The Whole Genome and Nothing But...

Last week, The Wall Street Journal published an article called “Making Gene Mapping Part of Everyday Care”.  We see these pieces on occasion, as the price associated with mapping the whole genome continues to decline. The premise is basic: as the price (currently at $3,000) continues to drop toward $1,000, mapping the whole genome becomes a basic diagnostic, predictive and treatment utility tool.   I agree with this--to a point.  In the last 18 months, we have seen genomics being used to help better target good responders for certain cancer treatments and to determine treatment for rare diseases.   Genomics have also been used to find new treatments for various diesease.  In the last year, personalized medicine has seen significant growth.  A recent report by Kalorama Information showed that personalized diagnostic revenues surpassed $2.8 billion in 2011. The number has been pushed by the banner growth in tests matched with new cancer treatments  rather than in diagnostics in general.  This is likely to change but not immediately. The same research project estimated that revenues from tissue assays used to identify appropriate cancer treatments will grow markedly faster than in-vitro diagnostics over the next six years.

This should be viewed as a positive for the personalized medicine group as a whole. Years after loitering around the starting gate, personalized diagnostics (which come from gene mapping) to identify best responders for cancer treatments have become, more recently, a standard tool. It is a significant step forward. However, challenges remain in the quest to map and utilize the whole genome outside of research and academia.  (In research and academia, mapping the genome has its associated hurdles as well.)

These challenges exist for personalized medicine and the many potential uses for mapped whole genome for each individual. First, there are many common diseases that have environmental as well as genetic causes-diabetes, many forms of cancer, GI ailments, and heart disease to list a few.  There are many genetic variations that are not likely to link any disease.  On the legal front, we have seen a few high profile cases go to the Supreme Court in the last year regarding a company’s right to hold patents on specific genes.  And, lastly, there will be patients that do not want to know that they have a gene that may link to a higher chance of getting a serious or chronic illness. These challenges or questions are not new—they have existed since we first mapped a gene, and first linked certain genes to higher risk of developing certain genes.  In the last 15 years, science and medicine have made leaps forward in how to assimilate new technologies into assessment and treatment of patients.  An affordable, mapped whole genome will prove no exception but hurdles remain.

These hurdles can be addressed. Education of both patient and doctor is the key. As with most advancements, payors will also need to see the financial advantages to using the information gleaned from an individual’s whole genome. Then there are the FDA and other regulators, as well as certain ethicial questions that will always need to be adressed.  With the recent approval of several oncology therapeutics that rely on partnered diagnostic tests to identify the best suited for each particular treatment, the regulatory process moves forward. The genome presents an opportunity to truly make informed decisions about your health, preventive steps and treatment. As with many things in science—and life—it will be as helpful as you see it to be.

Bolt-ons, Buy-outs and Buying In

A few weeks ago, Illumina announced that it has received a hostile bid from Roche to purchase it—lock, stock and assays. This announcement kicked off a flurry of musings as to whether this was yet another sign that 2012 will be a year of mergers and acquisitions, following the big purchase of Inhibitex by Bristol-Myers Squibb for $2.5 billion in early January. Since the initial news on January 25, the Illumina/Roche process has moved on via dueling releases and statements in a play we have seen before. (Sanofi’s eventually successful acquisition of Genzyme in early 2011 comes to mind.) Yesterday, Illumina said that the $44.50 pershare that Roche was offering did not reflect an appropriate value. (Analysts have said that Illumina is looking for $69 per share.) As this dance continues, there is little doubt in my mind that Roche will, in the end, be successful. The question is whether they will overpay.

What is not a question is the fit. Illumina could neatly fit into Roche’s personal medicine and diagnostics groups and likely add immediate value. Roche sees this as a shortcut to their goal of defining and leading the personalized medicine field. The company has oft stated its focus in cancer, especially targeted therapeutics and diagnostics. Illumina arguably has this expertise. This is could be a good thing for Illumina as well. They lagged a bit in 2011, with disappointing earnings in the Q3:11 bringing lay-offs.Pressure remains somehwhat as fears about NIH cuts remain.   However, they are making a comeback now at a time when sequencing is hitting the $1,000 mark—an important threshold in the biomarker and sequencing games.

This potential acquisition also highlights key trends in the life sciences industry. Rather than buy a company that has bits and pieces that might fit and chucking the rest, the bolt-on acquisition is winning fans in big pharma CEOs. The bolt-on simply means acquiring a company that fits neatly into existing structure and pipeline. It is often cheaper than the mega-mergers of yesteryear and, perhaps, a bit easier in transition. Another trend highlighted is that of big pharma filling in pipelines and working towards goals via acquisition, as they continue to adjust to the era of restructured outfits, R&D reviews and patent cliffs.

In the end, it remains up for debate whether this is a year of M&A fever in life sciences. (I am less than convinced.) After all, consolidation is not the only solution. However, I do think bolt-ons are going to continue to be popular this year. They make sense for both sides of the equation in many ways.