Roche Has Problems but RNA Interference Has More

Includes: ALNY, RHHBY
by: Derek Lowe

So Roche (OTCQX:RHHBY) is (as long rumored) going through with a 6% headcount reduction, worldwide. That's bad news, but not unexpected bad news, and it certainly doesn't make them stand out from the rest of big pharma. This sort of headline has been relentlessly applicable for several years now.

What surprised me was their announcement that they're giving up on RNA interference as a drug mechanism. That's the biggest vote of no-confidence yet for RNAi, which has been a subject of great interest (and a lot of breathless hype) for some years now. (There's been a lot of discussion around here about the balance between those two).

That's not the sort of news that the smaller companies in this space needed. Alnylam (NASDAQ:ALNY), considered the leader in the field, already had over $300 million from Roche (back in 2007), but so much for anything more. The company is already putting on a brave face. It has not been a good fall season: they were already having to cut back after Novartis (NYSE:NVS) recently thanked them for their five-year deal, shook their hand, and left. To be sure, Novartis said that they're going to continue to develop the targets from the collaboration, and would pay milestones to Alnylam as any of them progress - but they apparently didn't feel as if they needed Alnylam around while they did so.

Then there's Tekmira, who had a deal with Roche for nanoparticle RNAi delivery. They're out with a statement too, saying (correctly) that they have other deals which are still alive. But there's no way around the fact that this is bad news.

What we don't know is what's going on in the other large companies (the Mercks (NYSE:MRK), Pfizers (NYSE:PFE), and so on) who have been helping to fund a lot of this work. Are they wondering what in the world Roche is up to? Looking at it as a market opportunity, and glad to see less competition? Or wishing that they could do the same thing?