it is to make a drug. Our approach to RNA Therapeutics is made with a recognition of the full package it takes to launch a successful commercial product. We work based on that strategy. That’s versus another strategy you see from smaller companies, which is to get an interesting experimental result, and publicly disclose it in an attempt to increase the value of your investment or a VC’s investment, without a real [awareness] of what it will take to make a therapeutic eight years later. Timelines are very abbreviated for biotech. They can’t do the 5-10 year plan. Nobody has that kind of runway, except maybe Alnylam and Isis. There are very few companies with the infrastructure to do long-term planning.
We immediately, after the acquisition, invested not just heavily in the RNA piece that is here in San Francisco, but we built an entire delivery group in West Point, PA. The thing that continues to differentiate Merck is that we have people with decades of experience in pharma R&D, drug safety, metabolism, pharmacokinetics. To us, the delivery vehicle is a really big medicinal chemistry program. It really is the blend of pharmaceutical and medicinal chemistry that’s allowing us to make the advances we’re making. Then with the appreciation of issues on safety, and input we can get from our regulatory and clinical colleagues, we feel we have a very strong engine here for developing RNA therapies.
X: You said there are three key components from around the company. The discovery group and optimization is here in San Francisco, delivery, and a third. What does the third group really do?
AS: Manufacturing. It’s the synthesis of the oligos, not just in a standard way, but modified. And the delivery vehicles, whether it’s a polymer or lipid, or an RNA conjugate. All of that is a specialized set of chemistries. They do all our small scale synthesis, and large scale synthesis that’s need for large clinical trials and preclinical studies.
X: How many people across the company are working on RNAi?
AS: A lot.
X: How many?
AS: We don’t disclose how many. It’s viewed as, in the pharmaceutical industry is constantly re-inventing itself. To a large degree, Merck did not move quickly enough in the biologics space to be leading. Although we have plans to be a player. The decision to acquire Sirna for $1.15 billion was for us to be a leader in a modality that could differentiate our company. While we don’t talk about the size of the investment, the size of the original investment is an indication of the seriousness with which Peter Kim has toward making sure we are successful.
X: I won’t belabor this, but can you say how many people you have here in San Francisco?
AS: We have two floors here, and it’s about 60,000 square feet. We’re effectively fully staffed. But we don’t disclose headcount.
X: Obviously the Sirna acquisition was a high-profile public event. But has Merck formed any other less visible partnerships with small biotech companies or academic groups to work on key parts of the problem, like delivery? Or is everything in-house?
AS: At the time of the acquisition of Sirna, we had two existing agreements. One was with GlaxoSmithKline, the other was with Allergan. GSK was for respiratory diseases, and Allergan was for the eye. We successfully completed both of those collaborations, per the terms of the agreement. The GSK collaboration ended about a year ago, or a year and half. Those are pretty good sized-collaborations in which both of those companies have the rights to RNAs we’ve discovered. They can develop them for indications they’ve specified. We have an enormous external licensing evaluation effort.
We have a graph we’ve disclosed which represents the number of opportunities we have looked at to do exactly what you describe, which is collaborate, particularly in the delivery space to advance this field. We are fully funded to do that, not just the evaluation, but the actual work. And what’s really disappointing is that when you look at that graph, which is current as of mid-2009, there were 250-260 interesting opportunities, and there are really only two or three which have data that’s valuable—meaning they have data from non-human primates.
Our approach to external licensing has been very much an evaluation prior to the collaboration. We have done a number of evaluations, and I’m sorry to report that the number that has progressed to a true collaboration has been only a handful.
So the yield here is reasonably low. Less than 2-3 percent
