Monday, April 14, 2014

Welcome to 'The Wait'

With Tekmira sliding today 15-20% and the rest of RNAi, and in fact biotech sector, trading weaker by the hour, I will acknowledge the technical damage and view this cementing the end of the RNAi Therapeutics Revival Era (2011-2014).  The new 3-year segment can likely be called ‘The Wait’ as following various human proof-of-concept gene knockdowns, we have accepted that RNAi Therapeutics are real, but still would like to see first products approved to fully declare victory.

RNAi Therapeutics sentiment follows 3-year cycles with striking regularity: it all started with the 2002-5 Geek Phase, one of benign ignorance of the technology, and was followed by the 2005-2008 era of Irrational Exuberance when Big Pharma gave away money regardless of technical obstacles. This then foreshadowed the 2008-2011 era of Doubts and Despair when no matter how good the scientific news, it fell on deaf investor ears.  Finally, we are still all too familiar with the 2011-2014 Revival where those that persisted reaped life-changing rewards.

I was prepared for this sentiment change to occur, but not in so drastic fashion.  Also, that Putin invading the Ukraine, a senator writing a Letter of Ignorance to Gilead, and a new Chairman of the Fed stumbling in her first important speech would get the ball rolling was unexpected.  It would have made more sense for Arrowhead Research to first demonstrate gene knockdown with DPC before assuming the waiting mode.

For investors this means less reliance that the general RNAi Therapeutics sentiment will elevate stocks.  Instead, attention needs to be paid to each company’s clinical trial catalysts.  For companies it means to stay fiscally conservative and focus capital largely on expanding pipelines instead of the technologies at their disposal.  Fortunately, the healthy cash balances of a number of companies (Alnylam, Tekmira, Arrowhead Research, and Dicerna) mean that they can afford to do so and are shielded for the moment from the need to raise capital.  Product-oriented deals such as in HepB are always on the table to supplement the balance sheet.

Novartis revealing today that it has given up on its internal RNAi Therapeutics pipeline development efforts  was both surprising and not.  Not surprising since it is obvious that these tired Big Pharma R&D organizations have even failed just to copy the leading RNAi delivery technologies from pure-play RNAi Therapeutics companies.  With the exception to some degree of Merck, the RNAi work from Big Pharma that has transpired has been nothing short of embarrassing.  Surprising in that one would have thought that Novartis would take their 31 target picks and marry them to delivery technologies from either Tekmira or Arrowhead Research.

The question now is who will get the picks.  Although rapidly deteriorating in value, the picks would give a company leverage over the very Alnylam that licensed them to Novartis.  This is because Novartis enjoyed preferential gene target picking rights.


And finally, full disclosure, I in fact did sell.  Not that it makes any sense scientifically.  I do not, however, want to make the mistake of ignoring the fact that the market has changed and ride it down any further.  I will continue to follow the science and markets here on this blog and hope you will do well in spite of me.   This is a very difficult post, but I know that in the end I will be measured by my ability to forecast.

Friday, April 11, 2014

McSwiggen Patents not Fundamental

Alnylam recently issued a press release regarding the upholding of a European patent (the ‘McSwiggen’ patent EP 1423406) that it had inherited from Merck as a result of the $175M+ January deal.  Given that Alnylam called the patent ‘critical for the development and commercialization of all RNAi therapeutics’, I thought it would be worthwhile pointing out that while valuable, it is by no means to be considered a fundamental RNAi trigger patent. 

The reason is that the patent claims contain a number of important limitations.  Remember that for an RNAi trigger to infringe, it would need to fulfill each of the various specifications.  Here is the main claim with my annotations in red highlight:

1. A chemically modified short interfering nucleic acid (siNA) molecule that down-regulates
expression of a target gene by RNA interference (RNAi), wherein:

a. the siNA comprises a sense strand and a separate antisense strand wherein said
antisense strand comprises a sequence that is complementary to RNA of the target gene
and wherein the sense strand comprises a nucleotide sequence that is complementary
to the antisense strand,

b. each strand of the nucleic acid molecule is independently 18 to 24 nucleotides in length
and the siNA duplex comprises 17 to 23 base pairs;
This encompasses most canonical (Tuschl-type) RNAi triggers, but not Dicer-substrates for example (means it already does not apply to Dicerna’s and Arrowhead’s Dicer-substrate RNAi triggers)

c. 10 or more pyrimidine nucleotides of the sense and/or antisense siNA strand are
chemically modified with 2’-deoxy, 2’-O-methyl or 2’-deoxy-2’fluro nucleotides,

10 or more modifications (on pyrimidines at that) is a lot, but not unprecedented.  Tekmira’s use of RNAi triggers utilizes fewer modifications since they do not rely so much on them for stabilization purposes; however, conjugate approaches such as DPCs and GalNAc-siRNAs are usually heavily modified

with one or more phosphorothiate internucleotide linkages and/or a terminal cap molecule
at the 3’-end, the 5’-end, or both of the 3’ and 5’-ends, being present in the same or
different strand.

A single, terminal phosphorothioate linkage is often employed in RNAi triggers for apparent stability reasons, although I have not actually seen a study that this is actually beneficial; self-delivering RNAi triggers often use more extensive phosphorothioates in addition to an already heavy use of modifications.  ‘Caps’ are used for stability reasons and to increase ‘guide’ over ‘passenger’ strand loading specificity. This is a nice tool, but not essential. For example a UNA (usiRNA) modification at the 5' terminus would do the same.


In sum, the upheld McSwiggen patent has just too many modifications so as to present Alnylam’s competition headaches.  Most affected will be self-delivering RNAi triggers and RNAi trigger conjugates.  In fact, Alnylam may have needed the patent the most and I’m wondering whether it also needed it to do the deal with Genzyme-Sanofi.  Remember both the Alnylam-Genzyme and Alnylam-Merck deals were basically announced on the same day.

And no, this is no evidence that Alnylam's patent estate covers 'usiRNAs' as the company went to pains to point out in the press release.

Thursday, April 10, 2014

GILD by Association

Biotech stocks have suffered massive losses with the IBB biotech index down 20% over the last 1 ½ months.  This followed a sustained bull market with a 300% increase since the US Housing Bubble bottom.  RNAi Therapeutics stocks could not duck this trend and suffered similar, if not exaggerated losses: bellwether Alnylam down almost 50% since their $700M Genzyme deal, Arrowhead Resesarch down 40% since their all-time high, and even the most undervalued of them all, Tekmira, down a solid 30% off the pricing of their secondary barely a month ago.  Should investors worry?

The causes of the pullback in the biotech market can be attributed to at least three factors: 1) a general downturn in secular growth stocks that have done quite well recently; 2) worries that interest rates are on the upswing and could divert capital flow away from stocks with little or no current earnings; and finally 3) a sense that society will stop paying for expensive drugs. 

Although the era of ‘resource-constrained’ healthcare has long arrived in Europe, the fact that US lawmakers made an example out of HCV wonderdrug Sovaldi (sofosbuvir) as a wildly overpriced drug, sent shudders through the biotech investment community.  If a $84,000 price tag for a cure of HCV is deemed too much despite the fact that it will extend life by years for the average patient and save the healthcare system much more over the long-term in terms of reduced costs related to liver-related complications…then what about say orphan drug pricing for which $300-500k per patient every year has not become that uncommon?  To wit, orphan diseases represent a fertile ground for RNAi Therapeutics as illustrated by Alnylam’s phase III candidate for TTR amyloidosis, ALN-TTR02. 

‘Resource-constraint healthcare systems’ is certainly something that I occasionally hear here at the European Liver Meeting (EASL) which celebrates the very Sovaldi and general progress made in treating HCV, yet tries to deal with the problem of how to get it patients due to cost issues in light of the millions infected and that would be treated today if cost were not an issue.

Interestingly, nobody here criticizes the drug makers for overcharging.  I don’t think this is because they are paying for our lunches, but because the medical and long-term pharmacoeconomic and quality-of-life benefits of curing HCV are so obvious.  In general, I believe the Sovaldi issue will be short-lived and accelerate a transition to a value-based reimbursement system with the benefit of curtailing some of the drug pricing mis-behavior we have seen (you all know them).  However, beyond that, I expect that we will still be willing to spend much on our health and drug costs accounting for just ~10% of overall healthcare costs, the pharmaceutical industry should be able to make the case that innovative drugs that make a solid difference in patients' lives out to be rewarded financially.  Remember this when small, innovative biotechnology companies are undercapitalized to the point of becoming financially non-viable yet patients clamoring for new treatments.  RNAi Therapeutics was in that precarious position just 2 1/2 years ago and RNAi investors deserve every cent they raked in on the stock market when the sector recovered. Every cent.

If you look at the RNAi Therapeutics pipeline addressing the roots of and seeking cures for diseases ranging from the severe and orphan like TTR amyloidosis and solid cancers, to the chronic and debilitating like HBV and alcohol dependence, it will be RNAi companies that will stand first in line to benefit from the value-based cost model of healthcare.   The continued flow of clinical trial data (watch ARC520, TKM-PLK1, ALN-TTR02, and ALN-AT3 this year) should make that obvious and allow RNAi Therapeutics to break out from the biotech crowd and bounce back.  And even if the monetary policy makers increased interest rates, I don’t think it would be much in this deflationary environment, and a 1% short-term interest rate should not divert capital flow all that much.    

Thursday, March 27, 2014

As Ebola Spreads Fear in Western Africa, Pressure Mounts to Deploy RNAi Antiviral

A day or so following reassurances by the Guinean authorities that the Ebola virus outbreak had been contained and was under control, news is making the rounds of confirmed lethal cases in Conakry, the 2 million capital city of the country, and in neighboring countries in Western Africa.  With the death toll rising, the disease spreading internationally, and the virus paralyzing affected areas, pressure is mounting to call in an RNAi Therapeutic which has proven to be effective in the most stringent efficacy models possible.  66 are thought to have died from the disease by now, at least 4 of which are healthcare workers.

The therapeutic, developed by Tekmira Pharmaceuticals and funded by a $140M contract from the US Department of Defense, has shown 100% post-exposure survival in monkeys infected with the otherwise highly (90%) lethal Zaire strain of the virus.  This is the same virus ravaging through Western Africa right now.  Because of this, the Ebola therapeutic which targets two viral sequences simultaneously and which entered phase I in-man studies earlier this year, there is a very high likelihood that TKM-Ebola will be applicable in this situation.

Only days ago, TKM-Ebola was bestowed fast-track status by the FDA.

Under normal circumstances, licensure of TKM-Ebola would follow the Animal Rule.  According to the Animal Rule, treatments for diseases for which it is either impractical or unethical to conduct efficacy studies, can be approved by the US FDA if sufficient efficacy can be demonstrated in stringent animal models (monkeys here) and human safety at corresponding dose levels.  Ebola obviously is a candidate for the Animal Rule since experimental infections of humans cannot be done ethically and natural outbreaks are so rare and unpredictable.

Following the demonstrations of animal efficacy, the ongoing single- and multi-dose ascending phase I in-man study for which the single-dose phase appears to have already concluded is designed to confirm such safety.  To make sure that the findings are robust, this is typically followed by larger animal efficacy and human safety studies.  At this point (~2016/7), the FDA would make its decision regarding licensure which would lead to stockpiling orders from the US government for preparedness against bioterrorist attacks.


Arguments for deployment of TKM-Ebola in Western Africa

Although TKM-Ebola has not completed the formal requirements under the Animal Rule, it is fair to assume that TKM-Ebola, the most advanced Ebola anti-viral in development, will do more good than harm in a disease without alternatives besides supportive care.  With a lethality of 80-90%, I would certainly take my chances.

A deployment would serve at least two purposes.  Firstly, it would give us a chance to confirm the effectiveness of the RNAi Therapeutic in actual humans.  In addition to the scientific value, if I were the US government, I would be eager to take advantage of the unique opportunity at testing efficacy before spending billions on an agent for which there is only theoretical human efficacy.

Secondly, having TKM-Ebola as a standby in hospitals would help restore some calm and confidence, especially among the healthcare workers which need to contain the outbreak.  It is also most likely that from a logistics point-of-view, this is the population where TKM-Ebola would be most effective as it is here where the disease can be detected and drug administered early enough for the treatment to be effective (within 2 to 3 days following exposure).

In order for TKM-Ebola to have maximal impact, manufacturing would have to be scaled up (I estimate ~2 months for the production of large lots) and the logistics around diagnostics and treatment administration put in place.  Nobody knows whether the current outbreak will spread further, but it is better to be prepared in case it does.  As the suspected Canadian case this week illustrated, Ebola is now just a plane ride away from us. 


Watch out for the April 1 presentation by Dr. Ian MacLachlan from Tekmira on the latest data for TKM-Ebola which will be in front of a sell-out crowd at the FILO 2014 conference in Galveston, Texas.

Saturday, March 22, 2014

Endocyte Success to Catalyze Interest in Folate-Targeted RNAi Therapeutics

One of the big stories on Wall Street this Friday was Endocyte and their folate-targeted drug vintafolide. All on the same day, Endocyte received a positive opinion by the CHMP in the EU, paving the way towards marketing authorizations of vintafolid in ovarian cancer in this important market.  Simultaneously, it announced encouraging phase II data in non-small cell lung cancer (NSCLC) in which the drug, in combination with chemotherapy agent docetaxel, met the primary endpoint in extending progression-free survival (PFS).

I hope I got all of that right.  What is more important in the context of RNAi Therapeutics and this blog is that folates have been considered by the field as a promising targeting agent in the past and the successes by Endocyte and progress in RNAi delivery could lead to a new push in that direction.

The idea behind vintafolide is simple.  Since non-targeted small molecule chemotherapeutics inhibiting basic cell division processes cause widespread toxicity in normally proliferating tissues (e.g. GI tract, bone marrow), often times preventing their use at therapeutic dosages, targeting such agents specifically to cancer cells should greatly increase their therapeutic window and utility.  In the case of vintafolide, the chemotherapeutic agent (DAVLBH) is targeted towards the folate receptor that is overexpressed in many tumors as tumors have an increased demand for folates to support their growth.

Following binding of the folate drug-conjugate to the folate receptor, the conjugate is taken up by the cancer cell through endocytosis.  Once in the endosome, the folate falls off the drug which in turn is then free to diffuse into the cytoplasm to inhibit cell division by binding to tubulin. Meanwhile, the folate receptor recycles back to the cell surface.  All analogous to ASGPR and galactose in the liver.

One challenge with folate-targeted RNAi Therapeutics that I have heard a number of times, is the concern that folate receptor expression is not sufficiently uniform to get at all/most the cancer cells.  This assumes that in order to be successful, a cancer RNAi Therapeutics would have to reach the majority of cancer cells.

Interestingly, vintafolide is used in combination with a companion diagnostic comprising folate with a molecule that can be imaged.  By first running the imaging test, Endocyte has been able to focus their studies on those patients which express folate receptor on all their tumor masses.  Importantly, apparent anti-tumor activity correlated with folate receptor expression.  Such enrichment strategies could obviously also be applied to folate-targeted RNAi Therapeutics.

Imaging tests, however, would not be able to address folate receptor expression heterogeneity within a tumor mass.  It would be interesting to know to what degree vintafolide activity was restricted to the cell that has taken it up or whether it could also act on by-stander cells.

RNAi Therapeutics companies that could take an interest

I can remember Alnylam-related OTS presentations before 2009 that looked at simple folate-siRNA conjugate delivery with promising localization data.  Knockdown efficacy, however, seemed limited. 

This is not surprising given the absence of endosomal release chemistries in those molecules.  Endosomal release of receptor-targeted RNAi Therapeutics could obviously be addressed by Arrowhead’s DPC technology.  A folate-targeted single molecule DPC would be my front-runner in realizing the potential of folate receptor-targeting for RNAi Therapeutics. 

Curiously, Merck has partnered with Endocyte on vintafolide and as we know had been busy copying delivery technologies by Arrowhead and Tekmira.   It would therefore greatly surprise me if Merck had not looked at folate-targeted RNAi Therapeutics, which might strengthen Alnylam’s effort in developing folate-targeted DPCs following their acquisition of Merck's RNAi assets in January.

In addition to the conjugate companies, liposomal players such as Tekmira and Dicerna could get in on the folate action as well.  This is because receptor-mediated endocytosis is believed to play an important role in the cellular uptake of liposomes that are not constitutively positively charged (àApoE-LDL receptor).  By adding folate to the mix, one could a) extend the utility of a liposomal cancer RNAi Therapeutic to cancers overexpressing either receptor, and/or b) enhance cellular uptake by interacting with 2 receptors simultaneously on cancer cells that express both receptors.

Friday, March 21, 2014

Further Possibilities for Arrowhead Phase I Dose Extension

Last night’s speculations on the reason for the phase I dose extension of the HBV RNAi phase I trial by Arrowhead Research was actually positive: they are tackling the potency issue presented by the 2mg/kg dose. 

In addition to further increase dose, it could also involve prolonging drug infusion times which we know, based on Alnylam’s GalNAc data, could optimize hepatocyte uptake by the GalNAc-targeted DPCs.

Regardless, you have got to question why extending beyond 2mg/kg had not been part of the original plan and why the study extension has not been publicly discussed, e.g. in the latest conference call.   

Extending the study to further potency is the most rose-colored scenario that one can draw.  The other scenario would have to do with safety concerns, possibly raised by regulators.  As I had discussed before, for DPC, especially the 2 molecule version, the tox-limiting element is the melittin-like peptide.  Melittin is derived from bee venom and although the MLP is not the identical sequence as melittin, there are theoretical concerns around allergic reactions.  In general, having peptides involved raises a new set of immune issues, especially when you require 2mg/kg of them.

Of note, one of the exclusion criteria for the phase IIa HongKong trial is excluding those with a history of allergy to bee venom, indicating that this has been an issue with regulators:
·         Has a history of allergy to bee venom or history of hypersensitivity reaction requiring an emergency visit to a physician or hospital and/or requirement for treatment with steroids and/or epinephrine.

So how about adding transient immune suppressant to the mix- e.g. an anti-histamine?  Nothing spectacular, a safety precaution, but once again highlighting the benefit of Arrowhead Research making advances with the single-molecule version, also for applications outside the liver (see today’s positive news around Endocyte and folate targeting for cancer as just one example of where such research could be directed at).


Potency matters, and wouldn’t it be ironic that as Tekmira is weaning itself off immune suppression (à dose-intensive TKM-EBOLA trial), on the back of developing more potent formulations, Arrowhead Research, not known as a public supporter of liposomal RNAi delivery, is adopting such?  

Thursday, March 20, 2014

Potency Concerns and Tekmira Could Be Spurring Extension of Arrowhead HBV Study

As picked up by sooner_or_later55 on the InvestorVillage mssage board on Arrowhead Research, there have been changes to the clinicaltrials.gov entry for the phase I study of ARC520.  These indicate that the study has not been concluded as I and probably most others had assumed following the release of top-line data in October 2013 and the more detailed results presented at HepDART 2013 last December.


At that point, 36 subjects had been treated in the single-dose dose-escalating study up to 2mg/kg.  In this healthy volunteer dose-finding safety study, the most significant event possibly related to ARC520 was a case of urticarial rash of moderate intensity.  In general, the safety profile was quite encouraging for the first test of DPC delivery technology in humans.

According to the clinicaltrials.gov entry, the target enrollment was upped to 48 subjects in February 2014.  The company has more or less confirmed the renewed activity in this email to an investor ('Linda').

So why is there still activity in a trial we thought had been wrapped up?  

After all, the 2mg/kg upper dose informed the dose selection for the single-dose study in HBV-infected patients in Hong Kong which is about to commence dosing any day.

My favorite hypothesis is that it has to do with concerns around efficacy.
 
As I had discussed in my companion HBV blog before, 2mg/kg may not be enough for the type of 1log+ knockdown activity that may be necessary for the Hepatitis B surface antigen (HBsAg) knockdown-immune reactivation hypothesis to really kick in.   3, 4, and especially 6mg/kg could make a big difference according to the preclinical studies by Arrowhead Research in achieving much greater HBsAg knockdowns (it is important to focus on the dose of the melittin-like peptide when reading these papers). 

And for this indication, the deeper and the more rapid the knockdown, the more patients to benefit from such a treatment.  Say with an 80% HBsAg knockdown (my prediction for the outcome of the single-dose Hong Kong study for 2mg/kg which is the approved top dose in the study), an HBV RNAi therapeutic can achieve a cure rate of 10%.  Similar to the interferons, the best we have right now for curing HBV, but with presumably much improved tolerability.  However, with 90% knockdown (half the HBsAg left to immune suppress compared to 80%), this could jump to 30% cure rates, with 95% knockdowns to 50% etc etc.

I already hear you cringe that all this is speculation.  To this, I respond that not only all of life and particularly drug development and the stock markets are a speculation, but that it is informed by biological intuition.  You either sufficiently lift your foot off the (immune) brake or not (--> threshold).  Throw in the fact that the set point where the brakes have been released will vary due to the variability in how much individuals’ immune systems have been repressed and damaged by HBsAg, you probably end up with a sigmoidal knockdown-response curve. 

Tekmira competition

As we consider the importance of knockdown efficacy in absolute terms, it will also not have been lost on Arrowhead Research that other companies, most notably Tekmira, has been gearing up with their own HBV RNAi and antisense knockdown drug candidates.
 
I call out Tekmira because I not only own the stock, but because of the value of knockdown potency in this indication and the fact that SNALP LNP delivery is and will remain the most potent gene knockdown technology for the foreseeable future.  SNALP LNP potency has been validated in humans with over 90% target gene knockdowns in the ALN-TTR02 study using 2nd generation technology and it is reasonable to expect that Tekmira’s most recent 3rd generation formulations will exceed that.

Although genes vary by the ease of knocking them down, I expect HBV to be an easier target than TTR given that its genes are expressed from an episomal template, i.e. not from copies integrated into the genome.   

Add to this potency advantage the decade-long experience of Tekmira working on HBV and other viral applications (e.g. HCV, Ebola, Marburg) of SNALP RNAi (see Nature Biotech publication from 2005 using 1st generation technology), which includes the design of escape-resistant and pan-genotypic RNAi triggers and should also manifest in a more thoughtful/thorough trial design, it is not a stretch to imagine that it was partly the Tekmira competition that is spurring Arrowhead Research to presumably be testing the feasibility of higher doses now.  

Moreover, the first-mover advantage of Arrowhead may not be as big as widely assumed since Tekmira could be moving directly into single-/multi-dose ascending studies in HBV infected patients in early 2015, just months behind, if at all, the Arrowhead multi-dose phase IIb study.  


The prospect of higher cure rates will not only inform the RNAi drugs a patient will be taking in the future, it may also divert investments today in an area that is rapidly gaining in investor and pharmaceutical interest.  After all, even just 10 million of the ~300 million HBV patients that would require treatment for medical reasons and could afford it would make for a ~10 million*$20k = $200B market, and that could well be an underestimate...  
By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.