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Business and Markets

Merck Closes Down GlycoFi

Back in 2006, Merck paid $400 million for New Hampshire-based GlycoFi (a Dartmouth spinoff) to boost its move into biosimilar products. The technology was a yeast-based platform for selective glycosylation of proteins, and GlycoFi had a point with their business model, because that can be both a crucial and painful process for producing an active protein therapeutic.

But by 2010, it became clear that the biosimilars move hadn’t gone as well for Merck as they’d been hoping. In 2013, the company signed another biosimilars deal that seemed to mostly leave it in the regulatory/marketing end of the business, while the R&D was done elsewhere, which made the whole GlycoFi acquisition look less compelling. The InVivo Blog speculated on this situation in 2014, but by then Merck had already been moving the scattered parts of the GlycoFi operation into one new central location at the Dartmouth Regional Technology Center.

Well, they got about three years out of that new facility, it seems, and I would have to think that the people working in it were worried about their jobs from the day that they moved into it. The press in the area is now reporting that GlycoFi employees have been variously let go and/or relocated, and their site is now vacant (which doesn’t do that Dartmouth technology park any good, either). Unless Merck is getting some internal use out of that protein glycosylation technology that no one’s hearing about, the entire deal looks more like a costly excursion. But there are a lot of those in this business. . .

23 comments on “Merck Closes Down GlycoFi”

  1. Anon says:

    Pharma is now investing billions of dollars competing to develop drugs that already exist, with zero added value for patients. If you think that generics threaten the industry, well pharma is now just shooting itself in the foot, and will end very badly. Tragedy of the Commons at the extreme, like monkeys fighting over each other’s bananas rather than growing and picking their own.

    1. Isidore says:

      Competing in the development of generics/biosimilars is certainly of significant value to patients, as prices go down

      1. Anon says:

        Yes, but it’s merely robbing from the innovators and giving lower prices to patients while taking a slice inbetween. Overall net value creation is negative as it means spending billions to (re)develop something that already exists. If every pharma company did that (as they in fact are), there will be no innovation and nothing left of the industry as it is effectively commodorizing itself.

        1. Imaging guy says:

          So anyone making a rival product based on a patent owned by another is “robbing from the innovator” and creating “negative net value” to the society?

          1. Anon says:

            Just because it might be legal doesn’t mean that it’s not taking and destroying value instead of creating value with innovation. There is a big difference between constructive and destructive competition, while both are legal.

        2. I don’t think that I would characterize creating a biosimilar as robbing from the innovators. The innovators had patent and other protections for some number of years as their payment for innovation. The underlying point of having a patent system is to incentivize innovation with the clear goal of allowing the market to later capitalize on the invention once the patent expires. This is meant to be a win-win in that the innovator gets an initial monopoly and resultant high profits for a period of time, and then the public eventually gets much cheaper versions of the same product once the patent expires.

          Would it be nice if the companies spent those billions on searching for new drugs? From the standpoint of pure innovation, of course. But that is risky. From the standpoint of someone running a company beholden to stockholders, it makes sense to go for the option that seems more likely to create future profits, especially as biosimilars are generally subject to much less of a reduction in price than small molecules (a reason to rally around Just Biotherapeutics Creating a product that does the same job but costs less is not rent seeking. Buying an existing generic product with no real market competition and a captive market and jacking up the price several hundred percent? That’s rent seeking.

          1. Anon says:

            You need to think where value is coming from and going to, and how much, then you will see my point that overall value is destroyed.

        3. regdoug says:

          I think a common definition of value is performance divided by price. So if the performance is the same and the price is lower, you just created a higher value drug. Sell that higher value drug for a few years and you get (value of original – value of new)*(number sold) – research costs = value created.

          1. Anon says:

            I Er, no. Value is what people are willing to pay for something. If a drug is commoditized by biosimilars, it becomes worth less than when it was exclusive. Increasing supply decreases value. This is basic economics.

            Or even if net value created is measured in terms of the incremental clinical value less the costs of developing it, then the net value created is zero incremental clinical value minus a couple hundred million to develop what already exists. Thus negative value creation = value destroyed.

      2. rcyran says:

        Companies that develop biologics still have patents, exclusivity periods etc. A patent shouldn’t mean a developer can just charge monopoly-level prices forever. After an agreed number of years it makes sense that society allow rivals to make cut-price versions.

        This also has the nice effect of encouraging companies to develop new drugs, rather than just spending all their efforts milking existing ones.

        1. loupgarous says:

          You still don’t always get added value when a drug patent expires. Indiana’s US Senator Dick Lugar did his bit for Indianapolis-based Eli Lilly and Company, attaching an extension of their patent on fluoxetine (‘Prozac”) to an unrelated bill until Lilly was ready with new indications for Prozac and its own “me too drug,” duloxetine. (“Cymbalta”), which has a noticeably higher side-effect profile and has been associated with worse liver toxicity than fluoxetine.

          But, since the incidence of suicide among Prozac users has been reported as high as 12 per 1000 users against 3.8 per 1000 with non-SSRIs and 2.5 with placebo, compared with no statistically-significant increase in suicide among Cymbalta patient cohorts, at least Lilly’s drive toward market exclusivity with a new antidepressant may have, if not added value, at least reduced the harm it might have been responsible for had their already long patent protection on Prozac lasted longer.

          1. Handles says:

            The Cymbalta story shows the possible benefits of “me too” drugs quite well. One of the off-target effects of duloxetine is on a sodium channel (doi: 10.1097/ALN.0b013e3181e89a93) which makes it a reasonable pain killer for some of those hard to treat neurological conditions like fibromyalgia. AFAIK this was only discovered after the drug was approved.

            The duloxetine suicide risk sadly took a while to sort out, as a healthy volunteer hanged herself *at the trial centre*.

  2. Me says:

    Well at least they actually had a product and a viable platform. More than we can say for Sirtris 😀

    And yeah like #1 you have to ask what a big player like Merck is doing pushing into biosimilars? I’m told there is far less price erosion with a biosimilar than with a generic, but still….if they’re gonna go down that route, why don’t they start selling gourmet burgers and fixing up apartments?

  3. anonymous says:

    If they do not wise up soon, may be they have to shut down few more sites. The hemorrhage will not stop any time soon.

  4. SteveM says:

    I just a read a useful abbreviated term at the Unz Review, “HIQI” meaning High IQ Idiot. With Merck, another 400 Million flushed down the toilet with nary a peep by that C-Suite cabal of HIQIs.

    America is saturated with HIQIs generally. In science (Pharma), business and government. The perverse irony is that they almost always walk away rich from their wreckage after wasting tons of other people’s money.

    BTW, stick a fork in America because it’s cooked…

  5. cancer_man says:

    Hey Derek,

    Off topic: I noticed you didn’t comment on the NR article in Science three weeks ago that was out two days before your critique of Elysium’s marketing. What is your take on that as well as the front page article in The New York Times that features a study on dogs taking rapamycin: “Dogs Test Drug Aimed at Slowing Aging Process”.

  6. matt says:

    I, for one, would like to offer my services to be bought out for $400 million and then be laid off at some sufficiently discreet later time. Since none of my services will be used at all in the transaction, it really doesn’t matter what my credentials are.

  7. hn says:

    That’s too bad. I thought GlycoFi had some promising and useful technology unlike many of the companies these days that seem to be based on nothing but hype.

  8. mikeb says:

    GlycoFi is on the right track, it is just that our understand of glycobiology, which has been dubbed the quantum mechanics of biology, is still in its infancy. You are going to see other companies in the future attempt to do what GlycoFi tried to do and that is to have complete control over any desired glycoform of a recombinant therapeutic.

    1. Tom Warner says:

      Ten years ago the mind set of glycobiologists was that the glycosylation of recombinant therapeutic proteins needed to be as human –like as possible. Presently our thinking has evolved, and the feeling now is why stop at making human-like glycosylation, why not try glycoengineering and make the protein a ‘biobetter’ instead of making it similar, either to a the naturally occurring molecule or to an innovator therapeutic protein? As an example, glycoengineered EPO , with a longer serum residence time and improved efficacy.
      In this manner a new chemical entity is created ,one with improved physical and biological properties; hopefully, better efficacy. This provides patients with an improved drug, and it provides manufacturers with IP and exclusivity , the risk of toxicity and immunogenicity is mitigated because the basic , functional part of the peptide is unaltered.
      Glyco fi’s technology was a step in the right direction to some extent, but using this modified yeast as a platform to make ‘biosimilars’ presents an extraordinary daunting task. The job is difficult enough to make a bisimilar protein using the original expression host cell line as employed by the innovators ; but to use a genetically modified yeast system, a completely different biological organism, is going to add a monumental amount of complexity to already difficult and unpredictable system..

  9. Andy II says:

    So the question is how important glycoforms play in their therapeutic values (efficacy and safety) and in their quality (uniformity if you will). Some cases, Fc glycoforms are critical ( and some cases are not obvious. Of course, glycoforms are important in their stability/half-lives. No sugars, no half-life. If you see the HPLC profile of glycoforms cleaved from a therapeutic antibody, you will see at least 4 major biantennary fucosylated GlcNAc terminated N-linked oligosaccharide forms with or without galactose capped on the terminal GlcNAc. Besides there are many forms, high mannose, triantennary, sialic acid on and off… The current focus is to produce therapeutic antibodies with a defined glyco structure at one site. EPO has 3 glycosylation sites (two N- and one O-linked) and each glycoform is different. What the different you would see if we compare EPO with the defined (tetra-antennary N-linked with sialic acid capped) and O-linked and EPO from the current process. Without microscopic analysis, you would not see much difference. Remember the definition of “Biosimilarity”? Two products are similar in the validated analytical methods. If you try to make a bio-better with defined glycoform, you have to establish the regulatory process.

  10. Cytirps says:

    Another achievement by Peter Kim.

  11. MBA-PhD, for what that's worth. says:

    Anon, you’re confused. Value from a drug or other therapy is mostly what the *patients* get. A zero cost drug is still immensely valuable to patients and society. Along the way doctors, pharma companies and others capture some of that value back by charging fees from patients or taxpayers, in exchange for the service of inventing and delivering the therapy. In order to simulate investment and research, patents provide a short term possibility of capturing far more money (“rent”, really) than it costs to sell the therapy. That’s needed to incentivize invention of goods that require long and expensive development times. After a patent expires, the company that competes to deliver the lowest possible cost for the therapy (while maintaining sufficient quality) is providing the most value to patients and society. A company that continues to extract unearned rents through legal or marketing tricks may be delivering value for it’s employees and shareholders (and by extension possibly your 401k), but it is extracting that value from patients and taxpayers.

    Glycofi’s technology is just one more example of good ideas that couldn’t be translated into a product fast enough for the investment to be worth it. Those good ideas may still have great impact down the road, but the investment was a net loss. You can argue if that’s because of valid scientific reasons, or because of management screw ups until the cows come home. Doesn’t matter. Glycofi as an investment was a failure, and it is now finally being disassembled to recover salvage costs.

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