Wednesday, June 20, 2018

Small Molecules and Gene Therapy Muscle Out Oligonucleotide Therapeutics

Over the last two days, breathtaking data were reported for the treatment of two severe, inherited muscle-wasting diseases affecting children.  The investigative agents were a small molecule splicing modulator and a gene therapy both of which appear to achieve superior results compared to approved Oligonucleotide Therapeutics agents. 

The developments highlight the risk that while gain-of-function changes (here by splice modulation) may have proved to be low-hanging fruits for Oligonucleotide Therapeutics, they, unlike gene knockdown approaches, face increased challenges from other technology platforms.

Small molecule splicing modulation for Spinal Muscular Atrophy (SMA)

In 2011, Roche started collaborating with PTC Therapeutics on small molecule splice modulators for the treatment of SMA.  The idea is to screen small molecules for their ability to bring about changes in RNA processing that would hopefully be gene-specific enough so as not to cause widespread off-targeting.

I had always considered this to be a monumental, if not insurmountable task.  This is because a given splicing event brings together a set of proteins that each in turn also function at other genes.  So surely a small molecule that may bias splicing from SMN1 to SMN2, as does antisense oligonucleotide SPINRAZA from Ionis and Biogen through highly specific base pairing, would also affect a range of other genes.

If that were not enough of a challenge, a small molecule carries the extra baggage of being more widely available across tissue types such that off-targeting is a risk to not just the CNS as with SPINRAZA, but many other cell types where there may be no benefit from SMN upregulation.

Accordingly, the first compound in the PTC-Roche collaboration to enter clinical development, RG7800, had to be discarded last year due to retinal tox concerns.  Another small molecule competitor, branaplam from Novartis, had similarly been put on hold due to tox concerns although this compound has resumed development late last year.

It was therefore amazing to see updated results from the FIREFISH study of the follow-on compound RG7916 in type I SMA infants.  They show that 90% of children had an improvement in the CHOP-INTEND measure of physical functioning after 6 months on the drug.  The results are particularly impressive considering that treatment had been initiated relatively late compared to the new standard of care with SPINRAZA and the soon-to-be-approved gene therapy by Novartis (àAvexis).   

Not only that, there had been no treatment discontinuations due to safety issues with RG7916.

Given that SPINRAZA has to be given intrathecally while RG7916 can be given orally, and given that both the gene therapy and the orally available RG7916 appear to be somewhat more efficacious than the oligonucleotide, the focus of Biogen and Ionis should now be on testing combinations of SPINRAZA with both modalities.  Ideally, there is added efficacy from using the agents together either because due to higher achievable SMN protein levels and/or due to complementary biodistribution (note: the value of SMN increases outside motor neurons is debated).  If not, the SPINRAZA franchise may have a limited shelf-life.

Fake-it-‘til-you-make-it Sarepta with gene therapy breakthrough

The other piece of great news for families dealing with neuromuscular disease came yesterday at the Sarepta Therapeutics R&D Day. 

To wit, Sarepta had used dubious data and a lot of political lobbying to get the controversial exon skipper eteplirsen approved under accelerated approval.  While delaying the confirmatory study that is supposed to be part-and-parcel of an accelerated approval, Sarepta has been raking in billions in sales and added market capitalization.  This has allowed the company to build a veritable DMD powerhouse with a number of candidates that look much more promising than ordinary PMO-based eteplirsen.  They include peptide-conjugated PMOs and especially gene therapies.

If you are involved in drug development, better get used to the dubious morals of the industry.  If things go well, you behave like the paragon of virtue, if things don’t go so well you fake it until you get another chance at succeeding.  I digress…

Before the initial gene therapy data were to be presented by Jerry Mendell from Children’s Nationwide of SMA fame, I had dreaded the thought of having a hyped-up R&D Day being about divining the meaning of a biopsy slide or two on the barely-above-background expression of the microdystrophin transgene.

However, what was presented was anything but borderline.  Unlike with eteplirsen where we were dealing with debatable 1%-type absolute expression levels, there was robust microdystrophin expression: ~75% of cells expressed the transgene (by IF) with roughly 30% absolute expression of microdystrophin relative dystrophin from a normal person (by Western blot).

Not only this, the microdystrophin was functional at the molecular level as judged by restoring dystrophin-related protein complexes serving to protect the muscle from damage by acting as shock absorbers.  Accordingly, CK levels in the blood, a marker of muscle damage and elevated in children with DMD, were robustly (9x) and uniformly lowered in all 4 boys between the ages of 4 and 7.  Add to this the obligatory before-and-after videos and there is little doubt already at this relatively early stage already (~1-3 months after gene transfer) that AAVrh74.MHCK7.microdystrophin is a powerful agent applicable to essentially all types of DMD.

On the safety side, there were considerable, but transient and manageable increases in liver enzymes.  This was to be expected, however, considering the very high doses of AAVRh74 needed to achieve widespread transgene expression in muscles throughout the body and treating physicians know to look for it.

If the safety holds up and expression continues to be long-lived, AAVrh74.MHCK7.microdystrophin could render many exon-specific oligonucleotide splice modulators obsolete. The duration of action is the most concerning issue to me at this point given the attendant cell turnover and attendant risk of losing episomal gene therapies in patients with muscle damage.    

Tuesday, June 19, 2018

Arrowhead Cuts Trial Short And The Market Loves It

Yesterday, Arrowhead Pharmaceuticals announced that it is cutting short its phase I study of ARO-AAT as it had observed what appeared to be maximal drug activities at lower than predicted doses.  ARO-AAT is the GalNAc-targeted investigational RNAi agent for the treatment of alpha-1-antitrypsin-related liver disease.  This just 3 months after it had initiated dosing in the (healthy volunteer) study.  

The stock market greeted the announcement, sending shares up another 24% turning it into a 10-bagger in the span of one year!

Interpretation of AAT program status

This is what was said to describe the general results seen so far:

We have escalated above a dose that we believe achieves maximal activity, and all doses to date appear to be generally well-tolerated.”

And this was the trial design:

AROAAT1001 (NCT03362242) is a Phase 1 single- and multiple-ascending dose study to evaluate the safety, tolerability, pharmacokinetics, and effect of ARO-AAT on serum alpha-1 antitrypsin levels in healthy adult volunteers. The study includes 7 cohorts in which 16 subjects receive placebo and 28 subjects receive single or multiple doses of ARO-AAT at doses of 35, 100, 200, or 300 mg. Additional cohorts were planned at a dose of 400 mg, but were deemed unnecessary based on observed activity at lower doses.

The company said that data from the study would be presented at AASLD late this fall.  However, based on the original study design involving single and multiple dose cohorts of 35, 100, 200, 300, and 400mg, we can roughly infer the following from the press statements: single and multiple dose cohorts of the first 3 doses up to 200mg had been completed (= 6 cohorts) and the 300mg single-dose cohort had started when they determined that 300mg is already above where maximal activity is reached.  Although the statement does not exclude the possibility that maximal activity appeared to have been seen already at 100mg, we can conservatively 200mg (~3mg/kg) as the dose with which the company plans to move into patients.

In monkeys, the company reported that AAT expression in the liver was almost completely abolished following 2 doses of 3mg/kg spaced 28 days apart based on last year's AASLD poster.

Moving pipeline and technology speedily along

This fast-tracking of the program is consistent with Arrowhead’s overall rapid-fire execution in bringing new programs into the clinic and then use modern, parallel-cohort trial designs and disease experts to move them rapidly along in the clinical development bowel. 

Its goal- and there is every indication they will make good on it- is to bring around half a dozen clinical candidates into the clinic in just over year.  If that weren’t challenging enough for a small biotech company like Arrowhead, these programs are not limited to being targeted to a single tissue (the liver), but could also involve the lung and cancer.

In a way, the liver pipeline is being moved along in a similar fashion to when Alnylam selected its current late-stage clinical crop of candidates 5 or so years ago in a cook-off between different target genes.  Once the technology is ready for a certain tissue, you focus on populating the pipeline with related candidates.  This allows you to grow your market cap and become an established biotech player.  With a market cap now well above $1B, Arrowhead certainly is close to reaching that dream.  It only needs to add to balance sheet cushion.


On the other hand, claimed breakthroughs not in just one (lung), but two (à cancer) additional tissue types, make me wonder whether Arrowhead has started to overpromise again in a fashion similar to the DPC experience when it and investors chose to whistle over safety signals ('DPC has no side effects').  It is understandable if RNAi companies dangle the carrot of additional tissue types in front of the investor community- investors need dreams to hang their hats on- but the speed in light of the size of the company make me wonder if they are taking a short-cut or two too many and investors choose to ignore red flags again.

How times have changed: a year ago, still overly punished by the markets for the DPC fiasco, an cutting-a-trial-short announcement like yesterday’s would have sent shares down further.  Now, Arrowhead is getting the benefit of the doubt.

Knowing that a statement like ‘all doses to date appear to be generally well-tolerated’ can mean pretty much anything bar a drug-related patient death, I choose to remain neutral with regard to the news and will await the AASLD data until further judgement on the quality of Arrowhead’s approach.

Friday, June 8, 2018

Alnylam's Primary Hyperoxaluria RNAi Drug Clears Patient Hurdle

Alnylam today provided an update on its clinical program of Lumasiran for primary hyperoxaluria (PH), an ultra-rare disease of organ damage and failure due to elevated levels oxalate (here for OxalEurope presentation slides).

The new data include safety and efficacy from all three studied dose cohorts (1 and 3mg/kg monthly, 3mg/kg quarterly) and involved early-stage PH type 1 (PH1) patients without end-stage renal disease and systemic oxalosis.  Accordingly, RNAi knockdown of the target glycolate oxidase (GO) enzyme reduced (urinary) oxalate by ~2/3.

Importantly, this was uniformly achieved across all dosing cohorts, perhaps with somewhat less inter-patient variability for the 3mg/kg cohorts.  Accordingly, oxalate levels were reduced in all patients below a threshold where natural history studies point to an almost complete protection from progression to ESRD. 

Of note, despite the caution that RNAi competitor Dicerna Pharmaceuticals had voiced that GO as a target might be prone to a rebound effect- based on the preclinical observations that oxalate reductions only kick in after profound, ~85% GO gene knockdown is achieved- the new data provide no evidence for this.  Instead, quarterly dosing with 3mg/kg was as good as with monthly dosing of the same dose, consistent with the sustained target-gene knockdown profiles seen with most current GalNAc-RNAi candidates.

The safety profile was unremarkable for a disease like this.  The only obvious drug-related side effect were transient injection site reactions in 2 out of the 9 patients receiving the investigational agent.

With these data in hand, Alnylam is about to embark on a registrational study of Lumasiran in ~25 PH1 patients.  This study will further include younger patients and those with more advanced disease than in the present study.  Given the similarity of the oxalate knockdowns across the cohorts, it is difficult to predict what the dose and dosing schedule will be, but testing both 1mg/kg and 3mg/kg quarterly could be a good idea.

Dicerna competition

Lumasiran is not the only gene knockdown agent in the clinic.  Its closest competitor, ~1.5 years behind based on the May 30 announcement that the 1st PH patient has now been dosed, is Dicerna Pharmaceuticals’ DCR-PHXC.  DCR-PHXC is differentiated from Lumasiran in that it targets LDHA instead of GO1 and is expected to have a more linear target gene knockdown-oxalate knockdown relationship.  

It is also applicable beyond the PH1 patient population, i.e. also for the less severe (and much less commonly diagnosed) PH2 and PH3 forms of primary hyperoxaluria.

Lumasiran has thus now set a high bar for the commercially currently most valuable patient population.  It will be thus be important for Dicerna to improve diagnosis rates of PH2 and 3 as it intends to embark on a pivotal study in 2019.

Monday, May 14, 2018

Busy Week in Oligonucleotide Therapeutics

Ionis-Akcea ApoCIII Panel

Alnylam CNS Aspirations

Arrowhead Cardiovascular Data 

Dicerna Deal Pre-Announcement

It’s been a very busy week in the Oligonucleotide Therapeutics space, so I thought to memorialize the most important events of last week with this blog entry. 

Difficult Volanesorsen Panel

The highlight of the week certainly was the Advisory Committee on Volanesorsen (VLN; commercial name WAYLIVRA) for the treatment of Familial Chylomicronemia Syndrome (FCS) hypertriglyceridemia.  Here, the FDA, experts in the field, and sponsor Akcea Therapeutics were struggling to assess the risk:benefit of the ApoCIII-targeting phosphorothioate antisense gapmer. I had previewed the panel here.  

As I had expected, the majority voted yes on whether VLN should be approved for FCS.  

While following a very strict diet can be a powerful risk mitigator in FCS, it greatly affects quality of life and alone cannot absolve patients from the risk of pancreatitis attacks, abdominal pain and a range of other morbidities related to having very high triglyceride levels in the blood.  Because VLN is by far the most effective agent for lowering triglyceride, I would have been very surprised in this era of patient choice if a panel of experts wanted it to be out of reach for them.

Unfortunately, aside from on-target pharmacological efficacy, VLN performed very poor in terms of safety and tolerability.  Moreover, the trial was too small and ill-designed to tease out real disease benefits such as a lower pancreatitis attack rate and improved quality of life.  Not even a trend in favor of VLN could be discerned here.

As a result, the discussion was mostly centered around what an effective risk mitigation program (REMS) could look like to prevent dangerous bleeding events caused by the thrombocyte-(= platelet-) suppressing activity of VLN, the adverse event that was singled out as most concerning. 

Unfortunately, the practical experience with VLN showed that even closely following platelet counts and stopping VLN administration or adjusting dosing frequency in response to dropping levels are not able to stop such bleeding risk from continuing.  As such, it is to be expected that VLN will get onto the market without a really satisfactory REMS and that patients may have to accept the bleeding risk, knowing that treating physicians will be ready to administer steroids and/or IVIG should platelets drop to extremely low levels.

Due to thrombocytopenia and the range of other safety and tolerability issues and safety monitoring demands, there is a real possibility that VLN will mostly be a placeholder until safer ApoCIII-lowering alternatives can get approved.  In light of what we have learned from mipomersen and TTR-lowering drug Inotersen, the most negative impact of the VLN data is probably on the potential of systemically administered phosphorothioate antisense oligos outside of the liver.  While GalNAc for the liver and potentially GLP-1 peptides for pancreatic beta cells should keep required ASO levels substantially below the 200-300mg/week dose known to cause the tox and tolerability issues, the prospect for tissues, including muscle, that require systemic ASO administrations is less bright.

Having said that, there could be very simple solutions such as minimal reductions in the extent of phosphorothioation that miraculously can get rid of most of these side effects.  In the absence of a reliable animal model system, however, learning the rules in the clinic could take quite a few more years.  

Alnylam announces CNS aspirations

Another highlight of the week in Oligonucleotide Therapeutics was Alnylam’scoming out in applying RNAi for gene knockdown in the central nervous system (see presentation here). 

While CNS had been an area of interest of the company in its early days (Huntington’s Disease collaboration with Medtronic, a Parkinson’s program), the direct intrastriatal injection results and delivery approaches with old RNAi trigger formats were far from promising for clinical translation.  Not surprisingly, CNS had dropped off the corporate radar.

With the lesson learned from GalNAc-RNAi for the liver, most notably that of the importance of high chemical stabilization and ligands to maximize both oligonucleotide concentration and cellular uptake, and the surprisingly broad CNS biodistribution seen following intrathecal administration of antisense oligonucleotides by Ionis, it was only a matter of time that companies in the RNAi space would re-visit ‘old tissues’ for RNAi.  So with Arrowhead stoking interest in its RNAi efforts in the lung and Alnylam now in the CNS, RNAi is on the cusp of shedding its perception that it is ‘only for the liver’.  And unlike Ionis and Akcea, the RNAi space has street cred so that the capital markets are likely to buy into those claims.

To make matters worse for Ionis, Alnylam is now predicting that (similar to the liver), knockdown with its RNAi molecules should be longer-lived and much better tolerated than the phosphorotioate competition (from Ionis and Biogen): 

'Expect superior potency, duration and systemic safety profile vs. ASOs'

In light of the limited though promising public data (single rat intrathecal injection of 0.9mg of RNAi trigger causing substantial, ~75% target gene lowering for at least 1 month, the latest time point measured), it is too early to decide whether that’s true.  More information on this subject should, however, emerge over the next 2 years by which time Alnylam plans to file its first IND for the CNS.

Arrowhead highlights cardiovascular pipeline

Arrowhead Pharmaceuticals seems to have repaired relationships with investors following its DPC Waterloo and is increasingly getting credit for its GalNAc-based turnaround.  Outside of its lead programs in HBV and AAT-related liver disease, it is cardiovascular disease indications that are the focus of these efforts.

So at ATVB, the company presented an update on these programs with a focus on ANGPTL3 for the treatment of a range of lipid-related abnormalities, especially hypertriglyceridemia.  Of note, first monkey data showed that the administration of therapeutically relevant 3mg/kg triggered robust, 80% target gene knockdown lasting for more than 4 weeks. 

With INDs/CTAs planned for both ANGPTL3 and ApoCIII as well as potentially Lp(a) by partner Amgen anticipated before the end of the year, 2019 promises to be a clinical data-rich year for RNAi in cardiovascular disease.

Dicerna kind of pre-announces AAT-deal as investors get ready to sell shares

Much of what is going on behind the scenes at Dicerna is currently only being reflected by its SEC filings.  

On May 4, large shareholders who had supported the company throughout its litigation with Alnylam and now stand to be richly rewarded for it (~5x gain currently) had their shares registered for sale in an S-3 filing.  These shares account for a whopping roughly half of the shares outstanding.

To bring all investors up to speed, such a registration necessitates the filing of a prospectus.  Interestingly, this document was very specific in that the company now expects to partner the mystery orphan-disease candidate it has been talking about for quite some time this quarter:

We plan to seek a risk-sharing collaborator for this program before we file an IND and/or CTA, which we expect to be prepared to file in the second quarter of 2018.

The document also removes any doubt that the secret target of that program is alpha-1-antitrypsin:

The protein causes progressive liver damage and fibrosis, in some cases leading to cirrhosis and liver failure, and we believe that silencing of the disease gene will prevent production of the abnormal protein and thereby slow or stop progression of the liver fibrosis. Greater than 100,000 people in the United States (“U.S.”) are believed to be homozygous (i.e. having identical pairs of genes for any given pair of hereditary characteristics) for the mutation that causes the liver disease, and at least 20% of those people, and potentially a significantly higher fraction, are believed to have liver-associated disease as a consequence.

So if you were mesmerized by the stocks recent strong performance on modest volume, here’s a conspiracy theory: the company is helping supportive investors to get out on a high volume day that an AAT deal announcement would precipitate.  And spending a few bucks to run the shares up is well worth the investment. 

If the events unfolds as I speculate, it is yet another powerful reminder it is not sufficient for investors to merely follow the press releases, but carefully read the regulatory filings, even if they may seem dry and overly long. 

Addendum 15May18: on its quarterly conference call, Dicerna clarified its convoluted statement in the prospectus regarding the timing of partnership and IND of the mystery candidate. Accordingly, the candidate will be ready for IND/CTA filing by the end of Q2. An actual filing, however, will have to await a partnership which the company now guides for the second half of this year.  Apparently, they are currently in talks with 'more than two' potential partners.

Another focal point of the conference call Q&A session was the rationale behind the single-dose trial with DCR-PHXC for primary hyperoxaluria and how they want to use that as the basis for designing a pivotal registrational, multi-dose trial in 2019.  In this regard, contradictory statements were made.  On the one hand, the CMO contended that as seen with the more advanced program by Alnylam, most of the oxalate lowering can be seen following a single dose already so the company will have a good idea as to the necessary dose and dosing frequency for the pivotal trial.  On the other hand, the CEO predicted that repeat dosing is likely to be necessary to get an idea as to the actual oxalate-lowering potential of a given dose.  Here, I side with the CEO, but keep asking myself why on earth are they taking so much scientific and regulatory risk with a single-dose trial? 

Tuesday, May 8, 2018

FDA Cautious on Triglyceride-Lowering Antisense Drug WAYLIVRA

Today, the FDA released review material for the Advisory Committee Meeting on Volanesorsen (trade name WAYLIVRA) this Thursday.  WAYLIVRA has been developed for the lowering of serum triglyceride level in patients with a genetic form of severely elevated triglycerides, familial chylomicronemia syndrome (FCS).  Briefing Docs provide valuable insights as to the safety of drug candidates which are often glossed over by sponsor companies leading up to such regulatory events.

Echoes of KYNAMRO

The last time we had this opportunity in the phosphorothioate antisense space was in 2012 when the subject was the ApoB-lowering KYNAMRO.  Like KYNAMRO, WAYLIVRA is a second-generation 2’-MOE phosphorothioate-backbone oligonucleotide that was given at high doses in the registrational trials (200mg for KYNAMRO, 300mg for WAYLIVRA). 

It should therefore not come as a surprise that the safety and tolerability of WAYLIVRA was quite poor. In particular, not only did the at times drug-induced severe thrombocytopenia cause considerable bleeding concerns, the sponsor Akcea and parent company Ionis Pharmaceuticals have no idea about how to mitigate such risk.  Dose adjustments and increased platelet monitoring apparently did not change the thrombocytopenia risk substantially and apparently are still being made to this date without much rhyme or reason.   

In addition, there were the flu-like symptoms, liver enzyme elevations, renal tox, even a case of anaphylaxis causing around half of what should be highly motivated patients with FCS to drop out from the clinical studies.

This time it’s potent though

Fortunately, unlike KYNAMRO, WAYLIVRA has robust potency.  For those that managed to stay on the 300mg weekly dose, serum triglyceride lowering in excess of 70% was seen (reflecting ~90% target ApoCIII-lowering; cf. ~20% target-gene lowering with KYNAMRO).  Even the FDA had to acknowledge here that this is an unparalleled achievement.

But the positives end here already, with the FDA noting that in contrast to Akcea’s/Ionis’ claims there is no reliable reduction in measures of actual morbidity of FCS patients such as pancreatitis attacks, abdominal pain, and general well-being.  In fact, on most measures there was not even a numerical benefit favoring WAYLIVRA.  This, the FDA agrees, is also a function of the low number of patients available for such ultra-orphan disease studies.

The FDA admits that lowering of the biomarker serum triglyceride, even to much lesser extents than WAYLIVRA, has formed the basis for approving other drugs for hypertriglyceridemia-related disease.  In light of this, I expect WAYLIVRA to receive a favorable panel vote on Thursday on the condition that access to WAYLIVRA is strictly limited and safety tightly monitored (à REMS).  It apparently scares the FDA that while FCS has an estimated prevalence of 1 to 2 in a million, up to 1 in 600 have very high triglycerides resembling FCS.

Having said this, I am not quite clear why there should be different risk/benefit threshold with regard to the triglyceride-related morbidity for FCS and conditions resembling FCS as long as these other patients have exhausted options to treat the underlying causes for their particular hypertrigliceridemia.  As such, I believe the market potential estimates ought to be dramatically increased for WAYLIVRA.

WAYLIVRA competition

It is already clear, however, that WAYLIVRA will have a limited shelf-life.  Hot on its heels is a GalNAc-conjugated in-house competitor (ApoCIII-LRx) which has shown triglyceride lowering approaching that of WAYLIVRA, but at 5-10x lower dose levels, less frequent dosing and, crucially, with supposedly none of the worrisome safety issues of WAYLIVRA.  A phase III study of that compound is planned for 2019.  By that time, an RNAi GalNAc compound by Arrowhead should also be well in the clinic setting up ApoCIII-lowering to become a substantial market for oligonucleotide therapeutics by expanding the market well beyond the FCS population.   

Monday, April 23, 2018

Dicerna Focuses Operations Following Settlement With Alnylam

Last Friday, Dicerna and Alnylam announced that they had settled all ongoing litigation between the parties just as the acrimonious fight was about to court. 

Settlement terms
As part of the settlement, Dicerna will pay Alnylam $25M in stock and cash and drop its anti-competitive practices counter-suit against the RNAi behemoth.  In addition, Dicerna has agreed to not pursue certain targets/indications (see discussion below).  In return, Alnylam will drop its trade secret lawsuit it had filed on grounds of suspected GalNAc-conjugate trade secret misappropriation in the wake of Alnylam’s acquisition of the Merck RNAi assets in early 2014.

Litigation background
Allegedly, ex-Merck employees who had been hired by Dicerna had taken along competitively advantageous information that Alnylam claimed that it paid for.

Personally, given the timing and fuzziness of the litigation, I had always believed that Alnylam primarily filed the lawsuit to drain a much smaller, but direct competitor of vital financial resources.  In particular, even if these ex-Merck employees took with them information important to Alnylam, Merck obviously didn’t protect such knowledge as expected for trade secrets.  Moreover, Dicerna’s application of GalNAc-RNAi conjugate looks extremely different from that of Alnylam.  Even a more negative outcome should therefore not have adversely affected Dicerna's ability to further develop its technology.  

Coming out from underneath the litigation cloak
Still, this strategy had almost worked out.  Ironically, it was Alnylam’s own success in the clinic (à primarily Patisiran phase III APOLLO data last fall, but also GalNAc-related data) that had provided Dicerna stock with sufficient strength for the company to be in a position to ward off the existential threat posed by the litigation: $25M just 15 months ago would have been a mortal blow to ~$50M market cap minion Dicerna.  Today, the $600M market cap makes the $25M almost immaterial.

Nevertheless, based on the extremely bullish market reaction to the deal (up close to 40% following announcement of the settlement before settling the day at +18%), I believe that an important facet of the deal has been widely underappreciated.  Specifically, the fact that Dicerna had to agree not to pursue certain targets could completely change the face of this company. 

'Dicerna will be restricted in its development and other activities relating to oligonucleotide-based therapeutics directed toward a defined set of Alnylam targets, for periods ranging from 18 months up to four years.'

Instead of a broad pure-play GalNAc RNAi company, Dicerna now probably needs to be considered a 5-or-so development candidate company for which the end game will be its sale to a larger company.  Except for the long-promised deal on the mystery candidate (AAT?), this reduces expectations for future strategic blockbuster deals.

Disclosure: Especially in light of the target selection restrictions, I view the settlement as incrementally negative for Dicerna and expect the market to realize the same soon.  Following Friday's strong move to the upside, Dicerna is a short-term conviction short with a $10 near-term price target.  Also expect Alnylam to sell the 2M million Dicerna shares almost as soon as it receives them (please read comments section below for correction).  Long Alnylam.

Friday, April 20, 2018

Ionis Re-Sells Neuro Assets to Biogen for $500M and Improved Terms

This morning, Ionis Pharmaceuticals rattled my world by announcing an update to its neuro parnership with Biogen.  After recovering from a shock reaction thinking that $6B market cap Ionis Pharmaceuticals had sold the rest of its crown jewels in the neurological space for $500M and little more (upfront and premium paid by Biogen for the stock consideration), I noticed that this was merely the renewal of an earlier partnership that was about to expire in 2019.

Clearly, Biogen was eager to continue the partnership with sales gushing in from its first neurological disease partnership candidate, SPINRAZA for the treatment of spinal muscular atrophy, and other neuro antisense programs such as the one for Huntington’s Disease showing great clinical promise.  

As time was running out on the previous deal, Biogen wanted to buy itself additional time to be able to pick the right neuro antisense candidates.  In return for the 10-year extension, Biogen will now have to make its picks already by the end of IND-enabling studies instead of with clinical proof-of-concept.  This makes it likely that as Ionis can be expected to churn out IND-enabling studies one after another, quite a few candidates will slip by that deadline and become wholly owned by Ionis Pharmaceuticals.

Equally exciting is the fact that despite the earlier exercise term, instead of earning single digit to midteen royalty on drug sales, Ionis now stands to receive midteen to 20% royalties on sales.

On the downside, in the wake of the latest Akcea deal re-arrangements and this neuro deal extension which effectively shuts off other suitors to become owners of a significant part of the Ionis neuro franchise, we can wave good-bye to any hopes of a quick buy-out.  More likely, Ionis will largely remain a royalty play for the next 8-10 years by which time it surely will have a new CEO.  And then Biogen.

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.