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Post# of 19309
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DewDiligence

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DewDiligence

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Re: DewDiligence post# 4030

Monday, 08/13/2007 7:20:53 AM

Monday, August 13, 2007 7:20:53 AM

Post# of 19309
Musings on GTC’s Business-Model Risk

[This is a repost of msg #4030 with minor changes and updated hyperlinks.]

Endogenous means “arising from within,” so an endogenous protein is a protein that the body makes on its own such as antithrombin or FVIIa or alpha-1 antitrypsin. This is in contrast to the tweaked proteins in, for instance, the FVIIa analogues from Novo Nordisk (#msg-22016170) and Maxygen (#msg-17854630).

If a recombinant drug based on an endogenous protein is very close structurally to the endogenous protein—i.e. if it has the same sequence of amino acids and the same folding but not necessarily the identical glycosylation—then the odds are good that the drug will not incur show-stopping safety problems. ATryn is an example of such a drug.

However, when drug developers start tweaking the molecular structure of a protein to a greater degree than described above, then all bets are off. Thus, the business model of companies who specialize in doing this (e.g. MAXY, NTEC) is considerably riskier than GTC’s business model.

GTC’s CD137 program is fundamentally different from the ATryn and FVIIa programs. In the CD137 program, GTC is seeking to develop a brand new molecule—an antibody directed at the CD137 receptor—rather than simply a recombinant version of an endogenous protein. Thus, the CD137 program is clearly riskier than the other programs in GTC’s pipeline.

In general, GTC’s raison d’etre will be to pursue relatively low-risk programs based on endogenous proteins rather than to be a full-fledged drug-discovery company. GTC has a proprietary production platform that enables the company to produce recombinant drugs based on endogenous proteins more cheaply than anyone else, and this—rather than drug discovery through tweaking—is GTC’s area of greatest competitive advantage.

“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”

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