3 Trends That Could Define Drug Discovery in 2014

These clear trends could help investors identify winning companies in 2014 and beyond.

Feb 12, 2014 at 8:30AM

Last year was undoubtedly remarkable for investors, scientists, and patients as the health care industry soared to new heights. Innovation continued the changing of the guard as biotech supplanted traditional pharmaceutical approaches and biotech's triumph, cancer immunotherapy, took the cake as breakthrough of the year. But after such an exciting year of developments, which trends will carry through to 2014 and keep the health care gravy train rolling?

RNA Therapeutics
The early candidate for 2014's drug breakthrough is actually not a new technique at all. The idea of using RNA to silence diseases with genetic underpinnings dates back to the early 1990's. Only now, though, are researchers bringing antisense and RNAi technology to the forefront with two approved drugs and a slew of promising clinical trials.

While their technologies are slightly different, big pharma has embraced Isis Pharmaceuticals (NASDAQ:IONS) and Alnylam Pharmaceuticals (NASDAQ:ALNY) as the leading plays in antisense and RNAi platforms. Between the two, Isis and Alnylam are tackling diseases as diverse as cancer, heart disease, inflammation, and metabolic disease. More importantly, Isis' approved drug Kynamro validates their platform, and next-generation antisense drugs only improve upon the safety profile of the drug class.

That potential and the flexibility of RNA therapeutics has caught the eye of bigger players in the industry. Isis' deep pipeline has earned it partnerships with various big pharma players and a strong relationship with neuropharmacology powerhouse Biogen. Milestone payments from these deals provide cash to be invested in Isis' wholly owned drug candidates, like hypertriglyceridemia drug ISIS-APOCIIIRx.

Like Isis, excitement over Alnylam's technology has earned it several partnerships, including a large equity investment from Sanofi's subsidiary Genzyme. That investment expands a partnership dedicated to moving five drugs to advanced clinical development by 2015. Alnylam currently only has one drug in Phase 3 trials, so that pipeline growth could be very exciting to watch.

Immunotherapy... again
Cancer immunotherapy's run to the top isn't over -- in fact it's just beginning. Bristol-Myers Squibb (NYSE:BMY) and Merck are undoubtedly leading the way, but Roche and others are in the chase with targeted therapeutics of their own.

The clinical benefit of cancer immunotherapy is its ability to jump start the immune system to battle tumor cells. The business benefit is that one class of drugs, the checkpoint inhibitors, can pair with targeted drugs to tackle countless cancers. That's the case for Bristol's Yervoy, the only FDA approved checkpoint inhibitor. It is currently enlisted in a whopping 93 clinical trials, and is seeing annual sales growth greater than 30%. It's likely that Yervoy will be paired with any number of other immunotherapies in 2014, including PD-1 inhibitors like Bristol's own nivolumab and Merck's MK-3475.

It appeared that Bristol had the lead in this hyper-competitive market, but Merck has turned up the heat. MK-3475 is already in rolling submission at the FDA for the treatment of advanced melanoma, and like nivolumab has recently been the focus of dual therapy partnerships to treat kidney, lung, and skin cancers. It'll be worth following the hype as the drug is tested in a wider range of cancers.

Big Data
2014 is shaping up to be a year replete with large-scale population studies of disease risk factors and outcomes, and the industry is tackling the need for big data on two fronts.

Illumina (NASDAQ:ILMN) announced plans to unveil the first high throughput genome sequencing device that costs a mere $1,000 to sequence a single genome. That gives researchers (that can afford the $10 million device) a golden opportunity to crank out 20,000 genomes per year, and study risk factors for disease in a huge population at the genetic level. That includes diseases that have set researches scratching their heads, like Alzheimers, Parkinson's, or even diabetes.

Then there's the push toward electronic health records and the sheer magnitude of data that will be compiled digitally. For companies operating in the cloud like Cerner (NASDAQ:CERN) or athenahealth, those data are right at their fingertips. Hidden within all of those data are risk factors for disease, drug-drug interactions, drug safety and long-term efficacy, which are all gathered from the millions of patient records in the cloud. 

There are already several initiatives aimed at exploiting this repository of clinical data. The FDA's Sentinel Initiative plans to tap into EHRs and insurance registries to track drug safety profiles. "Informatics for integrated biology and the bedside", or i2b2, programs are also leveraging the warehouse of clinical data to provide searchable databases of health records for population studies. Cerner's EHRs are compatible with these translational research platforms, and its focus on population health could make the company a leader in EHR-based research.

A divergence in health care
Oddly enough, the advances that will drive drug discovery are pulling health care in opposing directions. Targeted molecular therapies for cancer will promote highly personalized treatment, while population studies of accumulated digital data will provide a bird's eye view of public health. In 2014, look for companies willing to stretch those boundaries with innovative solutions to health care.

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Seth Robey owns shares of Isis Pharmaceuticals. The Motley Fool recommends Alnylam Pharmaceuticals, Athenahealth, Illumina, and Isis Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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