Wednesday, April 28, 2010

mdRNA Wants to be Opportunistic, Does not Rule out Further Participation in Sector Consolidation

Yesterday, I had the opportunity to talk to the combined mdRNA management team about the maturity of their science, intellectual property, and corporate development objectives. This is a particularly fascinating topic for students of corporate strategy on the eve of their merger with trans-kingdom RNAi company Cequent Pharmaceuticals which combines two ends of the RNAi technology spectrum: chemistry-driven synthetic siRNA therapeutics with bacterially mediated RNAi.

In this context, it may not come as too much of a surprise that the company is positioning itself to further explore the various corners of the RNAi and also RNA Therapeutics space (e.g. antisense approaches such as for microRNA inhibition, a possibility also pointed out here in a comment by former CEO of Nastech/mdRNA Steven Quay) and take advantage of technologies that they come across and perform particularly well in their hands. For example, like myself and I believe an increasing number of other people in the sector, mdRNA agrees that DNA-directed RNAi could be very powerful for neurological applications and therefore be of interest.

I would add, however, that mdRNA’s ability to further participate in M&A activity is limited by their challenging financial situation and would always have to take place in a setting that, like was the case with Cequent, adds cash to its reserves. One scenario to get on top of that issue would be to achieve their goal of reaching one significant Big Pharma partnership around the middle of the year and then, depending on the share price reaction raise some additional capital on the public markets, although management was keen to stress that this of course would have to occur in the least dilutive fashion possible.

In general, I was a bit positively surprised by their down-to-earth assessment of the maturity of mdRNA’s technology, unlike the impression that I had got at times when often very similar press releases had been issued touting the company's progress. The company is now focusing their internal development pipeline on the bladder cancer program where it has reported potent gene knockdowns with intravesical administration of DiLa(2) liposomes. Systemic delivery programs, meanwhile, are not imminent and largely the domain of their 4 active early collaborative efforts.

When asked for the reason of this slight adjustment of pipeline prioritization, it became clear that the rational development of systemic (liposomal) delivery can be a challenge. While they have mastered DiLa(2)-mediated knockdown in rodents, non-human primates (NHPs) appear to be quite a bit more tricky. They were quick to add, however (rightly so, I believe), that claims by a number of other companies about knockdown in NHPs would often have to be taken with a grain of salt. In my mind, the difficulty in making rapid progress in expanding systemic liposome delivery to primates could be a price to pay when one is quite broadly oriented instead of focused on core technology strengths. On the other hand, compared to a number in Big Pharma they are still advanced in that regard and attractive enough as at least an early stage collaborator. Moreover, the bladder cancer program where they seem to have seen the most promise and on top of that the Cequent pipeline should keep the company more than occupied with clinical and near-clinical development programs.

As alluded to before, the reason why Big Pharma appears to be interested in working with mdRNA is because mdRNA, as an RNAi-focused company, may be able to provide their partner with general RNAi Therapeutics expertise. MdRNA may disagree with me here officially, but it has also been my view that, more than IP, it is this general platform know-how that may lend itself as a launch pad into RNAi Therapeutics for a Big Pharma entrant worth maybe $100-150M? A similar case could be made for Silence Therapeutics and RXi Pharmaceuticals.

Intellectual property, of course, was then also discussed, and, as you would have expected, mdRNA believes to have broad freedom-to-operate (FTO) in RNAi trigger, especially usiRNAs, and liposomal delivery. As evidence for this, they cited outside patent counsel that attested them to have such FTO, and a Roche that apparently did extensive due diligence before taking, what I believe to have been a UNA-focused license to RNAi triggers a year ago. Furthermore, there are a number of patent applications being prosecuted now that may see the light of day. It will probably remain an area of disagreement between myself and mdRNA that while it is possible to see such patents being issued, it is important to keep in mind that a patent still only gives you the power to exclude, but does not give you automatically FTO which is particularly relevant for more narrow patents, e.g. a patent that covers a double-stranded RNA containing at least one UNA, but that would still fall structurally under the more general Tuschl designs.

In light of this, it is possible that Roche paid mdRNA to play in UNA-modified siRNAs, with UNA being a “modified nucleotide” [this is btw not how mdRNA wants to define it, but that’s the way I define it :)] with admittedly interesting biophysical characteristics that could lead to unanticipated beneficial effects for siRNA potency and specificity, some of which apparently is in the publication pipeline. Maybe it is because I am still too much of an academic at heart, but I still care for those publications as they are the best way to be scientifically credible in the eye of a potential suitor. If the patent examiner can be convinced of the beneficial properties of a UNA in an siRNA, just as Silence Therapeutics was able to convince at least two examiners about such properties for the Atu-siRNA modification pattern, then Alnylam may not be able to exploit UNAs without mdRNA’s permission, the loss of which to Alnylam would be debatable (there are a lot of other modifications to be explored). A similar difference in opinion between myself and the company applies to their liposomal formulations and the use of cationic/titratable lipids and possibly (not discussed) formulation methods, although some of this may be too premature to speculate on as we have yet to see the eventual formulations.

In summary, mdRNA is certainly not afraid of the challenges ahead as it hopes to leverage its proven adaptability to be an opportunistic RNA(i) Therapeutics investment vehicle. While some differences in opinion exist, I certainly wish them well and am quite hopeful for their FAP and bladder cancer clinical candidates, both as product opportunities per se and what RNAi Therapeutics can learn from them.

It is the first time that I publish such an interview on this blog and still need to learn how journalists manage to come up with all those quotes (are they recording their interviews, or reconstruct quotes from memory?). Instead, you were served with a highly ‘interpreted interview’ and I will be happy to provide space here for the company should they feel that I misrepresented their views.

Friday, April 23, 2010

Recent Mipomersen Publication Questions Company Credibility

As you may remember, I had become quite bullish about ISIS the stock for the potential of its lead drug candidate, the ApoB-antisense inhibitor mipomersen for the treatment of hypercholesterolemia, to surprise to the upside. Based on the combined phase I and II data, the recent phase III data in the homozygous and heterozygous familial hypercholesterolemia populations appeared to have been on the lower end (~25-30% LDL-c reductions) of what I thought might be the true efficacy of mipomersen and maybe influenced by the genetic background of those patients. More importantly, the rate with which patients from these earlier studies were supposed to have entered the open-label extension studies and the apparent absence of increased safety liabilities with consequent prolonged dosing made the extent of the analyst scrutiny of the liver enzyme elevations appear overly alarmist.

Well, so I thought and was waiting for the release of the data from the phase III trial in the patients with severe hypercholesterolemia, the patient population with arguably the largest commercial potential for mipomersen, when, without much, or should I say any fanfare, a paper (Akdim et al, 2010) on a phase II study for which top-line data had been announced in a press release in November 2007 came out. I have followed biotech long enough now to know that companies like to put their topline data in the best possible light which is usually followed by the subsequent revelation of a few warts here and there. In light of the published data, however, I found in this case the take-home message of the press release to have been sufficiently misleading to warrant this blog entry and take back some of my optimism with regard to mipomersen…both efficacy-wise and, more significantly, with respect to safety.

The November 2007 press release which can be found here reported on the efficacy of ApoB and LDL-cholesterol lowering following 13 weeks of treatment at the important 200mg/week dosage which forms the basis for the current registration trials to be 42% and 48% reductions, respectively. What struck me a little bit as odd at the time, but interpreted as rather a sign of strength of mipo’s safety, was that no trial-specific safety data were offered. Instead, the safety data in that press release was an ‘integrated safety analysis’ comprising all the mipomersen studies until that date which were largely short-term studies.

This analysis claimed that, while on treatment, only 3% of the more than 250 patients exposed to mipomersen had experienced ALT elevations of 3-5x upper-limit of normal (ULN), the same percentage as in the combined placebo group, and none experienced more than 5x ULN. Taking into account also the follow-up periods (‘entire study period), the numbers would increase to 5% (placebo) and 7% (mipomersen), a slight, but not worrisome increase it would seem. Only by studying the tables, one would have noticed that there was one case of >5x ULN that apparently occurred during the follow-up of dosing part of the study (‘entire study period’). Injection site reactions that, as we now know, poses a number of development challenges for ISIS/Genzyme (soon daily injections?), were mentioned as a side-effect but characterized as ‘cosmetic inconveniences’ of no medical concern.

The fact that there were 2 more patients in the Akdim et al. paper than in the press release for the 200mg cohort could be due to many things (including drop-outs), but it is quite unfortunate that with the enlarged patient group LDL-cholesterol lowering suddenly would drop from the 48% in the PR to 36% in the paper. Well, 36% should be a degree of knockdown that the company should be able to live with, but sets off alarm bells that maybe some of the other data could have been presented in an overly positive light as well.

And indeed this is my conclusion after seeing the safety data: 5 out of the 10 patients (granted a small population, but this is 50%, nothing like the 3-7% mentioned in the press release!) in the 13-week 200mg cohort had an ALT increase of >3X ULN, 4 of which on 2 consecutive occasions! One patient even experienced an increase of >5x ULN and subsequently dropped out before all planned doses had been administered (which was then included in the ‘entire study period’ group, but not on-treatment group). Also not mentioned in the original press release was the fact that the ‘cosmetic’ injection site reactions applied to almost all patients receiving mipomersen (much, much less in placebo obviously) and that these accounted for 2 drop-outs in the 10-patient 200mg cohort.

Everybody, of course, has to form his/her own opinion about how much to rely on press releases reporting top-line clinical trial data. The way these phase II data were handled, however, rocks my confidence in how much to trust management’s contention that the wide-spread mipomersen concerns are ill-founded. The company does not have to be surprised that its credibility in the investment world is what it is and will be difficult to repair without structural changes. This is unfortunate, because I believe ISIS has otherwise made an admirable contribution to the development of oligonucleotide-based therapeutics.

PS: The purpose of this blog entry is not beat up on ISIS for the sake of it. Unfortunately, attempts to resolve my concerns first with the company directly failed as an email to ISIS investors relations (info@isisph.com) two days ago remained unreplied to.

Monday, April 19, 2010

Follow the Court Proceedings of the Tuschl Tussle

The ‘RNAi Litigation Blog’ is a service by John Leavitt and his colleagues Doug Naab and Scott Lloyd from the technology Research and Advisory firm Nerac that provides a great deal of background information on the Tuschl case and real-time summaries and insights of the court proceedings. As you will remember, this case touches on the ownership of the fundamental Tuschl I and II RNAi trigger patents and of which the outcome could decide what kind of economics Alnylam will be able to extract from its IP and what type of workaround strategies Alnylam’s competition will have to adopt (primers on the Tuschl Tussle and the potential fallout can be found here and here).

The most recent entry on the RNAi Litigation blog was on a hearing held on April 12 about Whitehead’s and UMass’ (the defendants) motion to dismiss the plaintiffs’ (Max Planck and Alnylam) First Amended Complaint. A lot of the hearing seem to have concerned Zamore’s assignment of his rights to the Tuschl I invention to UMass which the plaintiffs strongly feel Whitehead was contractually obligated not to have allowed. After all, it is UMass’ involvement in all of this which makes this case so important because UMass then decided to go it alone and essentially licensed all of the Tuschls most importantly to Sirna Therapeutics (now Merck). This could very well substantially deprive Alnylam of the economic benefits of its, what it believed to be exclusive rights to Tuschl II. To me, it actually seems quite fantastic how UMass believes that the one month that Zamore worked at UMass until the first filing of Tuschl I would now entitle them to the entire Tuschl inventions. Should the plaintiffs prevail in the assignment question alone, then much of the risk to Alnylam’s future business dealings would be taken off the table, unless of course events would escalate in such a way that both the Tuschl patents explode because the USPTO declared the patents invalid because of mishandling of inventorship. The defendants first line of defense is to claim statute of limitations on the assignment question to which the plaintiffs responded that they only became aware of the fact that Whitehead allegedly deceived them in their recent discovery and that they were first damaged in 2007 as Tuschl II ran into problems at the USPTO because of the way Whitehead prosecuted it.

There was an awkward moment in the hearing when the judge asked why Sirna/Merck was not part of the case as it appears that overlooking for a moment the few million in royalties that UMass may enjoy, it is Merck that stands to lose their $1B investment should they end up with a therapeutically useless Tuschl I. It appears, however, that UMass will have to bear the brunt instead because it apparently told Sirna/Merck that they were able to provide access to the inventions described in both the Tuschl patents. Maybe not surprisingly, Merck (‘outside pressures’) also appears to be the reason why attempts to settle this case have failed miserably.

The next important milestone in the case seems to be which counts will eventually be admitted. Unfortunately, it seems as if the judge is not keen at all to delve into the technical details of the case and would rather let the USPTO agonize over it. I am afraid, however, that in order to understand and solve any of the counts at hand, she would eventually have to refresh her high-school biology...

Well, instead of my second-hand account, why not bookmark and visit the 'RNAi Litigation Blog' here directly.

Sunday, April 18, 2010

RNAi Therapeutics More Relevant than Ever

If there ever was the impression that the pharmaceutical industry could afford not to pursue RNAi Therapeutics with urgency, this could not be further from the truth- at least not if you consider Roche a bellwether of the industry. Severin Schwan, who once served as the leader of the Roche Diagnostics division before becoming Roche's CEO, set the tone of this year’s Roche Investor Day by stating that the challenge the industry faces is to capitalize on our exponentially increasing understanding of the molecular basis of disease by being able to target more than the 100 out of the roughly 2,000,000 proteins in our bodies that mankind was able to develop in all its history.

This begs the question of where exactly the bottleneck lies. Is it true that small molecules and monoclonal antibodies alone will not be able to significantly expand on the 100 targets? If the answer is at least a partial ‘yes’, then the industry cannot afford to not invest in RNA(i) Therapeutics as the technology that virtually opens up the entire genome as drug targets.

The limitation in target space is quite obvious for monoclonal antibodies. While they have proven a great new class of therapeutics, they cannot address the majority of proteins that happen to reside inside cells. To be clear, there is a lot of innovation going on in monoclonal antibodies, including the development of ever more optimized and also ‘armed’ antibodies, but a lot of this has to do more with life-cycle management of existing MAbs than exploring new target space. Sure, with more insights into disease, new extracellularly accessible targets will emerge, but I do not see this alone sufficient to sustain the pipelines in the next 20 years. Of note, being in his early 40’s means that Dr. Schwan is one of the few CEOs that may actually be measured during his tenure against his long-term vision of drug development, rather than merely against his ability to squeeze short and mid-term value out of the current pipeline.

The limited target space of MAbs is actually also something that drove Genentech’s decision (now fully owned by Roche) to go against industry trends and adopt small molecules as a technology platform. By focusing on only a few select, but important cellular pathways rather than working superficially on many, a strategy that has really borne fruits, new attractive genetically defined targets have emerged that were not within the grasp of MAbs.

Certainly, there is room for novel exciting small molecule approaches for therapy, but their ability to expand on the druggable space is fundamentally limited by their cross-reactivity. To be fair, RNAi Therapeutics also have their off-target challenges, but I would submit that by off-targeting a random set of genes, which hopefully will teeter out in genomic noise, rather than structurally related, and functionally cross-talking GPCRs, kinases, phosphatases, proteases etc, there is less risk for confounding phenotypes, especially if you can weed out the most obvious unacceptable off-target profiles of RNAi Therapeutics early on with genomic profiling technologies.

So while safer and better MAbs, the exploitation of new major disease pathways also with small molecules, and the rapid growth of the emerging markets should drive the growth of Roche for the next 5-10 years, they are well aware that in order to substitute this growth they need new platform technologies, especially RNAi Therapeutics, and given the timelines, the time to invest is now, just as they invested into MAbs and PCR in the early 90’s when the precise commercial timelines of those technologies were still very much uncertain. And when it comes to developing a new platform, the quality of the science is paramount, and it is therefore not a coincidence that Roche has chosen Alnylam and Tekmira as its closest outside collaborators in that effort.

What is unique to Roche is that they have a very substantial foothold in (technology agnostic) diagnostics which allows them to lead the personalized medicine effort that aims to maximize the therapeutic benefit of a drug, thereby lowering clinical trial failure rates and justifying premium pricing in front of payers. If you had wondered what ever happened of the personalized medicine ‘hype’, it (not the hype) is already a reality. It seems that for virtually every drug in pre-clinical/early clinical research, Roche Pharma and Diagnostics are now collaborating to develop drug response markers and companion diagnostics. It is therefore only a matter of time until they come out on the other end of the drug approval process. Importantly, by seeking to understand the molecular basis of a ‘disease’ in a particular patient, this trend directly plays into the strength of RNAi Therapeutics as the key players in a disease do not care whether they are druggable or not. In fact, I find it ironic that there are actually some pharmaceutical companies, even some major biotechnology companies that use RNAi as a tool for target discovery that would limit their screening libraries to siRNAs that target only the so called druggable space. Not only are they missing out on a more complete understanding of a disease process in general which would also feed back positively on small molecule and MAb-based drug development, they will also miss out on many, if not most important targets. Once again, they risk being left behind by a company that sees the Big Picture and not only preaches innovation but actually lives it…Roche.

Wednesday, April 14, 2010

‘Physiological Liposomes’ for the Transfer of Small Silencing RNAs

There have now been a number of reports demonstrating the surprisingly stable presence of microRNAs in extracellular compartments such as blood and urine. This area, however, has long struggled to gain widespread acceptance in the RNAi community because of concerns that they could just represent microRNAs associated with cellular debris. On the other hand, their occurrence in increasingly better defined 30-100nm lipid nanoparticles that are generated by intracellular membrane budding and then exocytosis outside of cells strongly argue for a physiological role for these ‘exosomes’ with implications for small RNA diagnostics and therapeutics.

Speculation that exosomes could function as intercellular transport vehicles for RNAs, especially microRNAs, is relatively recent. Before this, they were largely thought to play a role in immunomodulation (both stimulation and induction of tolerance), pathogen spread, and for cancer cells to manipulate their microenvironment for example by setting free matrix metalloproteinases that would facilitate their metastatic spread (for a review, see Schorey and Bhatnagar). The recent focus on microRNAs is justified, however, because small RNAs are clearly enriched in intact form in these particles. Moreover, evidence for actual cellular RNA transfer has been presented by showing that mRNAs in exosomes from one cell type can be translated in a second recipient cell (Valadi et al, 2007), and that small silencing RNAs (microRNAs, siRNAs) can be similarly transferred and mediate modest silencing (Kosaka et al, 2010).

My initial interest in exosomes was founded on the prospect for microRNA diagnostics based on fluids instead of sometimes difficult-to-obtain biopsies. A physiological role for exosomes would therefore add to the confidence that such microRNAs would be of sufficient abundance in such fluids and that their content may be subject to less variability than might be expected for degradation products. Overall, despite Rosetta Genomics’ failed attempt to develop a blood-based screening test for colon cancer, the theoretical foundation for further pursuing such microRNA Dx is quite strong now.

The natural spread of silencing from one cell to another could also be relevant to RNAi Therapeutics since delivery of a large amount of small RNAs to one cell may facilitate the silencing in a neighboring cell through the exosomal pathway. This may be particularly useful for DNA-directed RNAi approaches where vector transduction of a target tissue may not be complete, but once transduced, a cell is able to generate more than sufficient amounts of siRNAs. I can vaguely remember now-defunct ddRNAi company Nucleonics making such claims which, ironically, actually may have hurt their credibility. Although I would susupect that such an effect would not be terribly strong, it could certainly contribute to more homogeneous silencing especially with highly potent siRNAs. This spread would be analogous to a process referred to a systemic silencing well known for organisms like plants and worms, but for which a homologous process has not been believed to exist in humans.

Finally, the study of ‘physiological liposomes’ may allow us to learn a trick or two for the design of RNAi Therapeutics delivery technologies, especially those based on liposomes. Ceramide for example has recently been shown to be important for the small RNA transfer function of exosomes in a study apparently co-founded by Japanese company Dainippon Sumitomo which has also recently expanded their early collaborative efforts on RNAi Therapeutics with Silence Therapeutics, including Silence’s lipoplexes and liposomes. In addition to studying the lipid composition of exosomes, other areas of interest might be the mechanism of cell uptake and membrane fusion. Maybe after all, RNAi delivery may not be as ‘unnatural’ and therefore daunting as once thought.

For a link to a dedicated website on exosomes click here.

Wednesday, April 7, 2010

Alnylam with Dominant RNAi Trigger IP Estate, but Woppmann not that Critical, Really

At a time when we get inundated with various intellectual property claims regarding RNAi triggers, it may seem difficult to tell the wheat from chaff to the degree that investors are now being routinely told that the IP issue is so complex that it is better left to the experts. Nevertheless, because Alnylam’s press release today about the issuance in the US of a patent from the Woppmann patent series supposedly ‘broadly’ covering RNAi Therapeutics has the potential to add to the confusion, I will still attempt to shed some light on the importance of this patent.

This is how the granted claims were summarized in the press release:

1) a double-stranded RNA (dsRNA) of any length having effectiveness in inhibiting a target gene by RNAi;

2) “overhang” and “blunt-end” design features and certain nucleotide pair motifs; and,

3) a 19-28 nucleotide region of the antisense strand that is complementary to the target gene.

It is therefore useful to look up the actually issued claims, and compare....*

At first glance, assertion 1) would appear to cover essentially all types of double-stranded RNAi triggers. The crux of the matter, however, is in the qualifier ‘having effectiveness’. It is true that the granted siRNA structures indeed describe what should make for effective siRNAs. This, however, does not mean that alternative effective siRNA structures are not possible. It is for example quite easy to design around siRNAs of which the first nucleotide of the overhang (which has to be at least 2 nucleotides) has to be a purine (A or G) and has to include at least a ‘GC’ sequence motif. In the case of a 2 nucleotide overhang (the industry standard), this means that any overhang except for ‘GC’ would get around the patent (GC is one out of at least 16 2-nucleotide combinations of which there are many more if one includes non-standard nucleotides). I am not aware that ‘GC’ have any particular advantage (well, at least the patent examiner could be convinced of that), or at least that it would be difficult to find potent siRNAs with non-GC overhangs.

This restriction almost makes it irrelevant to discuss the merit of claim 2 in the press release. But since a similar claim had created similar confusion when the European Woppmann patent issuance was announced two years ago, it is important to point out that fully blunt ended siRNAs are not covered: in addition to having to fulfill the above overhang rules, the Woppmann siRNA would have to have at least one overhang.

The ‘certain nucleotide motifs’ may allude to the requirement that one end of the covered siRNA must contain either a terminal GC base-pair or at least two of those in the last 4 base-pairs. This actually is very similar to the famous Zamore differential end-stability/ strand selection rule, to which Silence may have a claim, and of real scientific value. But again, given the above restrictions, this is more of an academic point.

Alnylam is considered the 800-pound gorilla when it comes to RNAi trigger IP, and rightly so. In fact, most competitors would give an arm and a leg for such a patent that gives broad freedom to design effective siRNAs. It is therefore difficult to understand why the company characterizes the patent in the press release as if it had broad power to exclude, while the actual claims are much more specific than that. By this, it risks to lose the trust of an already wary investor base, quite confused anyway by the barrage of press releases. Worse than that would be if Woppmann would be considered to substitute for the Tuschl patents should the lawsuit not end in Alnylam’s favor. This is not to say that it is any worse than the PR policies of a number of other competing companies in the space. However, to maintain its leadership position in RNAi Therapeutics, it is important to maintaining the credibility of a company that has suffered recently.

Disclaimer: I am not a trained intellectual property expert, and if somebody has concerns about the validity of my interpretation, he/she is free to raise those in the comments section.


*You can do so yourself by going to the following website: http://portal.uspto.gov/external/portal/pair

After you manage to decipher the password, search for patent application ‘10/560,336. Then go on the ‘Image File Wrapper’ tab and click on the latest document type ‘claims’. This way you will be able to see the claims that should look very closely or identical to what will be issued.

Monday, April 5, 2010

The ISIS-GSK Deal, a Model for Future Drug Development?

At a time that Big Pharma continues to slash internal research and early-stage development, it is not surprising to witness GSK buy access to such capabilities from ISIS which has proven quite effective therein. In fact, efficient drug discovery and early-stage development is one of the major benefits of developing therapeutics based on RNA gene silencing, whether antisense or RNAi. Moreover, the deal in which GSK provides ISIS with 5-6 targets that apparently cannot be addressed by conventional means (small molecules, recombinant proteins and monoclonal antibodies), highlights the attraction of using RNA Therapeutics to address hitherto undruggable targets. Some of these targets are in the rare disease field which is rich with molecularly well defined targets (e.g. single-point mutations, gain-of-function mutations, repeat expansions etc) that are particularly well suited for RNA Therapeutics and that has developed into a high-value area for the pharmaceutical industry.

By paying ISIS $35M in upfront now and another potential $20M in milestones for each candidate up to phase II, GSK gives more or less free rein to ISIS to create drug candidates against these targets and gets the option to fully license them without having to enter into a competitive bidding contest. While this may preclude in many cases the types of financials that ISIS achieved in their Genzyme deal for mipomersen, ISIS benefits that somebody already has a vested interest in licensing the targets it is working on. Selecting the right targets is often a challenge for smaller biotech companies that aim to eventually license drugs to Big Pharma. In fact, ISIS, which has declared that it wants to remain a small-sized biotech company that will not develop drugs on their own past phase II, had a few drug candidates handed back to them recently and it remains to be seen what kind of interest some of their drug candidates they came up with on their own for metabolic disease and CRP will garner.

The deal naturally triggered discussions what it might reveal about the dynamics within the RNA Therapeutics industry. Clearly, GSK has a significant interest in RNA Therapeutics as also evidenced by their relationship with microRNA Therapeutics company Regulus in which ISIS holds a ~50% interest and which is physically located at ISIS. In their conference call, ISIS’ management hinted that this prior exposure to ISIS antisense technology is what made GSK choose ISIS (and not Alnylam) as their hub for RNA Therapeutics development.

I agree that this deal, unless it is largely for mechanisms of action that are not aimed at gene silencing or for therapeutic areas for which RNAi Therapeutics have not fully caught up yet, makes a deal between GSK and Alnylam, as a follow-up to their Sirna/Merck relationship that expired about 1 1/2 ago, a little bit less likely. It also puts GSK, maybe feeling a bit burned after their increasingly controversial acquisition of the early-stage platform, anti-ageing company Sirtris Pharmaceuticals, into the category of Big Pharma that wishes not to be left behind in potentially revolutionary drug development technologies, but not make an immediate large financial commitment through in-house research. It is unlikely, however, that an Alnylam would have an interest in accommodating such plans as, like all successful stand-alone biotech companies today, it aims to eventually become an integrated pharmaceutical company, and for it to get there, Roche-like large non-exclusive platform licenses are the preferred way of funding this ambition for now.

Friday, April 2, 2010

mdRNA-Cequent, and the RNAi Therapeutics Consolidation Wave Keeps On Rolling

Only 3 months after the Silence-Intradigm merger, synthetic siRNA Therapeutics company mdRNA just announced that they would combine their RNAi Therapeutics assets with that of trans-kingdom RNAi company Cequent Pharmaceuticals. Unlike the Silence-Intradigm merger, however, this merger is less about synergy, more about complementing each others’ strengths, and by this make it successfully through a biotech climate that is only now starting to thaw for platform technologies like RNAi Therapeutics.

Technically an acquisition by mdRNA of Cequent, the transaction benefits mdRNA in that the access to Cequent's cash enable it to finance operations until the end of the year, possibly long enough to convince one or two of their early-stage Big Pharma collaborators to pay $10-20M in upfront payments each for a platform license. Equally important, the transaction transforms mdRNA into a clinical-stage company, with one trial start imminent and possibly 3 additional INDs by the middle of next year (an inflammatory bowel disease program by Cequent and two cancer programs by mdRNA) that should be considerably helped by Cequent’s proven expertise in moving innovative drug candidates into the clinic. This profile, with a stretch-goal of being ready to commercial in 2014 CEQ-508, Cequent’s clinical candidate for the prevention and treatment of colon cancer in familial adenomatous polyposis, or FAP, an orphan disease (reviewed here). This more mature profile may allow the combined company to reach new types of investors.

On the other hand, similar to Intradigm, this transaction provides Cequent’s VC investors with what in the current biotech climate can be considered a successful exit by valuing Cequent at $44M at the time of the announcement, although the present value should be somewhat less following huge volume trades earlier this week. This is also the result of the feat of being able to grow a healthy pipeline of drug candidates in just 4 years, one that is based on a rather unorthodox technology that uses bacteria as delivery agents for the RNAi trigger to sites such as the GI tract (the current focus), genitourinary tract, and skin.

The technology diversification provided by tkRNAi gives the New mdRNA a wider choice of development options. It would be good, however, to keep nourishing the molecular biology of tkRNAi as I believe that within a short period of time, through the wonders of bacterial genetics, significant technology improvements could be achieved. With up to 9 employees contributed by Cequent and about 50 by mdRNA, it remains to be seen to which degree this can be realized in the new company.

I believe both sides and their investors are well served by the outcome and it should be a case where the whole is greater than the sum of its parts. About 60 employees is also about the critical size to be attractive as a partner for Big Pharma with sufficient depth in the various disciplines (RNAi trigger, delivery, regulatory etc), but not too big for it to become too big a cash-burn burden. But this is no time for mdRNA to celebrate for too long. We’ll have to see what Michael French and the new team have up their sleeves next. Meanwhile, there is more potential for consolidation in RNA(i) Therapeutics and mdRNA-Cequent should not be the end of the story during this phase of the global and industry-specific economic cycle.

Disclosure: I have been an advisor for Cequent Pharmaceutical and will only discuss publicly available information. My views on mdRNA’s technologies and tkRNAi can be found by searching this blog with keywords like ‘mdRNA’; ‘Nastech’; ‘Cequent’; and ‘tkRNAi’.

By Dirk Haussecker. All rights reserved.

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