Wednesday, January 21, 2015

Alnylam Raises Another Half a Billion as It Rolls Out Cardiometabolic Program

There has been some confusion today why Alnylam would raise another half a billion dollars when it already has one billion in liquid assets.  The answer has probably to do with their newly formed cardiometabolic franchise (aka STAr), the first candidate from which, ALN-PCS, has just entered the clinic.

With a delivery platform that enables monthly to quarterly dosing for gene targets in the liver, RNAi can no longer be thought of as a mere second-line alternative in diseases with existing therapies or where there is direct competition with much-touted monoclonal antibodies for extracellular proteins.

For example, earlier this year, Alnylam reported early, but highly suggestive data for its subcutaneous hemophilia candidate ALN-AT3 which supported that it will work as beautiful as the genetic model behind it, and due to its monthly dosing regimen has to be considered a potential first-line therapy in a market where transitioning to weekly intravenous infusions with complex recombinant proteins is already considered progress.

Based on the non-human primate data, ALN-CC5 (going up against Alexion’s fabled Soliris) and ALN-PCS are no different.   

First cardiometabolic pearl: ALN-PCS

While all the focus in the PCSK9 space is currently on the monoclonal antibodies which are marching towards approval, ALN-PCS looks like it could shake up the market.  While up to 50-60% LDLc reductions can be expected with both the monoclonals and ALN-PCSsc, once-quarterly regimens appear feasible with ALN-PCS.  By contrast, the most advanced monoclonal antibody, alirocumab by Regeneron/Sanofi, struggles with achieving stable pharmacodynamics with just monthly dosing.  

Amgen’s evolocumab may be doing slightly better for the most part with monthly dosing, but there is still the challenge of patients with high starting levels of PCSK9- and it is still monthly and recombinant protein versus potentially quarterly and synthetic molecule.

Given that the target patient population for the PCSK9 class is expected to be in the tens of millions, clinical development for hard end points such as cardiovascular events would obviously cost a lot of money.

In the case of ALN-PCS, it is The Medicines Company that has to shoulder the costs for now.  This is because it exclusively licensed ALN-PCS from Alnylam around 2 years ago for just $25M and modest biobucks.  This deal was a great oddity because part of the reason why The Medicines Company had to pay so little is that the expectations was that ALN-PCS, at the time still the intravenously administered liposomal version ALN-PCS02, would only be used in select patient populations, such as those hospitalized with a need for rapid lipid lowering.

This profile would have obviously matched a hospital specialty company like MDCO better than a drug with the profile of ALN-PCSsc. 

In terms of value, however, I believe that ALN-PCS already is worth more than MDCO’s market cap of ~1.6B which is a function of IP issues around lead drug Angiomax and some of the more recent hospital-focused niche products it has been frantically acquiring in an effort to fill the hole should Angiomax go generic this year.  

Therefore, should the phase I results in mid-2015 support a first-in-class profile for ALN-PCS, something will have to give: either The Medicines Company splits up into a PCSK9 company and a hospital-focused entity, or (more likely) it will dispose of ALN-PCS- how about to Alnylam which would love to have it back and become the heart of the new cardiometabolic franchise?

Note: I consider MDCO the best risk:reward opportunity in biotech 2015. 

NASH, diabetes, dyslipidemia

In addition to fighting bad cholesterol by knocking down PCSK9, some of the newly raised money will be directed at other large dyslipidemic opportunities, (type II) diabetes, and the increasingly hot non-alcoholic steatohepatitis (NASH) indication.  Given its central role in system-wide metabolism, the liver is rich in targets and being able to go after every protein-coding gene alone and in combination greatly increases the odds that Alnylam (or ISIS Pharmaceuticals) come up with category-busting drugs.


I believe Alnylam was right in doing the capital raise and it could well accelerate development of the new franchise and, partly depending on the outcome of the phase I study with ALN-PCS, result in another Genzyme-type billion dollar deal next year around JP Morgan.

Read the Xconomy timely interview with Alnylam's CEO John Maraganore which further details some of the thinking here. 

Tuesday, January 20, 2015

RG-101 for HCV: Give Me 8mg/kg

Last October, Regulus Therapeutics announced stunning data from an ongoing trial of anti-miR122 RG-101 for the treatment of HCV infection.  Accordingly, 6 out of 14 patients administered a single injection of 2mg/kg of the GalNAc-conjugated antisense oligonucleotide dropped to what the company referred to as ‘below the level of quantitation’ (BLOQ) by day 30 and remained there as of the update (day 57 for those treated first in the study).

*BLOQ is not the same as 'undetectable'.  It is 'undetectable' for x number of weeks that technically defines a cure.

2mg/kg data looking ever better

The more I look at the data (here for the corresponding dataset), the more intrigued I get.  For starters, the 2mg/kg was only the starting dose in the patient cohort.  Moreover, a patient that had been more recently treated and had reached only 29 day in late October seemed to be on his way to BLOQ.  In fact, after his titers had dropped to below ~1000 IU/ml, viral decline seemed to accelerate as if a threshold had been reached. 

Overall, it seemed that as long as you got below ~1000 IU/ml, the virus would not rebound (at least until day 57).  Accordingly, the 5 patients that rebounded got close (1000-10000 IU/ml), but never below the apparent threshold.  The lack of overlap between the individual knockdown curves also suggest that viral rebound is not the result of stochastic escape mutations, as is often the case in HCV, but simply due to diminishing drug concentrations.

This leaves two patients which as of the update were still slowly declining as if the threshold rule was counterbalanced by declining oligonucleotide concentrations in the liver after day 30.

In summary:

Everybody responded irrespective of genotype and starting viral titers, of these…
…6/14 BLOQ;
…3/14 undecided;
…5/14 nadir of 1000-10000 IU/ml, then rebound.


A one-shot cure?

In the current marketplace, comprising of ~12M untreated HCV patients in the top 7 pharmaceutical markets plus hundreds millions more in the rest of the world, HCV treatment success has less become a function of viral cure rates achieved in clinical trials, but more one of compliance with the pill regimens.  Therefore, a therapy which would shorten current treatment regimens (say to 4 instead of 8-12 weeks), or even involve just one or two subcutaneous administrations in the physician’s office as part of routine checkup visits, would have great pharmacoeconomic impact.

The company is currently crunching the numbers for the next higher, 4mg/kg cohort.  In general, with RNAi and antisense therapeutics, what you see with increased doses is a slight acceleration of gene knockdown (thereby shifting the knockdown curves down), and, likely of more importance in this case, extended duration of drug activity.

The latter is supported by animal, including non-human primate data that showed that liver concentrations of RG-101 increase linearly with dose from 1-10mg/kg.  This means that for the 3 undecided patients in the 2mg/kg cohort, a doubling of the drug concentration could have easily pushed them BLOQ.  

Alternatively, a second dose of 2mg/kg on day 29 would have achieved that as also supported by animal data showing that viral nadir drops further when a second dose is given (on the left is an example from the challenging chimeric mouse model).

I am less sure whether the other 5 patients would have gotten there with 4mg/kg, but would be much more sanguine about it with a dose of 8mg/kg.


A mistake not to escalate to 8mg/kg

Unfortunately, Regulus Therapeutics stated last year that based on biomarker data which measures the activity of human genes naturally regulated by miR-122, 4mg/kg would be the highest dose to be tested in HCV.  This is because the biomarker response seemed to have saturated already by 2-4mg/kg.  This despite of the fact that they had established in the same phase I study that 8mg/kg is also safe and well tolerated in non-infected healthy volunteers.

I clearly think that stopping at 4mg/kg is a mistake.  First, I highly doubt that at least in terms of duration of biomarker activity, they did not see improvements with higher doses (show me the data).  Second, it is wrong in my opinion to assume that drug saturation with regard to microRNA activity against endogenously expressed genes is a good reflection of microRNA activity in the context of viral replication.  In this case, the rationale is further in question because of the special way miR-122 acts in HCV replication (increases, not decreases activity).

Tempering expectations

As we await the 4mg/kg data and an update on the 2mg/kg cohort in ‘early February’ according to recent company guidance, I should caution that the above scenario suggesting a one-shot monotherapy cure is within reach is obviously an unbelievably exciting best-case scenario.  There is a lot which could make the market react adversely to the upcoming data.  This includes emerging side effects, and responses that could even be worse than the 2mg/kg data, e.g. if some patients do not respond at all or if the company is right in their biomarker assumptions which due to chance could make the 4mg/kg data look worse numerically. 


Therefore, my base case for market-neutral data is that all patients will have to respond, and that the extent of the response will be similar to that seen with the 2mg/kg dose.  But then again, I’m looking at the data and keep thinking to myself…’8mg/kg might be the one-shot cure that could transform HCV treatment’.  In any case, the company has little to lose from dose escalating to 8mg/kg.

Monday, January 12, 2015

Tekmira Merges to Create HBV Powerhouse as ex-Pharmasset Geniuses Seek an Encore

Last night, Tekmira startled the RNA Therapeutics world by announcing that they would combine with OnCore Biopharma in a merger-of-equals to create the HBV drug development powerhouse.  With eight investigational HBV assets in the pipeline, this model follows the HCV space where combination therapies and companies with a single-minded focus on HCV were able to create tremendous shareholder and patient value.

Most often cited here is Pharmasset which gave Gilead HCV wonderdrug Sovaldi for an at the time (2011) unprecedented $11B.  Of note, OnCore Biopharma was founded by ex-Pharmasset people, including the inventor of Sovaldi.

This also makes it clear that despite paying lip service to the combined Tekmira to continue to value their other liposomal RNA Therapeutics assets ex TKM-HBV1/2, it is a good guess that the RNA Therapeutics platform will not have a long life in the merged company.  This is also because with $100M in cash, the company will have to look for ways to raise capital, some of it in a non-dilutive manner.

Combination and speed

Before the merger, OnCore had already started sweeping up a number of HBV-related assets intended to tackle chronic HBV infections at multiple stages: 1) replication and gene expression; 2) promoting, by stimulating and de-repressing, an immune response against the virus; and 3) even removing cccDNA, thus aiming not only at an already extremely valuable ‘functional cure’, but complete cure.

It is likely that only a multi-pronged approach will be able to achieve that.  The two RNAi candidates by Tekmira which have just entered the clinic are expected to form the cornerstone of that since they target ALL the viral genes.  Moreover, in the challenging chimeric mouse model, TKM-HBV1/2 had an unexpected impact on cccDNA abundance. 

The fact that TKM-HBV is administered intravenously is acceptable for this disease as long as a (functional) cure is achieved after a finite treatment period which, of course, is the goal. By contrast, the other assets contributed by OnCore are largely, if not all oral, including agents designed to inhibit immunosuppressant HBsAg secretion. 

Unlike TKM-HBV, these are at the pre-clinical stage, at least regarding their use for chronic HBV (the TLR9 agonist has already been tested in humans for non-HBV applications).  It is expected that many of them will enter the clinic this or next year. 

Regarding clinical development, the initial goal is to establish the safety of these agents individually before combining members from the three different classes pairwise and in triplicate in phase II.

The fact that all modalities are now under one roof will also greatly accelerate development timelines as, again in analogy to the HCV experience, it would otherwise have made necessary protracted partnering negotiations, sometimes with direct competitors.

Merger a good deal for Tekmira shareholders

Although I bemoan the loss of Tekmira as an RNA Therapeutics platform company, creating the strongest drug developer in the hot HBV space is the more attractive alternative also given the importance of TKM-HBV to Tekmira even before the merger. 

Accordingly, it is more likely that this setup will yield Pharmasset-type returns (say 10x in 3 years), e.g. following an acquisition after showing >40% cure rates in phase IIb, compared to a more balanced RNA Therapeutics platform play which has faced considerable competition from increasingly potent and more convenient technologies. 


Congrats to Tekmira management and Directors. The seeming investor relations breakdown recently has now been explained. Well played!

Saturday, January 10, 2015

Alnylam and ISIS Pharmaceuticals Divide Up a Small Lobe of the Liver Kingdom

For some time now, a GalNAc IP war has been brewing given that GalNAc conjugation has been used by both Alnylam and ISIS Pharmaceuticals to enable tremendous advances in targeting genes in the liver in an ever more potent and apparently safe and convenient manner.  This has suddenly opened the floodgate to numerous therapeutic targets (ApoCIII, Factor XI, HBV, TTR etc) and indications with gene knockdown likely to dominate drug innovation for cardiovascular, metabolic, plus a number of viral and rare genetic diseases in the years to come.

However, instead of escalating tensions, a partial armistice was declared this week when the companies announced that they will not get into each other’s hair for at least 4 gene targets in the liver.  According to the Agreement, Alnylam can use the two companies’ combined IP to support RNAi Therapeutics against the rare genetic disease targets antithrombin (for hemophilias) and ALAS-1 (for hepatic porphyrias) while ISIS can leverage the same for antisense therapeutics against factor XI (for anti-clotting) and Apo (a) (for cardiovascular disease). 

Interestingly, the press release talks about a reciprocal IP cross-licensing that extends to ‘RNA-targeting mechanism’ leaving open the possibility that Alnylam may use ISIS’ RNaseH antisense chemistry and ISIS in turn Alnylam’s siRNAs for these targets.  This would allow the companies to maximize the life-cycle opportunities for these targets by making available multiple routes of administrations (subQ, inhaled, oral) and pharmacodynamics (slow/rapid onset; different effects of gene/protein half-lives on required dosing frequencies).  Moreover, since some genes are easier targets for a given mechanism than others, chances are high that you can find a highly potent molecule with either RNAi or RNaseH ASO.   

By thus avoiding duplication of efforts and competition in the marketplace, the economic value of these targets is likely maximized.  I do not expect, however, that the truce will extend to all targets in the liver given the advanced stage and importance of for example the TTR amyloidosis programs of the two companies.  Moreover, there might be partner (e.g. Genzyme, GSK) pressures to go after certain targets no matter what.  For these targets, it will be interesting to see whether the companies will resort to patent litigation or whether they agree to merely compete in the marketplace. 

While the economic rationale is obvious, there is a scientific risk to the non-compete.  This is because you might end up with a late-stage failure, e.g. due to an unanticipated side effect related to sequence-specific off-targeting that is only seen in larger patient populations.

This, of course, would be welcome news to 3rd party competitors such as Tekmira, Arrowhead, and espcially GalNAc wannabe Dicerna who could then be the last man standing.  On the other hand, the concentration and coordinated use of the IP estates of the two juggernauts in the RNA Therapeutics space will make circumventing it more difficult to the competition.


Monday, January 5, 2015

Antibody-RNAi Trigger Conjugates Show Signs of Life

Despite jettisoning RNAi Therapeutics 4 years ago, the more innovative arm of Roche, Genentech, has continued to dabble in the technology.  In particular, it has been interested in applying its monoclonal antibody know-how, including antibody-drug conjugates (ADCs) to the delivery of RNAi Therapeutics.  A recent publication by Cuellar and colleagues provides insights into these efforts.

THIOMABs for the creation of drug-like conjugates

While antibodies have a relatively long history in the delivery of RNAi Therapeutics, some of the early findings were generally quite difficult to replicate.  Part of the problem may have been the fact the early efforts involved structurally ill-defined non-covalent protein-nucleic acid complexes held together by charge-charge interactions.

To get around this issue, Genentech applied their THIOMAB platform which allows for the covalent addition of therapeutic payloads at defined cysteine residues.  This process yielded THIOMAB-siRNA conjugates with one, or more often two RNAi triggers per monoclonal antibody.  To help visualize them, also for pharmacokinetic considerations, think of the monoclonal antibody part being ~13x bigger/heavier than each RNAi trigger.

Of note, the RNAi triggers were partially (~50% of residues) modified with 2’-O-methyls and 2’-F for stability (siSTABLE from Dharmacon).

Not all receptors are created equal

One of the reasons why I am picking out this paper for discussion is the thoroughness of the research presented.  For example, the Genentech researchers selected not just one, but seven distinct cell surface receptors for which various THIOMAB-siRNA were created which in turn were be tested in a number of settings.  The receptors were partly chosen to capture a range of cellular trafficking behaviors such as rapid lysosomal uptake, recycling receptors, and slow-turnover receptors.

Importantly, the research validated a critical rationale for the use of antibody-RNAi trigger conjugates namely uptake of the RNAi triggers that is dependent on the presence of the cognate receptor and covalent linkage to the antibody.

For all the conjugates (ARCs), the bulk was shown to accumulate in lysosomes regardless of presumed uptake kinetics.  Interestingly, despite the seemingly shared uptake pathway, if not dynamics, only two of the seven receptors were associated with gene silencing (TENB2 and NaPi2b, but not e.g. Her2). 

The degree of silencing was much weaker compared to when the same conjugates were lipofected with ~50% silencing starting to be seen at 10nM.  This was followed by a shallow dose-response plateauing at 70-80% silencing around 500nM.  Based on the data presented, it seems that limiting amounts of receptors were responsible for this. 

Selective accumulation in mouse tumor model

A highlight of the publication to me was the investigation of THIOMAB-siRNAs in a mouse tumor model.  Although you may consider a ~30% silencing (i.e. 70% expression of normal remaining) when you cherrypick tumor areas of most efficient delivery a somewhat disappointing outcome as was reported in this case, important lessons can be learned from that.

Firstly, THIOMAB-siRNAs only accumulated in the tumor when the tumor expressed the cognate receptor.  This is unlike nanoparticulate RNAi delivery to tumors which relies on a passive process of accumulation (the EPR effect).  This opens up the prospect of RNAi drugs with ‘cleaner’ delivery profiles with an increased margin of safety.

Selective accumulation for these conjugates also suggests that the ~180kDa macromolecules were able to relatively rapidly exchange between tumor interstitium and blood circulation despite their size.  Consequently, other conjugates in a similar size range or below, including Arrowhead’s DPCs, should be amenable to such ‘active targeting’ as well.

Nevertheless, despite this apparent agility, imaging techniques showed that tumor delivery was largely restricted to areas next to the vasculature.  This limitation in fact is what is also seen with nanoparticles which rely on the EPR effect.  So while the active targeting capability is an important step forward, tumor penetration issues remain to be solved.

Path forward

Despite the arguably underwhelming in vitro and in vivo knockdown results if you just look at the numbers, I am optimistic that the studies have further supported that systemic RNAi delivery can be applied beyond the liver, vascular endothelial cells, certain cells in the kidney and phagocytes.

What is missing in that particular piece of research making the conjugates that make it into the cells count.  Given the lysosomal accumulation, an obvious strategy to unlocking the true potential of ARCs would be to apply endosomal escape chemistries, especially masked chemistries such as in the DPCs by Arrowhead Research (actually specifically referenced by the authors).

In almost the same vein, the sparse chemical modification used mean that potency improvements will be gained if heavier modification is applied even without adding endosomal escape chemistries.  This is also because some of the data are consistent with a model whereby the THIOMAB-siRNA conjugates get broken apart in late endolysosomal compartments and it is from that population of freed RNAi triggers that escape into the cytoplasm may occur (note: this does not exclude spontaneous endolysosomal rupture as an additional escape pathway).  If RNAi triggers were made metabolically more stable through more extensive modification, the amount of RNAi triggers available for such escape would obviously be larger.

All that is lacking then is the issue of tumor penetration.  I could imagine, however, that some self-delivering and/or lipophilic strategies could be quite useful here.  The Genentech researchers actually speculate that the RNAi trigger may have been the culprit in limiting the claimed natural ability of monoclonal antibodies to more deeply penetrate tumors.  This suggests that charge masking may overcome this limitation.  

I am open to this idea, but based on my understanding of the literature, tumor penetration is a challenging issue for basically all therapeutic modalities, monoclonal antibodies and 'even' small molecules, so let's not blame double-strandedness for all pharmacologic problems.


With interest in RNA Therapeutics growing by the day, expect lines of delivery research such as this one to be picked up and pushed to the next level.

PS: for antibody-mediated RNA delivery, Avidity NanoMedicines and the Roche-ISIS collaboration on CNS delivery should also be worth watching.


January RNA Therapeutics Deal Frenzy Kicked Off

As is now tradition for Januaries in RNA Therapeutics, expect this month to be filled with mouthwatering business development announcements.

Without a doubt, privately held messenger RNA Therapeutics company Moderna Therapeutics stole the show today by announcing a $450M financing involving 'Viking Global Investors LP, Invus, RA Capital Management, and Wellington Management Company, LLP, as well as existing investors AstraZeneca and Alexion Pharmaceuticals'.

Biggest private financing in biotech history EVER.

With $800M in cash, close to a billion USD raised since starting up 2 years ago or so, the biggest challenge will be how to efficiently put the capital to good use and move into the clinic in the not-too-distant future.  Before that happens, we should be seeing one of the hottest biotech IPOs in 2015.

Before Moderna announced their financing, ISIS Pharmaceuticals was the talk of the day with their GI-related autoimmune deal with Johnson&Johnson.  Not only does the early development deal provide ISIS with another nice junk of upfront cash, this time $35M, and a gazillion in potential biotech milestone payments and royalties, jn practical terms I expect the research to be particularly useful to ISIS as it develops oral delivery for systemic applications (think lipid franchise for which the new CEO will be officially enthroned tomorrow).  

I believe that the deal was primarily driven by JNJ's interest in the space following the whopping $710M upfront deal by Celgene last year when it acquired rights to an antisense compound developed by oligonucleotide therapeutics nobody Nogra Pharma for IBD applications.  The high upfront payment indicates that competitive bidding was involved and it is likely that JNJ lost out.

Remember, Big Pharma moves in herds.

The good news for JNJ is that if the first-generation phosphorothioate DNA is indeed working by an on-target mechanism (which I doubt), then a competing compound employing much more advanced chemistry and design by ISIS Pharmaceuticals will be infinitely more potent and beat Celgene in the market.  And for $35M and $800M in milestones if everything goes according to plan, it's a comparative steal.

For ISIS Pharmaceuticals it is just another step to broaden their expertise and applications of their platform.  Moreover, the upfront payment will help the company to remain cashflow neutral to slightly positive until 2017, at which time I expect drug sales to be finally taking off.

Wednesday, December 31, 2014

Tekmira Enters 2015 a Different Company

Today is the last official day for Chief Technology Officer Ian MacLachlan at Tekmira.   While scientifically a great loss to Tekmira, the change marks the end of Tekmira as a technology development company and the official beginning as a commercially focused clinical product development company.  From the clinical pipeline, it is TKM-HBV, Tekmira’s gene silencing candidate for the finite treatment of HBV infection, which stands out as the most important, if not existential asset to be watched in 2015.

After generation 1, 2, 3, and now even 4 SNALP LNP, and 10, 100, 1000x fold improvements in the potency and therapeutic window, the time has come to stop telling us that ‘next time will be better’ after yet another immunostimulatory setback.  In both cases (TKM-ApoB, TKM-EBOLAold), I was willing to take the bait as the company and Dr MacLachlan explained the basis for their continued confidence with scientific authority.  For TKM-EBOLA, the plausible explanation for the immunostimulation seen in the healthy volunteer study was particle heterogeneity following resuspension of the lyophilized liposomes (note: a lyophilized formulation was used in that case because Ebola may have to be used in areas with unreliable cold chains; other SNALP LNP products are provided as 'wet' formulations).

However, with the recent initiation of phase I studies of generations 3 and 4 formulation of TKM-HBV and the departure of Dr MacLachlan, the company seems comfortable with taking their last two shots at proving that SNALP LNPs can enable potent gene knockdown in the absence of transient immune suppression at comfortable safety margins and with profiles that are competitive with the emerging conjugate platforms in RNAi and RNaseH antisense.

Although a bit under the radar for the moment, the new studies with non-lyophilized 3rd generation TKM-Ebola Guinea should be informative as to whether the lyophilization hypothesis holds water.  As these studies should likely be of shorter duration than the TKM-HBV phase I studies, the safety results from those studies should be a harbinger for the safety for at least TKM-HBVgen3, if not TKM-HBVgen4.  

The changes at the company will be welcome by some investors which might have grown tired of holding shares in a lab experiment.  On the other hand, they dampen my outlook for other liposomal delivery opportunities not only in RNAi for oncology (see today's ho-hum update on TKM-PLK1), but also in the sizzling hot fields of mRNA and CRISPR Therapeutics.

So good luck Ian and thanks for leaving the company in good order. Yours is also a great loss to the field of RNAi Therapeutics.  Hope you will come back to Nucleic Acid Therapeutics with renewed motivation.


Hello 2015

Lastly, a Happy New Year to all my readers.  2015 should be a year that will be marked by clinical RNA Therapeutics data of ever higher quality which will make it crystal clear that RNA Therapeutics has become the 3rd major drug discovery engine of the pharmaceutical industry. 


First up: Regulus end of January/February 4mg/kg RG-101 in HCV.

Tuesday, December 23, 2014

RXi Pharmaceuticals Reality Check

Last week on December 17, RXi Pharmaceuticals announced (3-month) results from a phase II study of the company’s lead candidate RXI-109, an RNAi Therapeutic for the treatment/prevention of dermal scars.  

In this lower abdominal scar revision study 1301, one side in a given patient was treated with drug on days 1, 8, and 15 following surgery (immediate group) or on days 14, 21, and 28 (delayed group), while the other side was given placebo.  An assessor blinded to which side was injected with RXI-109 or placebo was then asked to tell drug from placebo. 

According to the release, the drug-treated side was (correctly) identified 54% of the time in the delayed treatment cohort versus 24% of the time in the immediate treatment cohort.

In the absence of further information on the identification procedure and scoring used (e.g. it is likely 'there is no difference' was a possible answer which would somewhat undersell the results), the following interpretation seems logical: in the delayed treatment cohort skin wounds treated with RXI-109 looked no different than those treated with placebo.  Moreover, when treatment was started soon after scar revision surgery, RXI-109 possibly did harm.

It certainly would have helped if RXi provided the VAS score as it did in the one-month update in September.

To me, this result looks like one of the worse types of biotech trial failures.  If you like to talk about 'misleading', then RXi should not look further than the title of their own press release on this failed study:

'RXi Pharmaceuticals Announces Sustained Effect of RXI-109 at Three Months Post Scar Revision Surgery and the Completion of Enrollment for its Phase 2a Trial RXI-109-1301'

Two days after the clinical trial news, the company then announced that it had licensed a non-RNAi dermal compound which is currently in phase II studies for cancer and other proliferative diseases of the skin.  A proprietary formulation of small molecule ‘immuno-modulator’ diphenylcyclopropenone (DPCP), aka Samcyprone, from an obscure company called Hapten Pharmaceuticals.


Now on to RXi’s financials...

At the end of Q3 2014, RXi had about $10M in net cash ($10.69M cash/cash equivalents minus $1M in liabilities), spending about $2.25M a quarter.  This means they presently have ~$8M in cash minus the undisclosed cash it spent on the Hapten deal.  If RXi continued with RXI-109 and RNAi and if it initiated the phase II clinical studies with Samcyprone, the cash burn would obviously increase.  Let’s say to $4M per quarter à $8M/($4M per quarter)= 2 quarters of cash left.

...and RXII the stock

Obviously realizing that the new asset is not not solving their  financial predicament, by contrast it is only worsening it, concurrent with the Hapten deal RXi entered into a new stock purchase agreement with Lincoln Park Capital ('ATM') according to which RXi Pharmaceuticals can sell LPC newly issued shares to raise capital.  The way these deals work is that LPC would get a discount on the shares and turn around and sell to the public market to lock in the profit.  This means that if RXi really counted on such revenues to keep their PCR machines running, any substantial rally in RXII is likely to be met with the selling of new shares.

Adding to the pressure is the fact that major shareholder Tang Capital, holding just shy of 50% of the fully diluted share count, has been steadily selling down its ownership in RXi.  Moreover, some of the Hapten deal (incl. milestones) was/will be paid in shares and it would be reasonable to suspect that the owners of Hapten are not in it for the potential of making money with speculating in RXII shares.  

If you consider a fully diluted market cap of $70-80M, the present situation with RXI-109 and the failure for years (also under Galena) to advance the self-delivering RNAi platform, the case can be made that there are better biotech stock investments out there.

Pick your poison

For the above reasons (including financial limitations), I tweeted last week that the move to license Samcyprone more or less amounted to RXi Pharmaceuticals getting out of the RNAi game.  In fact, the bitter irony is that RXi was born out of parent company Galena Pharmaceuticals making exactly the same move (marginalizing RNAi by acquiring a non-RNAi clinical asset).

So yesterday, the CEO of RXi Pharmaceuticals issued an Open Letter that, to sum it up, I was misleading the public with my conclusions about the strategic shifts happening at the company and was thereby scaring investors into selling their shares:

'We can only hope that investors and shareholders who read blogs, tweets and postings from third parties purporting to have an informed view on our business will also do an in depth evaluation of the background of those who write such "reports", their past contributions to the actual progress in the RNAi space, and their possible associations to competitors and other firms working in a similar space. Notwithstanding these ill-informed criticisms, we remain optimistic about the prospects of the Company and our core technology.'

By contrast, RXI-109 was on track, the company’s RNAi platform alive and kicking, and immune modulator (aka skin irritant) Samcyprone fully being aligned with RNAi gene silencing as it changes gene expression (I’m impressed).

At this point, a friendly piece of advice: RXi ought to label Samcyprone an 'immuno-oncology' drug which would almost sound as sexy as the VEGF compound RXi is now 'synthesizing'.

So I’m not sure what to hope for: a) that the CEO does not understand that continuing with two phase II compounds under present circumstances is akin to financial suicide, especially from a shareholder’s point-of-view; or b) that he understands it and scapegoats social media, including myself, for calling the bluff in an effort to win time.
   

I suspect it’s the latter and either way shareholders are unlikely to come out ahead.  After all, when he took the helm of RXi Pharmaceuticals at a time when it was fashionable to bash and ridicule RNAi, he made it clear that he was a ‘small molecule guy’ at heart. If I may ask you Geert, what exactly were your contributions to the actual progress of RNAi Therapeutics?
By Dirk Haussecker. All rights reserved.

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