Yeah, as the details come out, this isn't a totally philanthropic effort to dump all of this on the public for free, but rather for a fee. So, who is going to have the best database products for the pharmas, the wannabees or the ones with a 6-7 year headstart and a full slate of genomic products and dbases that cover a much broader array of organisms? Seems to me that this just adds further validation to INCY's business model. IMO PKN would have had a much more viable chance to compete had they started this effort in '92 and not '98, but they are an instrument and reagent company at heart.
Now, if I was the CEO of a Big Pharma, what would I be doing? Well, I'd want access to it all. For what I spend on R&D every year, and for what gets wasted chasing down bad leads, I'd want every chance to get a leg up that I could. Thus, if I were the boss, I'd be doing genomic deals across the board. I'd subscribe to the INCY dbases and get their software "operating" system. I'd do a deal with SKB to get access to the HGSI info and probably directly with HGSI too. I'd do a deal with PKN. Also, I'd do deals with whoever else in the more narrowly focused genomic companies has something relevant to my pharmas area of focus. I'd want it all so that I didn't get sandbagged by not having the intellectual property rights sewn up on something I'm pursuing, so that I can have the best drug targets and leads, so that I can have the best overall information and software to deal with that information and to integrate it with the publicly available data, and so that I can do it faster and better.
Of course, that's just my nature, I try and be thorough.
Here's a good analogy. How many Pharmas in the world only read the articles that appear in Nature, but just don't bother with Science (these subscriptions cost money you know)? NONE! They are accustomed to text based information sources and realize that they need to have information specialists that pursue whatever is being published anywhere worldwide regardless of the cost of the information. This helps them to keep from reinventing the wheel, helps keep their internal wheels of innovation turning and helps them do it all better and faster. Well, why when it comes to genomics do these analysts think that a company would only need to get access to one of the information sources available, but not all of it?
Now, some of the world's Pharmas are dinosaurs and just can't evolve fast enough to adapt to the environment. Most of them will probably ultimately go the way of the Syntexes of the world and get gobbled up by their faster evolving relatives. Some of these companies are still sitting around trying to decide if genomics is for real.
Look at the almost merger of Glaxo and SKB. These companies almost came together because they felt they needed to combine the genomics power that they each had individually to make a superior competitor. Of course as it turns out, for better or worse, they agreed to disagree and to not become one.
Another thing that makes me feel that yesterdays action was a complete over-reaction. INCY has lots of irons in fire and they keep tossing more in. They could very well have breakthroughs and great income from some of their other products they are working on, stuff from Synteni, Genome Systems, Combion, especially diaDexus and through the many collaborations they have in process. This is not just a database subscription company. Plus, through all the years, they still have not lost a single database subscriber yet, everyone keeps coming back for more and renewing when their subscriptions end. This is not a coincidence.
I had a friend tell me that no one has ever come up with a product yet from the INCY data. I had to laugh. This was a biotech person, who just doesn't think in terms of Big Pharma. First of all, biotech airs it's laundry, Pharma keeps theirs hidden out of sight. By this I mean that a biotech, in order to keep capital flowing in, has to show what it has and how it is progressing through the drug development process, warts and all. So, biotechs issue press releases on progress and failures throughout the whole development process. You hear about how great their invitro data is, how it progresses through mice and larger animal preclinical models, how every phase of the clinicals is planned and scheduled, when they plan to file an NDA this many years from now, etc., etc........ Contrast that with the typical Pharma, they tell you when they filed for an NDA maybe, and definitely tell you when they get a product approved for market. They just don't need to keep the investment community up to date on every little step of the process to keep the valuation increasing and the capital flowing. They just don't tell you about all of the clinical failures and successes that they are having (unless of course it is being done with a biotech partner), they don't need to, and it is more important to them to keep it secret from their competitors. So, why would it be expected that Pharmas would come out and advertise what great stuff they got from the INCY data? So that the other competitors of theirs would sign up too? No way, they don't want to help their competition out. Myself, I don't expect significant INCY based therapeutic Pharma products to be out until 2002 at the earliest and more realistically in the 2005-2010 timeframe. In the diagnostics realm, the timelines are shorter, so I'd expect to hear progress on this front with in the next couple of years. It is just a bit early yet for the Pharmas to be advertising the progress they've made with INCY's help.
If you think about the typical numbers tossed about for therapeutic development: of 5000 compounds tested in research, 1000 make it into some sort of preclinical development, 10 make it into Phase 1 clinicals and 1 of those makes it to market. Of course this process takes 8-15 years to complete. Now, go out in the press and try to find 9 pharma press releases describing their clinical failures for every one that describes how they've got a drug ready to launch. Those press releases don't exist, that dirty laundry is carefully hidden from view and filed away in secret notebooks never to be revealed. Do the same exercise in biotech and you'll find vastly more failures than successes being publicized.
Contrast this with the NY Times fraudulent, I mean erroneous, information that came out last week about ENMD and how great their stuff is in mice for curing cancer. Given the usual odds, I'd say they have about 100:1 chance of getting it to the market for humans (in 5 or 10 years). Of course the mouse community is very thrilled with this result, but I don't think that it was the mouse investment dollars that drove this stock, or that the mouse HMO's will be covering these treatment costs. I sure hope the SEC takes a peak into everyone involved in this fiasco at the NY Times to make sure that they, their friends and family, weren't trading in ENMD. Lots of money to be made in hype. At least James Watson didn't waste any time setting these turkeys straight. But hey, hype sells newspapers and stock, who needs reality when you've got such a great commodity.
Enough ranting for now.......
Rman
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