Sunday, June 8, 2008

RNAi Therapeutics: A Spoilt Market, or Waiting for Clinical Progress?

The market reaction to Alnylam’s deal with Takeda was, well, a bit disappointing. Although the argument can be made that next to the Sirna acquisition by Merck this has been the most favorable deal for the RNAi Therapeutics field yet, shares of Alnylam not only did not advance, but even declined on the news. Can the muted reaction be explained by a market spoilt by Alnylam’s RNAi mega-deals and that has come to expect an even larger cash component, or has Alnylam’s hinting at more deals given the shorts plenty of time to prepare for such an event by aggressively shorting the stock on the news as the considerable volume may have suggested? Possible. However, here I would like to consider the third possibility that for Alnylam’s stock to move to new highs, the market would like to see the deal making being complemented by scientific and clinical progress.

Actually, these platform licensing agreements are evidence for just that as the therapeutic areas covered by the non-exclusive license, namely metabolic disease and cancer, clearly indicate that the deal was driven by the maturation of liposomal RNAi delivery technology. Moreover, an important component of the Alnylam-Takeda relationship will be the exchange of RNAi delivery capabilities, suggesting that Takeda had also made progress in this area.

However, the bears would argue that what Alnylam, and the wider field, needs is further demonstrating progress with their development programs. Of course, we had the phase II ALN-RSV01 proof-of-concept data which was a great relief for everybody and should strengthen Alnylam’s position at the deal table if not on a PPS basis, but we should also remember that Alnylam had previously guided that it would advance one or two SNALP-related programs into the clinic in 2007. This has not happened and I can understand that some may have well been disappointed by that. Paradoxically, rather than reflecting science that has stalled, the delay can be explained at least partly by ongoing progress in SNALP RNAi delivery and it may not be wise to commit to a development candidate when improvements in both safety and efficacy can be made so readily as supported by recent conference presentations and publications.

Having followed biotechs for a while now, one major question I ask myself before investing in a biotech company is whether programs have been rushed into the clinic well before they have been properly validated pre-clinically. That often happens with small biotechs with acute fund-raising needs or when existing investors would like to exit and an IND is the goal, not final approval by the FDA. How otherwise could one explain e.g. Nucleonics’ decision to advance a plasmid-based, DNA-directed shRNA program for Hepatitis B into phase I when all the in vivo data consisted of some co-transfection studies (= glorified in vitro data) and when current non-viral plasmid delivery methods are unlikely to achieve the transfection rates sufficient for curing such a viral infection through direct gene knockdown. Next to Nucleonics, other early RNAi pipeline candidates, while somewhat more promising scientifically, may also serve the role of flag-waving programs demonstrating to investors that RNAi is not just a fascinating science, but also of clinical relevance.

Much has been learnt since the first candidates entered the clinic in 2004 and, like for SNALP RNAi in particular, it makes a lot of sense, also economically, to take advantage of the steep learning curve in general to increase the odds of late-stage pipeline success at the cost of slight early delays. Meanwhile, the irresistible expansion of RNAi into in vivo applications and the increasing number of RNAi-related conferences (another one, Beyond Genome, is just about to take place a little bit North of where I live) demonstrate that the field is vibrant and the science is making rapid progress.

If that weren’t enough, the coming months should bring more than enough RNAi clinical results to contemplate. Calando just reported this past week initial results from their phase I studies on CALAA-01, an unmodified siRNA in a targeted nanoparticle formulation for the treatment of solid tumours. According to their press release, the first patient has now completed a course of 4 intravenous doses over two weeks without any show-stopping adverse events. As this is the first clinical experience of systemically administered siRNAs, unmodified at that, it therefore also marks an important and reassuring milestone for the synthetic siRNA field in general. It is easy to envision scenarios how an adverse event could have had disastrous repercussions for RNAi Therapeutics. Well done, Calando!

Then there are the SNALP RNAi programs that, once entered, could yield relatively soon clear in vivo efficacy data on systemically administered RNAi Therapeutics. Finally, Benitec’s HIV program is another program that deserves some attention as quantitative patient data may emerge relatively soon; for example, an expansion of T-cells derived from the stem cells transduced with the lentiviral vector encoding for a triple-RNA antiviral relative to unmodified cells would be very promising.


Anonymous said...

Yes, the market reaction to the Takeda deal is difficult to read. (If aggressive shorting is responsible, the shorts will have to cover eventually. This should result in an increased demand at some point as compared to the natural demand, meaning that over longer term, the impact of shorting should be neutral. Although it is of course undesirable as it skews the informative value of the market price at any particular moment.)

You write that the Gemini data came as a relief. Yet the market clearly perceived the data as suboptimal and inconclusive. So it appears that the moment of truth (for the market at least) will come with the results of the pending ALN-RSV01 phase II trial in the naturally infected lung transplant patient population. As in this trial ALN-RSV01 will be, for the first time, delivered to naturally infected RSV patients to both upper and lower respiratory tract throught he nebulizer as intended, the results should be easier to interpret.

Accordingly, I think that this will be, for better or worse, the next price mover.

In light of this, I would argue that any reported scientific progress, progress with systemic delivery technologies and/or advancement of SNALP-delivered programs into the clinic, will be viewed and measured through the prism of the ALN-RSV01 program and how it fares (at least until clinical data generated on the basis of any such progress (including the SNAL-delivered programs) becomes available).

In any case, it should be interesting to watch. As food for thought, it may be interesting to speculate on why the ALN-RSV01 program was not covered by Takeda's option to develop and commercialize Alnylam's development programs for the Asian market. Was it because Alnylam is confident about its most advanced program and did not want to dilute its value or was it because Takeda was not interested? Or some other reason perhaps?


Dirk Haussecker said...

Hi Martin-
I am sorry if I cannot reply to all the comments, as for some reason, blogger does not alert me to new comments anymore by email.

I agree that the ALN-RSV01 program, as ALNY's most advanced therapeutic program, should have a significant impact on ALNY's share price, and the therapeutic potential has certainly not fully been answered in the experimental infection trial. As much as antiviral potency, safety and tolerability should be equally important as to the ultimate market potential of ALN-RSV01. Take ribavirin, a quite non-specific antiviral that is used for a number of viral infections, despite its toxicity and dubious activity.

Scientifically, the SNALP programs are very different and I think it would be a mistake to take ALN-RSV01 as a predictor of these systemic RNAi candidates and RNAi Therapeutics in general and vice versa. But then again, I am not Mr. Market and I am not sure how much people have invested because of the near-term potential from ALN-RSV01 and the longer-term potential of RNAi as a therapeutic.


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