Sunday, April 27, 2008

ENHANCE Ripple Effects Felt at ISIS Pharmaceuticals

The waves started by the ENHANCE tsunami have finally come to engulf ISIS Pharmaceutical’s stock this Friday as the FDA indicated that it wants to see costly and more time-consuming outcome studies for all but the most at-risk cardiovascular patient population in the approval of ISIS’ lead product mipomersen, an antisense compound directed against ApoB-100 in the liver. As I had discussed earlier in the wake of two high-profile studies that failed to correlate the responses of some of the most trusted biomarkers for diabetes and cardiovascular disease with disease outcome, most notably Merck/Schering-Plough’s ENHANCE study, this was almost to be expected.

The 29% drop in the stock that day was caused by a discussion between ISIS and their partners at Genzyme with the FDA on the approval path for mipomersen. Instead of being able to gain accelerated approval by merely showing LDL-cholesterol lowering as a surrogate biomarker for a broader patient population, this will only be accepted for the small homozygous familial hypercholesterolemia (ho FH) population, and it was not clear from the conference call whether this would be a full or an accelerated approval. For all other indications, mipomersen now has to show tangible benefits with regards to cardiovascular events, which, although it would eventually increase the market value of the drug considerably, means longer and more expensive outcome trials before the real commercial value of mipomersen can be realized (in addition, ho FH will be delayed by at least one year, because the FDA requires 2 rodent carcinogenic studies, instead of the one they had planned for).

What can the RNAi Therapeutics space learn from this experience? One lesson is that it is very important to be clear early on with what the almighty FDA wants to see in approving a drug, something particularly relevant for novel technologies and novel drug targets such as will be the case with RNAi. It is probably not a coincidence that clarity has come now that Genzyme has joined the mipomersen effort, as it is probably THE company experienced with gaining regulatory approval for unique, high-margin drugs with small, but very well-defined patient populations, a category that a number of RNAi Therapeutics will fall into as part of the personalized medicine revolution.

Another lesson is that the fortunes of an entire technology platform may be subject to the woes of a single dominant development program. While the cardiovascular disease market is enormous and the potential rewards substantial, this is not without a reason and substantial investments have to be made before gaining approval. A number of RNAi Therapeutics companies such as Alnylam, Tekmira/Protiva, RXi, Mirus Bio, and Merck have all indicated an interest in targeting very promising liver targets for hypercholesterolemia by RNAi, and although it may limit the ultimate financial reward, a company like Alnylam that carries much of the hope for realizing the therapeutic promise of RNAi, may have to think twice about to what degree it wants to make itself dependent on a single development program such as ALN-PCS01.

Companies targeting ApoB by RNAi (probably including Tekmira/Protiva, RXi, and Merck) should benefit considerably by learning from ISIS’ pioneering ApoB experience, and actually should have a chance at gaining accelerated approval should ISIS be able to show that lowering LDL-cholesterol by targeting ApoB is associated with cardiovascular benefits. For companies like Alnylam though interested in other, previously untested targets, the decision may only confirm that, yes, outcome studies will be required.

I welcome the trend towards evidence-based medicine and addressing some of the problems associated with direct-to-consumerism, but again, the FDA and politicians should not blindly destroy the drug development industry by forgetting that at the same time there need to be clear rewards for innovative (patent protection!) and efficacious (reimbursement!) drugs. This way the pie could stay around the same size, and yet everybody including patients, payers, and the industry would be winners.

Also this week: In a catastrophic financing, Nastech raised just shy of $8M in a registered direct offering at a probably historically low $1.73 a share, and may raise another $3M at $2.17 a share. One has to wonder why this relatively small fund-raising round was done at all at these so unfavorable conditions- unfavorable at least for the present shareholders. In any case, this may be the best time to cut their losses and fully commit to developing RNAi Therapeutics while monetizing what is left over from TJT nasal delivery. Their experience in drug delivery and peptide technology in particular may position them to be a respectable player in peptide-facilitated RNAi delivery (direct conjugation of RNAi trigger to membrane-penetrating peptides and/or using peptides as ligands for targeted delivery). But there is one advice that I would give them: please do not waste any more of your shareholder money and your own credibility on senseless and blatant patent workaround efforts such as three-stranded siRNAs. As the 36% drop on Friday illustrates, investors are sophisticated enough to see through this and rather than claiming to own everything under the RNAi sun, or universe, it is more credible to specialize in an area of your expertise and be good at it. Develop clinically relevant delivery for example, and the market will more than generously reward you for it.

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By Dirk Haussecker. All rights reserved.

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