Mercks Big Bet

Merck announced today that they have entered into a definitive agreement under which Merck will acquire Sirna. Sirna stands for short interfering RNA. The company describes themselves as a publicly held biotechnology company and a leader in developing a new class of medicines based on RNA interference (RNAi) technology. I guess when you name your company Sirna you had better call yourself a leader in the technology.

Mercks press release states that "the acquisition of Sirna complements the cutting-edge research on RNA expression that Merck has been doing since the 2001 acquisition of Rosetta Inpharmatics, Inc."

Rosetta Inpharmatics was founded in 1996 to design and implement DNA microarray gene expression technologies. Merck bought Rosetta for about $630 million in July 2001 with high hopes that Rosetta would make a difference in screening cancer compounds and genetic targets, which is not one of the company's strengths. As one Merck exec put it, "we're in a low-probability-of-success business." The acquisition of Rosetta and now (5 years later) Sirna, Merck has all the tools to begin to do higher probability of success research.

However, Sirnas lead candidate is in Phase II trials, which the Cargo Cult Scientist points out has a high probability of success relative to Phase III trials. That is to say, they haven't done much so far. Rosetta is also perplexing. In 2005 they published a report on the discovery of 3 genes linked to obesity. Obesity is a condition most often caused by an improper balance between diet and exercise. The genetic aspects of obesity have never been properly studied. Rosetta has shown a profound lack of productivity. In 2006 no news worthy discoveries have come from Rosetta. If RNAi and bioinformatics were so powerful, one would have expected bigger and better things from the past year.

Now that these two companies are subsidiaries of Merck, we at the Cargo Cult Scientist are going to keep an eye out for their success stories. Will Sirna knock out targets identified from Rosetta? Will Merck sink the big bucks in developing RNAi drugs that result from this collaboration. The Cargo Cult Scientist has experience in this sort of project. In 2002 the CCS worked for a bioinformatics company who wanted RNAi work to knock out genes they were identifying. The problem was that only one bioinformatics target was pursued by white lab coat members of the "wet lab". Either it, or RNAi failed to disrupt the protein pathway. We pursued other targets but mostly tried to optimize RNAi effects. Eventually we ran out of money. No airplanes landed.

For businessmen, it makes sense. The two companies should be able to develop drugs rapidly. The Cargo Cult Scientist however, is not a businessman. He sees Rosetta and Sirna as two burning flames on the runway. Merck has made a couple of very expensive mistakes. Their only hope is that Rosetta identifies some real targets someday and they get into the antiody therapy business. Sirna has no hope.