Global Insight Perspective | |
Significance | Merck & Co announced yesterday that it was making a sizeable investment in RNA interference (RNAi) technology by agreeing to acquire Sirna Therapeutics—one of the leaders in this new and exciting field. |
Implications | While RNAi technology remains in its relative infancy, it holds the potential to alter significantly the treatment of a huge range of diseases. Sirna, which was the first company to enter into clinical trials with an RNAi-based therapeutic, is already investigating the technology’s use in areas as diverse as oncology, viral disease, genetic disorders such as Huntingdon’s disease, and even hair loss. |
Outlook | With a price tag of US$1.1 billion, the acquisition of Sirna represents something of a gamble for Merck. However, RNAi holds the potential to become the kind of technology that Big Pharma players will need to invest in to meet their long-term growth expectations. This foresighted deal therefore has the potential to pay long-term dividends for Merck. |
Merck Looks Ahead with Acquisition of Innovative Biotech
While RNA interference (RNAi) technology is in its relative infancy as a method for developing therapeutics, it has the potential to allow the production of treatments that could significantly affect a large number of disparate diseases. As a result of this incredible potential, as well as an increasing need for the pharmaceutical industry to develop innovative technological breakthroughs that will allow for long-term growth, U.S. pharma giant Merck & Co announced yesterday that it has decided to make a significant financial investment in this exciting new area, through the acquisition of Sirna Therapeutics (U.S.), one of the technology's leading exponents.
Merck stated yesterday that it intends to acquire 100% of Sirna in an all-cash deal, at a price of US$13 per share (or around US$1.1 billion in total). The drug giant indicated that stock-holders owning around 36% of Sirna’s outstanding shares have already committed to support the transaction and have entered into a voting agreement. The two companies expect to close the deal—contingent on clearance under the Hart-Scott Rodino Antitrust Improvements Act—during the first quarter of next year.
Of particular interest were Merck’s comments that the Sirna acquisition complements its 2001 purchase of Rosetta Inpharmatics—a company that brought new tools for assessing RNA expression to the pharma giant. As a result, the company now hopes that not only will it be able to identify many novel drug targets, but it will also be able to produce many new classes of highly specific medicines against these targets, based on RNAi technology. RNAi-based therapeutics have the potential to selectively catalyse the destruction of the cellular messenger (mRNA) associated with disease-causing genes or viruses.
Outlook and Implications
Merck has been quick to grasp the nettle that faces the pharmaceutical industry, as it becomes increasingly clear that the adoption of new technology is going to be paramount in drug-makers' attempts to meet future growth expectations. This principle was shown in the recent past by the success of those companies that invested in antibody technology at a relatively early stage, and Merck has put its money into the belief that RNAi technology will be the next big thing to transform the face of medicine. In a similar way to antibodies, RNAi-based therapeutics have the potential to be extremely specific to their targets. As such, while US$1.1 billion may look like a hefty price to pay for Sirna, it is a gamble that may pay huge dividends for Merck. GlaxoSmithKline (U.K.) has been another Big Pharma to recognise the potential of Sirna and RNAi technology in the past, and has recently signed a multi-year collaboration with the biotech for the discovery and commercialisation of RNAi-based treatments for respiratory diseases.
Although Sirna’s pipeline is still populated mainly by early-stage programmes, the biotech has already proven the incredible flexibility of RNAi technology, with a range of projects being advanced across disease areas such as ophthalmology, respiratory diseases, viral diseases, diabetes and oncology. The company’s current lead clinical development candidate, Sirna-027, is a chemically optimised short-interfering RNA (siRNA) that it being developed in conjunction with Allergan (U.S.) for the treatment of age-related macular degeneration. One area in which Merck sees RNAi as having particular potential is the treatment of cancer; the company hopes to use RNAi to target the activity of genes that control the activities of cancer cells, and so produce their destruction without damaging normal cells.
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