By Doug Macron
Roche this week said it will shut down its in-house RNAi-related research activities as part of a broader cost-savings initiative that will include cutting its workforce by 6 percent over the next two years.
The company, which had been one of a handful of big pharmas to invest heavily in RNAi as a therapeutic modality, said it is responding to "mounting cost pressures in healthcare" and to "increasing hurdles for the approval and pricing of new medicines."
By streamlining its operations, Roche said it will be able to "focus its investments on innovations that promise the greatest clinical benefit for patients," and a greater emphasis on late-stage drug candidates.
"Following a comprehensive portfolio review, Roche will discontinue certain activities in research and early development," the company said. "These include RNA interference research in Kulmbach, Germany, and in Nutley, New Jersey, and Madison, Wisconsin, in the US."
Roche said that approximately 600 employees will "be affected" as a result of the move.
Of the total 4,800 positions Roche will eliminate under its reorganization plan, about 800 jobs will be transferred to other Roche sites, while another 700 will be outsourced to third parties.
It was not immediately clear whether any RNAi-related employees would be transferred or outsourced.
A Roche spokesperson told Gene Silencing News in an e-mail that the company is "evaluating creative ways to preserve some of [the RNAi] sites in a non-Roche environment."
She added that Roche will continue to "explore the potential of RNAi and other RNA-based technologies as a therapeutic modality, but this will be done via external collaborations."
"This is a comprehensive, focused initiative to reinforce Roche’s long-term innovation capability in the face of increased price pressures and a more challenging market environment," Roche CEO Severin Schwan said in a statement. "We will continue to drive our highly promising product pipeline … and contribute to more efficient healthcare systems.
"These measures are necessary to ensure sustained success of the company," he added. "We will make every effort to find socially responsible solutions for the employees affected."
Roche said that the cutbacks will save 1.8 billion Swiss francs ($1.8 billion) in 2011, and 2.4 billion Swiss francs from 2012 onward.
In the RNAi space, the two firms most likely to be affected by the situation — Alnylam Pharmaceuticals and Tekmira Pharmaceuticals, which had struck major partnerships with Roche — downplayed the impact the decision would have on their operations.
In a statement, Alnylam CEO John Maraganore said that "while we are disappointed and surprised to hear of [Roche's] portfolio decision given the progress being made in the RNAi field, we remain more confident than ever in our efforts to advance RNAi therapeutics."
Meanwhile, Tekmira President and CEO Mark Murray said in a statement that Roche's decision is not expected to have "a substantive impact on our business going forward.
[ pagebreak ]
"The majority of our revenue now comes from our exclusive manufacturing relationship with Alnylam … and our growing relationship with the United States government’s Transformational Medical Technologies program," which includes a contract to develop an Ebola therapeutic.
"We expect these will be the principal drivers of revenue through 2011," Murray said.
A Strong Start
Among the big biopharmaceutical firms that have made investments in RNAi, Roche was an early mover, inking a deal to acquire non-exclusive access to use Alnylam Pharmaceuticals' RNAi technology and intellectual property in oncology, respiratory diseases, metabolic diseases, and certain liver diseases (GSN 7/12/2007).
As part of that arrangement, which had a potential value of up to $1 billion for Alnylam, Roche also acquired the RNAi shop's Kulmbach-based subsidiary, Alnylam Europe, and its 40 employees.
Right from the start, Roche paid Alnylam $274 million upfront, shelled out $15 million for the German unit, and put up $42 million for an equity stake in the entire company.
Less than a year later, in 2008, Roche was on track to move its first RNAi-based drug into the clinic by this year, a senior company official told Gene Silencing News (GSN 2/14/2008). At that time, he said, the company was "investing very significantly" in the technology and had planned to more than double the headcount at the German facility, which was christened Roche’s Center of Excellence for RNAi Therapeutics.
Later that year, Roche paid $125 million to buy Madison-based Mirus Bio to acquire its polymer-based dynamic polyconjugate delivery technology, which had proven promising in preclinical testing as an siRNA-delivery approach (GSN 7/24/2008).
Also in 2008, Roche picked up access to Tekmira Pharmaceuticals' proprietary lipid nanoparticle delivery technology, at the time known as stable nucleic acid lipid particles, or SNALPs.
The following year, the companies signed a deal calling for Tekmira to help Roche develop two siRNA-based drugs, which would use the SNALP technology (GSN 5/14/2009).
Under that deal, Roche agreed to pay Tekmira up to $18.4 million in research funding, and as much as $32 million in milestones, plus royalties. Tekmira was also to handle product manufacturing for preclinical and phase I studies.
A Weak Finish
But by the summer of 2010, questions arose about Roche's RNAi activities when Tekmira disclosed that the Swiss drug and diagnostics giant would not meet its previously disclosed guidance of moving an RNAi candidate into the clinic before year-end (GSN 8/19/2010).
Now, it seems, Roche has decided that, in its hands, RNAi is too early-stage a technology to continue investing in at this time. In disclosing the discontinuation of its work with the technology, the company noted that it would also be reorganizing "certain internal functions" to free up resources so that it can focus on phase II molecules.
Have topics you'd like to see covered in Gene Silencing News? Contact the editor
at dmacron [at] genomeweb [.] com.