Thursday, February 4, 2010

RNAi Therapeutics Portfolio Update: Silence Therapeutics (Buy)

Considering the recent merger between Silence Therapeutics and Intradigm (see here) and following the review with Tobias on Atu-027 and the technologies behind it, I have decided to use the proceeds from the recent sales of mdRNA and RXi Pharmaceuticals to purchase shares in Silence Therapeutics for the fantasy RNAi Therapeutics portfolio. At 13.5 pence, giving the company a market cap or slightly less than 40M UK pounds, there should be good upside if Silence’s management can succeed in the certainly demanding task of integrating the two companies while at the same time establish RNAi drug discovery partnerships- all within the one year cash runway that the latest financing gave them.

I have long been wary about the value of Silence Therapeutics’ technologies. Readers of this blog might still be familiar with the angry outburst in the comments section of this blog from what appeared to be a Silence employee (just speculating) about 1 ½ years ago. Having appreciated some of the good science behind Atu-027, I can understand the frustration. But good science does not always mean that IP claims are valid, and in the case of Silence, their credibility had suffered with their bold claims of having broad freedom-to-operate in the RNAi Therapeutics trigger arena.

In the end, Silence had to settle with significantly less than they hoped for and probably led investors to expect, namely patent protection for blunt siRNAs containing alternate 2’-O-methylations opposite of unmodified nucleotides and that are 15-23bp long (length could be subject to the Tuschl outcome; in a twist of irony, it would be an Alnylam-Max Planck victory that would be beneficial to Silence). Although this is a far cry from getting protection for a much wider range of modification patterns and types of modifications as it looked possible at one point, they should be able to live with the outcome because I was even surprised that they were granted these patents at all, apparently on the basis that these patterns unexpectedly allowed for siRNA stabilization without killing efficacy. Some reward from being an early mover characterizing the properties of modified siRNAs, with a lot of their reported findings actually standing up to the tests of time.

My gut feeling tells me that while Atu-siRNAs have their use for RNAi Therapeutics at present, the evolution in RNAi Therapeutics trigger design is likely to render them obsolete in 10 years’ time, with Atu-siRNAs DNA/claim language not being able to adapt to the changes. Also, an extensive head-to-head comparison between the selection process for Atu-siRNAs versus Tuschl-type siRNAs, similar to what Alnylam has been doing for Dicer-substrate versus Tuschl-type siRNAs, would be helpful in getting a better feel for Atu-siRNA’s real value. The literature would suggest that the efficiency should be considerably impaired because the modification options are so limited.

Intradigm’s contribution to RNAi trigger assets are certain 25bp siRNAs, slightly longer than both Tuschls and reminiscent of RXi’s/Invitrogen’s ‘Stealth’ siRNAs. It is, however, still a mystery to me what these look like exactly and why these should be patentable structures. Similarly, the the scope of their licensed Zamore rules for siRNA design are somewhat uncertain apart from the one that has issued, and there is generally the questions of how it should be possible to enforce design rule patents when they depend on thermodynamic features rather than distinct siRNA structural motifs.

More than RNAi triggers, and a slight departure from earlier days, the company now emphasizes their relatively diversified approach to siRNA delivery. This is understandable as their is no question that financial value should follow scientific need. Silence's delivery technologies include the lipoplex-siRNA system is used for their lead candidate Atu-027 and that was shown to render endothelial cells of blood vessels accessible to RNAi. Here as well, I have long been quite skeptical about the strength of the data, because relative to other systems their characterization, including formulation method, had been quite sketchy, and I don’t believe that all of this is because they want to keep these details as trade secrets. Nevertheless, the apparent tolerability and efficacy of lipoplex-siRNAs from rodents to monkeys is very encouraging and should get them onto the radar of potential Big Pharma partners. Beyond lipoplex-siRNAs, Silence now lists peptide-based, targeted delivery (HKP) and delivery to the lung. While HKPs look nice in theory, the literature was not able to convince me of their immediate clinical utility and seems to be a little bit behind the lipoplexes. And for the lung-related delivery, I have yet to see the data. I plan to provide should I be able to get meaningful answers to some of these questions.

In summary, having invested tens of millions over the last 6-10 years into RNAi trigger and delivery research and with the bench depth provided by the merger, Silence Therapeutics should be an interesting partnership play, with Atu-027 as an innovative approach to cancer treatment that can be showed off to investors and partners, and maybe some positive surprises from their interests in RNAi compounds being tested in the clinic by Quark Pharmaceuticals and Pfizer.

Disclaimer: Investments in RNAi Therapeutics are highly risky and not suited for most people.The purpose of the blog and model portfolio is to convey a sense of the dynamics in the field and is NOT an endorsement for making related investments. I also have financial interests in some of the companies included in the portfolio. I do not, however, have short positions in any of those.

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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.