Roche Diagnostics is trying to leverage its position in the growing theranostics and molecular diagnostics fields by outsourcing to other drug makers some of its R&D and regulatory expertise.
Around four weeks ago, the diagnostics giant quietly unveiled SynergysDx, an in-house program designed to give pharmaceutical companies access to Roche’s molecular-diagnostics infrastructure. In theory, the program will help these firms create diagnostic components to therapeutic candidates and reinvigorate ailing drugs by organizing clinical trials; analyzing clinical data; validating markers; and developing, manufacturing, and marketing IVD assays.
At its core, SynergysDx is quite simple. Most drug makers sense that so-called “companion” diagnostic-therapeutic products are gaining momentum on the heels of the Herceptin juggernaut. Similarly, pharma companies understand that the diagnostic arm of pharmacogenomics can offer a leg-up to stubborn compounds while reducing the cost of drug discovery and development.
However, few drug makers have a diagnostics arm, and Roche is betting that SynergysDx will become a successful surrogate provider of diagnostic technology and know-how.
In short, Roche, which commands around half of the world’s molecular-diagnostics market, is sitting on a veritable gold mine. Question is, now that Roche has built it, will anyone come?
SynergysDx, based in Pleasanton, Calif., is part of a small family of venture projects that Roche runs out of its Basel, Switzerland headquarters. (Emily Winn-Deen, senior director of Roche’s genomics business development office and SynergysDx’s scientific liaison, said the Venture Office, run by Greg Heath, executive vice president of business development, will relocate to Pleasanton on July 1.)
The business model behind the program, which will operate from an approximately $1 million annual budget, is flexible. “It’s basically a service we’re offering, and exactly how the service is funded, we’ll work that out directly with the pharma company,” Tom Metcalfe, senior vice president of genomic and strategic business development at Roche Molecular Diagnostics, told SNPtech Reporter. Although the size of the diagnostics-outsourcing market is unclear even to Roche, the company intends to “sort out [revenue and royalty issues] on a case-by-case basis.”
According to Metcalfe, a typical outsourcing scenario might play out like this: Researchers at a pharma company guiding a drug through Phase I or Phase II development happen upon biomarkers linked to efficacy, toxicity, pharmacokinetics, and pharmacodynamics. The company decides it wants to test whether these markers can be used to create a companion diagnostic. But the company doesn’t have large-scale diagnostic-development capabilities. SynergysDx does have access to these capabilities, and could mobilize the requisite resources from throughout Roche.
So far, no pharmas or biotechnology companies have taken the bait, Metcalfe said, though Winn-Deen said there have been some nibbles.
Roche said the program is still new on the block, while Metcalfe said the company intends to advertise SynergysDx in “targeted media” as well as through “calls” to the pharmacogenomics community. Metcalfe mentioned the program during his presentation at the IBC Molecular Diagnostics meeting held in Boston two weeks ago.
Skeptics, however, tilt an eyebrow at the notion that pharmas stand to gain anything after buying R&D help from a competitor. And cynics say that Roche is illustrating the memorable rejoinder from The Godfather that the best business insurance is to “keep your friends close and your enemies closer.”
For Metcalfe, the plan is straightforward: SynergysDx “is here to make money,” he said. “We see it as [companies] will do it anyway. We don’t see it as being altruistic. We just see it as a realistic commercial opportunity.”
Added Winn-Deen: “We decided that if a pharma company wants to make a diagnostic, they will [go ahead] whether it’s with us or with another diagnostics company.”
Hey, Buddy, Can You Spare a Diagnostic?
Though the idea of outsourcing large-scale diagnostic-development capabilities may not be novel — Quest Diagnostics shelved a similar program last year, and a small number of private companies offer limited services — Roche is the only game in town in at least two important regards: The company and its diagnostics successes are well known to the industry, and potential clients can be sure that the firm will still be around when it comes time to take a product to market.
Some Roche competitors agree with Metcalfe’s assertion that SynergysDx is a logical progression of the Swiss company’s theranostic bent. “Most of the major pharma companies are not diagnostic companies, and they don’t have the experience, infrastructure, [or] technology to deliver assays,” said Nicholas Dracopoli, vice president of clinical discovery technologies at Bristol-Myers Squibb. “If you’re going to co-develop a drug with a set of markers … you’re going to have to have tests available globally when you launch the compound. I think that’s going to force the issue … and that you have to develop these tests and do the appropriate analytical and clinical validation,” he said.
“Anybody who can offer that service, and the ability to deliver the assays, has a viable approach,” Dracopoli said.
Asked whether BMS, which does not have a diagnostics division, might approach Roche for such help, Dracopoli said, “We would be willing to go to the best provider who would be willing to meet our needs.” Is Roche Dx the best provider? “I can’t address that,” he said.
Kim Slocum, director of strategic and business development at AstraZeneca, can address it: When it comes to Roche’s understanding of the “new realities of healthcare” — pharmacogenomics and theranostics — the firm “hasn’t just drunk the Kool-Aid. They’re taking a bath in it,” he told SNPtech Reporter. “Most of the diagnostics companies out there are three guys in a garage with $2 million worth of venture money. And you gotta wonder if they’re going to be around when you get to market.”
Though Slocum wouldn’t disclose whether AstraZeneca had plans to work with SynergysDx, he did say that having access to Roche’s infrastructure might have helped AstraZeneca justify to a Food and Drug Administration advisory committee last September certain data from studies of the company’s lung-cancer drug Iressa. “They were saying, ‘Come on, guys, help us understand why we have 10 or 15 percent of patients who seem to benefit fairly dramatically from this drug, and 85 percent get no benefit at all?’ Our answer was, ‘Well, we don’t know either.’ I suspect you’re going to hear more and more of that.”
SynergysDx faces other challenges as Roche begins selling it to the biopharma industry. Besides ensuring clients that their pipelines won’t be pilfered, the company runs the risk of inadvertently diluting its own carefully cultivated sphere of influence.
“Those risks are always there,” said Winn-Deen. “We’ve had discussions with our pharma division” about them. “We’ll try to focus where there’s no equivalent Roche drug.”
Slocum said a dose of common sense and due diligence will be in order. “If I’m competing with them directly in a category … I don’t know that they’d be my partner for that particular deal,” he said.