DNA encoded chemical libraries (DECLs) is an emerging technology used for high-throughput screening (HTS). DECL technology is rapidly advancing, and a large market exists. DECLs exhibit several advantages compared to conventional small molecule libraries, leading to increased adoption by large pharmaceutical and small biotech companies alike.
DNA-encoded chemical libraries is an emerging technology for HTS
High throughput screening (HTS) is widely used in the biotech/pharmaceutical industry for the initial stages of drug discovery. During a high throughput screen, a large library of compounds are screened for hits with a desired activity with the potential to be developed into disease-altering drugs. These compounds can range from small molecules or RNA to peptides and proteins.
The majority of small molecule libraries contain mixtures of purified natural products, natural product extracts, and purified metabolites that are individually acquired or synthesized. Each member of a library is screened for its efficacy against a target of interest. After screening, the structures of hits are identified by mass spectrometry. The synthesis and screening of individual molecules has historically been an expensive and complex endeavor, requiring large amounts of target protein, a suitable bioassay, and expensive high throughput machinery and experimental design. Thus, screens that are designed in this manner are usually limited to less than one million compounds.
DNA-encoded chemical libraries (DECL) is an emerging technology in this field that aims to improve the drug discovery process by efficiently synthesizing and screening very large libraries of small molecules through the use of DNA barcodes. DECLs are generated from chemical building blocks that are conjugated to unique, short DNA barcodes. These building blocks are then combined to yield billions of small molecules covering a large chemical space. The majority of screening methods using DECLs utilize selection-based approaches, whereby the entire library is simultaneously screened against a target of interest, usually a protein, to isolate small molecules that bind to this target. The small molecules with the highest affinity for a target can then be identified by high-throughput sequencing of their conjugated DNA barcodes.
A large and growing market exists for high throughput screening technologies
The overall market for HTS is expected to grow from 12 billion in 2016 to 18 billion in 2021. The growth of this market is driven by the need to discover new and better drugs to combat the increasing incidence of life-threatening and emerging diseases. Additionally, drug approval rates have also increased dramatically this past year. In the U.S., the increase in approved drugs can be attributed to the increasing number of applications, streamlined processes for drugs that treat rare and life-threatening diseases, and better-designed clinical trials.
|X-Chem||Abbvie, Gilead, Janssen, AstraZeneca|
|Nuevolution||Amgen, Merck, J&J, Novartis, Almirall|
|Ensemble Therapeutics*||Boehringer Ingelheim|
|Philochem||Pfizer, Bayer, Abbvie, Servier, Janssen|
Large pharmaceutical companies are utilizing DECLs to drug the “undruggable”
There are several classes of proteins that are important in disease but are difficult to screen against using conventional small molecule libraries. These proteins have been deemed “undruggable”. “Undruggable” proteins comprise around 80% of human proteins and include ubiquitinated proteins and proteins found in large protein-protein interaction complexes. “Undruggable” proteins tend to have ligands with molecular weights beyond the chemical space covered by conventional small molecule libraries. DECLs contain compounds of higher molecular mass that cover larger surfaces of proteins, thereby more effectively interfering with protein-protein interactions. Thus, DECLs can overcome the limitations of conventional small molecule libraries in identifying hits for “undruggable” proteins. With so many “undruggable” targets, a large percentage of companies in the DECL industry have been able to establish lucrative partnerships and licensing agreements with large pharmaceutical companies to identify hits against unique sets of targets (Table 1). In fact, some pharmaceutical companies such as Janssen have established partnerships with multiple companies in the DECL industry (Table 1).
Smaller biotech companies can utilize DECLs due to low cost and ease of screening
While conventional HTS is widely used by pharmaceutical companies, smaller biotech aren’t able to participate in HTS efforts due to the high capital investment needed in setting up HTS laboratories. HTS using DECLs is cheap and requires a relatively small amount of space or specialized equipment. With DECL technology, generating an 800 million compound DNA-encoded library would cost approximately $0.0002 per compound, whereas creating and screening a library of 1 million compounds by conventional methods would cost approximately $1,100 per compound. Identifying the hits from a screen using high-throughput DNA sequencing is also much less expensive than mass spectrometry. Conventional HTS are performed in large facilities that house highly specialized equipment including thousands of microplates containing the library compounds, incubators for storing the microplates, and automated robots to perform the screens. A DECL can be stored in a single eppendorf tube, and no specialized automation equipment is needed to perform the screen. Due to its low costs and ease of screening, DECL technology has the potential to be widely adopted by these smaller entities. Indeed, the companies currently utilizing DECLs for HTS listed in Table 1 are all small biotech companies. Adoption of DECL technology should continue to increase with better screening protocols, validation methods, and software for sequencing analysis.
While the DECL market is currently highly fragmented, the high rate of technological advances could differentiate a subset of stakeholders from rest of the market
As an emerging technology, the methods for synthesizing and screening of DECLs are constantly being advanced by both academic labs and industry. This has resulted in a fragmented market with new companies entering the market at a relatively fast rate. The majority of entities entering the market are startup companies that have spawned from academic research labs. While this has led to many existing stakeholders employing different approaches to library synthesis and screening, none of the stakeholders have acquired a commanding share of the market.
There are still several bottlenecks of DECL technology that need to be addressed. The largest bottleneck for this technology is the reactions that can be used to synthesize and screen DNA barcodes, which must be DNA safe to prevent degradation of the DNA barcodes. However, this limits the diversity of small molecules that can be synthesized. As DECL technology matures, we may start to see the subset of stakeholders who are able to address these limitations differentiate themselves from the rest of the market.
Investors can benefit from a high return on investment
Historical IPO/acquisition of these companies at early development stages have yielded high returns for investors. Nuevolution IPOed for $30 million in 2015, the biggest of the year for biotech companies on Nasdaq First North. At the time, it already had several programs in the hit to lead development phase. Praecis Pharmaceuticals was acquired by GSK in 2007 for $55 million. At the time of acquisition, Praecis Pharmaceuticals had one program in clinical testing and one in the hit-to-lead development phase. Due to the growing HTS market and the increasing adoption of DECL technology, investors can expect to continue generating high returns at the time of exit.
DECLs are a promising HTS technology that has the potential to make a huge impact in drug discovery. DECLs are increasingly utilized for drug discovery due to the advantages of DECLs over conventional small molecule libraries. Because DECLs contain larger small molecules than conventional small molecules libraries, large pharmaceutical companies are utilizing DECLs to identify inhibitors of “undruggable” targets. Small biotech companies are also adopting the technology because of the low cost and ease of screening. Due to the rapid advancements in DECL technology, this market presents a lucrative opportunity for both new investors and stakeholders alike.