Tuesday, November 13, 2007

Nastech’s RNAi Ambitions Hit by P&G Break-Up

Since Nastech announced that Proctor & Gamble would drop their collaboration on a intranasal spray of parathyroid hormone (IN-PTH) for the treatment of osteoporosis last Wednesday, the stock has been falling ever since and lost about 2/3 of its value in less than a week. This is not surprising as it shatters investor confidence in the nasal peptide delivery technology that the company was founded on one and a half year after Merck cancelled a similar agreement with Nastech for the intranasal delivery of an anti-obesity peptide.

Nastech’s experience highlights the risk of investing in biotech companies that are centered on a single, as yet unproven technology. It is therefore worth keeping in mind that RNAi Therapeutics is only one clinical trial or adverse event away from being shaken by similar woes.

With the benefit of hindsight, Nastech always wanted to be everything to everybody and doomed to fail. It does not take a degree in Economics to see that too many clinical programs, including some based on not very well validated peptides, and Blue-Sky Science Projects (like projecting that it would take another 10-15 years to develop an RNAi Therapeutics) were a recipe for financial disaster. While it is good to take pride in your science, the odds are stacked against you in trying to develop technologies all on your own, even in RNAi, an area where so much of the innovation will come out of academic laboratories and you may be better off licensing those while focusing your resources on drug development.

No matter how impressive you think it may sound that your RNAi (Dicer substrate) is so potent that it works at homeopathic doses, that you have found the Holy Grail to off-targeting (Ribo-T), and “solved” the delivery problem (peptide-conjugation), to those in the Art it sounds too good to be true, particularly when data in investor presentations lack critical controls and in the absence of appropriate peer-reviewed publications to support these claims. The burden is now, as they aim to spin out their RNAi unit (mdRNA) for money and visibility, on Nastech to prove to the investing public that there really is some value hidden in their RNAi. Otherwise, it will sound more like yet another pipe dream rather than reality of a company that would like to think that it alone can achieve what the rest of the scientific world is struggling with.

Nastech employees may represent a further RNAi-related value not reflected in the current ~$120M market cap (with ~$58M in cash). After Sirna Therapeutics was bought by Merck, there was an exodus of experienced oligonucleotide scientists that ended up working for Nastech in Bothell, WA. Although I doubt that Nastech’s RNAi IP will be valued very highly at this juncture, their know-how acquired in the process may be viewed as an asset by a larger company looking to jump-start their own RNAi Therapeutics work, similar to the acquisition of Alnylam’s Kulmbach, Germany, operations by Roche in July. Of course, employees may prove to be a fickle asset at a time when money is tight and Alnylam is relocating their European operations back to Cambridge, Mass. The coming days and weeks will be critical for the future of Nastech and their RNAi ambitions.

1 comment:

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By Dirk Haussecker. All rights reserved.

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