Tuesday, September 29, 2009

Important Decision for Silence Therapeutics Looms

In another sign that deal activity is also picking up in the RNAi Therapeutics space, Silence Therapeutics announced this morning that trading has been suspended awaiting the outcome of M&A talks with a private US investor group. It is not the first time that rumors around Silence Therapeutics have had a major influence on the trading of the stock. This time, however, there appears to be a factual basis for the rumors and if the deal materialized it would qualify as a reverse takeover according to the company.

It will be interesting to see whether the deal was negotiated from a position of strength or weakness, and whether there will be a change of scientific direction or IP strategy of Silence Therapeutics, one of the older players in the field. Clearly, their position should have been hampered due to their unfavorable cash and uncertain IP positions. A reverse takeover may thus allow the rumored private investor group from the US to access the public equity markets through Silence Therapeutics and at the same time re-capitalize the company. This may also mean that AtuRNAi will be replaced by another biotechnology as the company’s scientific foundation.

On the other hand, events over the last year may have given Silence Therapeutics investors increased confidence in their freedom-to-operate, and given that the phase I trial for solid cancers has just commenced, they may not want to give up their technology hopes just yet. The US investor group may thus gain access to Silence Therapeutics’ scientific and IP portfolio, although the money they would infuse into the company would mean that they are now the majority owners. A third scenario may be that the US investor group brings with it a complementary RNA Therapeutics asset, be it another set of RNAi triggers, targets (e.g. microRNAs) or delivery technology.

In any case, I am very curious to hear about the news as it should provide for some tantalizing insight into some of the dynamics moving the RNAi Therapeutics financial market. Tomorrow, at the latest, we should know more as the company was to announce its half-year report then.

Note added in proof (9/30/09): at the end of June 2009, Silence's cash position stood at ~US$5M.


Anonymous said...

Hi Dirk

Good to see you're back!

Silence's EU patent being opposed.
Hearing 13-14th Oct.
EPO's preliminary views suggest no huge concern, but it remains a threat.
I suspect the outcome could be a factor in the merger decision?

Dirk Haussecker said...
This comment has been removed by the author.
Dirk Haussecker said...

Thank you for your input. I look forward to more of that. On another note, however, I wonder what shareholders are thinking tough now that the opportunity has been taken away from them to buy in/sell out ahead of this important decision, because Silence Therapeutics can't keep a secret. This hurts Silence's credibility and it should do something against it. What is your guess...Archemix or Quark?

Anonymous said...

Actually, the pattern aspect remains relatively undecided by the examining division and opposers are going for lack of enablement amongst other things - the alternating patterns only work for some triggers...not surprising since there was no scientific basis for that arrangement.
That pattern is also obvious.
Still, SLN is in with a chance.

Re investors. Most are private shareholders that dont have any real interest in the opposition and in any case, consider only what they want to believe.

Quark have their own triggers in development now, so dont need SLN -although a merger would reduce future royalty payments, but early days. Quark also had concerns about SLN's freedom to operate, so may still do (given Tuschl I is now granted and Kreutzer-Limmer isnt gone in full yet).

Archemix is a very likely candidate. They'd bring a lot to the party. Unlike Silence, they're in a strong position.
This week may well decide whether due diligence will fall apart, although Archemix/Other could still be interested just for Atu027.

Dirk Haussecker said...

I thought of Archemix because they once attempted to do a reverse takeover to access the public markets. It may also be a scientific fit since both companies are focused on therapeutic RNAs. Quark, of course, also tried to go public unsuccessfully. Their IP- given the timing and circumstances of Quark’s invention my expectation is that the Quark-RNAi molecules will also be along the lines of an siRNA of a certain length, overhang type or modification pattern that is apparently not subject to the Tuschl patents. Like the alternating AtuRNA modification pattern, you may be able to find some active siRNA that way, but any such pattern is unlikely to be broadly applicable and does not represent an unanticipated progress on what is out there. So it might be that if they are honest to themselves, their IP position is unlikely to be any better if not worse than Silence’s. Lest I judge pre-maturely, do you have any insight into the nature of their RNAi triggers?

Anonymous said...

Quark's new triggers are possibly those described in WO 2009044392

I see Archemix as a very likely contender to be the merger party, good spot.

I'd say Quark, but not now they claim their novel siRNA trigger.

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.