Pharmaceutical companies now spent over $25 billion on research and development (R&D) yet the number of new molecular entities, drugs whose active ingredients have never been approved in the United States, has been declining for over a decade. The traditional method of drug discovery followed a standard and perilous progression: Identify a biological target like an enzyme or a gene that appears related to a disease; test hundreds of thousands of compounds in the hope that several of them will interact with the target; study the toxicity, absorption, and other physiological properties of the most promising molecules in animals, and if all still looks encouraging, test the compound in humans.

Part of the decline in productivity is obviously due to the fact that much of the low hanging fruit has been plucked, but traditional methods have reached their limitations. Today, pharmaceutical companies are turning to new the new technologies of genomic sciences, rapid DNA sequencing, microarrays, combinatorial chemistry, cell-based assays, automated high-throughput screening (HTS), proteomics and bioinformatics to discover new drug candidates to refill their pipelines. Although it may take as long as a decade for these technologies to have an impact, even a slight increase in the rate of drug discovery would dramatically increase the rate of success for pharmaceutical and biotechnology companies.

The draft sequence phase of the Human Genome Project was completed in 2000 and the final, high-quality sequence phase in 2003. Interestingly, the number of genes in the human genome has been revised downward from 100,000 genes to 30,000 genes. This has caused a revision in the dictum "one gene codes for one protein," as the estimated number of genes cannot account for the estimated 300,000+ proteins that make up the human proteome, the protein content of cells. Genes are not directed translated into protein but through an intermediary, messenger RNA (mRNA). The difference is largely due to epigenetic events that allow one gene to code for more than one protein.

Genomics is the study of the DNA sequence of humans and other organisms. It includes a wide range of modern biological technologies including DNA sequence analysis, analysis of genetic variations, gene expression, etc. The search for genes involved in disease has been revolutionized by the use of microarray technology. A microarray, or gene chip, is a slide containing thousands of DNAs, which can be tested for gene expression, compound screening and toxicology, yielding hundreds of thousands of data points in one experiment. Data mining techniques called bioinformatics utilizes its analysis into new drug leads for biotechnology and pharmaceutical companies. Affymetrix has established a dominant position in this field. Other leaders in the field include Agilent Technologies, Caliper Technologies, and Compugen Ltd..

A number of genomics companies are using population genetics to understand the connection between genetics and disease. DeCode Genetics is using the population data from the homogenous Icelandic population, while Myriad Genetics is using the detailed health records of the Mormons in Utah. Interestingly, a number of genomics companies have found it difficult to establish a sound business model and have abandoned the field to pursue drug discovery and development. These include Celera Genomics Group, Incyte Corporation, and Hyseq, Inc., which merged with Variagenics, Inc. to form Nuvelo Inc.

Gene expression is the study of the expression patterns of thousands of genes in healthy tissue and in various stages of disease. The results comprise a database that provides information to help companies determine which genes to focus on for their product development pipeline. For example, a particular pattern of gene expression in cells exposed to a potential new drug molecule might give an indication that the molecule would ultimately be toxic in humans. Or, if a gene expresson pattern is associated with the progression of a disease, and if researchers find that manipulating a particular drug target alters that pattern in a favorable way, it will give the researchers a strong indication that the target is a good one to aim for. Thus, gene expression studies can help sharpen the focus of every step in the drug discovery and development process.

Leaders in the field of gene expression include Lynx Therapeutics, Gene Logic, CuraGen, and Discovery Partners International. In 2001, Merck & Co. paid $450 million to acquire Rosetta Inpharmatics of Seattle, Washington, for its gene expression technology. In August 2003, Gene Logic announced a collaboration with the Center for Drug Evaluation and Research (CDER) to use Gene Logic's gene expression products to evaluate toxicology standards. This represents the expanding role of genomics-based data in the evaluation of experimental drugs.

Historically, drug companies have relied upon some 500 targets for therapeutic drugs. The Human Genome Project is expected to increase that number to 3,000- 5,000 targets for new drugs. A comprehensive analysis of the drug targets underlying current drug therapy undertaken in 1996 showed that present day therapy addresses only about 500 molecular targets. According to the analysis, cell membrane receptors and G protein-coupled receptors, constitute the largest subgroup with 45% of all current drug targets, and enzymes account for another 28% of drug targets. The human genome contains 12,000 to 14,000 genes encoding secreted proteins. Even if only 1% or 2% of these proteins would qualify as drugs, there would between 120 and 280 novel therapeutic proteins, most of which still remain to be discovered and developed.

Indeed, a more recent study showed that the 100 best-selling drugs of 2001 are directed at only 43 host proteins, which highlights that the economics of the pharmaceutical industry actually relies on a small pool of targets.

Another measure of the rate at which new targets are commercialized is the number of new molecular entities (NMEs) that are approved by the FDA each year. An NME is defined by the FDA as an active ingredient that has never been marketed in the United States. Over the past nine years, an average of 31 NMEs have been approved each year, with a high of 53 in 1996 and a low of 18 in 1994. However, most of these NMEs are "me too" drugs, that is drugs that modulate targets for which there are already drugs on the market.

The goal of genomics-based drug discovery is to translate gene sequence data and discoveries into drugs that provide therapeutic value.
Finding a gene, however, is just the first step in a long process in terms of developing a drug. Indeed, a recent study has shown that the targets of the top 100 pharmaceutical drugs are not human genes that directly cause disease, but are key biochemical switches that produce a desirable change in the physiological state of the organism, which in turn alter or abrogate an ongoing disease process. Thus, not only do you need to understand the function of the protein encoded by that gene, but the biological pathway that can be modulated to provide therapeutic effect.
Today, the large pharmaceutical companies have outstanding contracts for over 2,000 genomics-derived drug targets with companies such as Millennium Pharmaceuticals, Human Genome Sciences, deCode Genetics, and CuraGen Corporation.

The total number of protein drugs, largely recombinant proteins and monoclonal antibodies that are often referred to as "biotech" drugs, currently amounts to 59. Recombinant proteins have become important additions to the therapeutic armamentarium. Monoclonal antibodies, a specialized form of recombinant protein, have begun to fulfill their promise and are now the largest type of biotech drugs under development. Antibodies represent a very attractive therapeutic because they can be targeted very specifically. In 1998, biotech products, most of them recombinant proteins and monoclonal antibodies, accounted for 15 out of 57 drugs introduced worldwide (26.3%)

Given the therapeutic success of the interferons, tissue plasminogen activator (tPA), erythropoietin (EPO), granulocyte-macrophage colony-stimulating factor (GM-CSF), Herceptin, Rituxan, and many others, protein drugs are likely to make many addition therapeutic contributions.

Advances in molecular biology and understanding the human genome during the last decade has turned the traditional method of looking for drugs upside down. Instead of tinkering with compounds and then testing to see if they might be effective, drug companies now begin by identifying molecular targets in the body that lead to disease. Once targets are identified, researchers try to find drugs that work against them.

The first step in genomics based drug discovery is to decide the type of targets to be identified. These include the type of target, the disease or condition targeted, and the type of drug to be developed. Targets are typically proteins but also include DNA, mRNA, lipids, and carbohydrates. For protein targets, genomics companies search for the gene that encodes the protein. Cancer drugs seek to discover surface markers- proteins or carbohydrates, for example, that appear on the surface of cancer cells but not on normal cells. The disease targeted is an important decision for many biotech companies. Picking a disease before a genomic screen is critical to success because targets cannot be validate without some idea about what the specific target should do.

The type of drug developed also puts constraints upon the target selected. Recombinant proteins and monoclonal antibodies are protein-based therapeutics that cannot enter cells, and thus cannot generally affect intracellular targets. Monoclonal antibodies bind to cell surface or secreted proteins, and recombinant proteins generally interact with cell surface proteins, often replacing deficient secreted proteins. Small molecules and gene therapy can act on intracellular targets.

Knowledge of the human genetics of a specific disease is crucial. In cancer research, the choice of target is often highlighted by the mutated gene underlying the cancer, such as ras, p53, RB, p16, myc, and bcr-abl). Overexpression of specific gene products, such as HER-2, epidermal growth factor (EGF) and insulin-like growth factor receptors, and cytokines, have also been correlated as causative factors in some cancers. For example, elevated telomerase activity is observed in essentially all human cancers, and increased serum vascular endothelial growth factor (VEGF) has been reported to be a prognostic clinical factor correlated with decreased survival in breast, ovarian, colon, lung and gastric cancer patients.

Proteomics represents the effort to get from genome sequence to protein function by analyzing many proteins at once. The study was spawned from the current understanding of the genome and the fact that drugs typically target proteins that genes encode, not the genes themselves. To fully understand disease models and discover novel therapeutics, it is imperative that all proteins in a pathway are identified and thoroughly characterized since they are the ultimate disease effectors. Consequently, proteomics plays an important role in the drug discovery process.

Proteins are more difficult to study than DNA or RNA, not only because they are more numerous, but because of their very nature. In its first microsecond of existence, a protein is transformed from a linear chain of amino acids into a folded structure. Only in its final shape, usually a bundle of complex twists, turns, and helices, can a protein perform its biological function. Protein folding is difficult to predict and protein-protein interactions often fleeting and complex.

Tools such as BLAST, a software platform, allow scientists use to compare protein and DNA sequences. However, many researchers believe that the next phase of genomics research will be to map out interaction networks- the cell's internal wiring system through which genes and proteins communicate. Recently, a software tool developed by scientists at the Whitehead Institute in Cambridge, Massachusetts promises to apply this same computation muscle to the intricate world of protein interaction, giving researchers a new view of the complexities of cellular life.

A number of companies are developing tools for the proteomics sector, including protein chips, x-ray crystallography, 2-D gel electropheresis, and protein-protein interactions. Aclara Biosciences and Ciphergen Biosystems are developing protein chip to help identify proteins and protein-protein interactions. Leaders in the field also include Bruker BioSciences, Large Scale Biology, AxCell Biosciences (Cytogen Corporation), and Myriad Genetics.

Genomics has moved the bottleneck in the drug discovery process from finding drug targets to validating drug targets. Target validation is the process in which the role of a hypothetical target in relation with to a disease phenotype is understood. First, a target is evaluated in isolated cells to see if a compound can modify it in a reproducible and dose-dependent manner. Next, it is evaluated in an animal model that represents at least some disease-relevant mechanisms. The highest level of validation lies in demonstrating that the modification of the target, e.g. blocking a receptor or inhibiting an enzyme, leads to the reversal of a disease symptom in a clinical situation.

In the near term, companies that specialize in validation technologies, such as knockout mice, antisense technology, proteomics, and especially RNA interference (RNAi) will play an important role. There are a number of methods used to validate a disease target. One method is to use model organism. Many genes and biological pathways are highly conserved and can offer insight into human disease states. So-called knockouts, usually mice that have had a selected gene deleted or its expression reduced, are used to validate the disease target's role in disease. Leaders in this field include Lexicon Genetics, Exelixis, and Deltagen. Other technologies have also proven useful in target validation include antisense technology, led by Isis Pharmaceuticals, neutralizing antibodies, and RNA interference (RNAi). Often multiple approaches must be evaluated.

Modern drug discovery also involves screening small molecules for their ability to bind to a preselected target and modulate a biological pathway in cells or organisms, medicinal chemistry, and lead optimization to improve efficacy, stability and safety of a drug. Leaders in this field include Pharmacopeia, ArQule, Tripos, Albany Molecular Research, Argonaut Technologies, Molecular Devices, Simulations Plus, and 3-Dimensional Pharmaceuticals.

Overall, molecular biology, the foundation of modern drug discovery and development, is moving toward a systems biology approach. This will involve cataloguing the workings of the cell in a quantitative fashion. Bioinformatics, which uses computer power to analyze the mass of data produced by modern medical research, will be the key to a deeper understanding of human health and disease.

As these drug targets are validated, the bottleneck may shift to developing drug compounds, which will favor different technologies. Protein Design Labs, Abgenix and Medarex use genetic engineered mice to produce humanized or fully human monoclonal antibodies. Vertex Pharmaceuticals, Structural GenomiX, and Syrrx use protein crystallography and structural studies for rational drug design. Applied Molecular Evolution, Diversa, and Maxygen use directed evolution technologies, which subjects proteins to random amino acid changes to select for desired properties. Neose Technologies uses its carbohydrate technology to add sugars to protein-based drugs And Sepracor uses chiral chemistry to eliminate the left- or right-handed molecules to produce a purer molecule with fewer undesirable side effects.

Modern medicine is moving away from a one pill fits all toward a personalized medicine which addresses the underlying molecular causes of an individual patient's disease. Pharmacogenomics correlates response to medicine with genetic variation and is the basis for the personalized medicine of the future. Genentech's Herceptin was approved to treat a subset of breast cancer patients where the Her2 gene is overexpressed. The company was already conducting Phase III clinical studies when the company realized that it did not have a marketable diagnostic test that physicians could use to select patients once the drug was approved for sale. The company began collaborating with Dako, Inc. to develop an FDA approved In Vitro Diagnostic (IVD). Herceptin was the first drug that was reviewed and approved by the FDA along with an IVD, Dako's in vitro immunhistochemical test for detecting the Her2 protein.

SNPs (Single Nucleotide Polymoprhisms, pronounced "snips") refers to the variations in the DNA that make each individual different and may explain why one person suffers a disease and another resists it. SNPs are the most frequent type of variation in the human genome with a density of more than 3,000 SNPs found in about 2.5 megabases of human genomic DNA. One example is sickle cell anemia, which is caused by the single change of an A to a T.

The National Institutes of Health has launched a $36 million, 3-year program to collect data on 50,000- 100,000 SNPs, a new goal in its Human Genome Project.

In drug discovery and development, pharmocogenomics will couple rational drug design to DNA- and protein-sequence analysis to develop custom pharmacological products based upon individual genetic traits. The computing power required to integrate such functionality into a high throughout drug pipeline is considerable. Leading companies in the pharmacogenomics field include Sequenom, Orchid BioSciences, Genaissance Pharmaceuticals, Compugen Ltd, Illumina, Nanogen, Third Wave Technologies, Interleukin Genetics, Luminex and DNAPrint Genomics.