Money from the Sidelines Moving into RNAi Therapeutics Again

The recent signs that the appetite for RNAi Therapeutics by Big Pharma is returning coupled with accumulating evidence that RNAi can be triggered in Man with some of today’s delivery technologies, is finally translating into investors buying into the promise of RNAi Therapeutics again. Today’s almost doubling in the shares of Arrowhead Research (ticker: ARWR) on volume of over 40% of outstanding on the heels of a Nature publication showing that their RONDEL delivery system was able to induce an RNAi mechanism of action in solid tumor tissues in real patients, is quite impressive evidence for this. The incredible performance of RXi Pharmaceuticals (ticker: RXII) which has made much out of their ‘self-delivering siRNAs’ and who are also positioning themselves as an RNAi trigger alternative to Alnylam another one.

If the trend were to indeed continue, this time around I would expect much of the action to be in the limited RNAi delivery technologies that have made it into the clinic. Except for the $125M acquisition of Mirus Bio by Roche, I have long felt that the RNAi Therapeutics marketplace and investment community has never really reflected the importance of delivery in making RNAi Therapeutics a reality. In addition to being the critically enabling factor for RNAi Therapeutics, such IP should also be the most valuable kind.

The argument for delivery-related investments is based on the expectation that any Big Pharma that is seriously considering RNAi Therapeutics would first want to secure access to technologies that have shown potential as clinically viable platforms. This would allow them to gain familiarity with RNAi Therapeutics and, by being on its cutting edge, assemble know-how and lay down further IP to help position them as leaders in the field, an opportunity that was missed in the case of recombinant proteins and monoclonal antibodies.

A scarcity of technologies that have made it into the clinic providing some evidence of RNAi efficacy in the absence of show-stopping toxicities should further increase their value. At the moment these are SNALPs, RONDEL, Atuplexes, a lentivirus and tkRNAi bacteria. You will not be surprised to hear that based on the strong and abundant pre-clinical, including non-human primate data, highest quality science, modularity as a platform, well-defined structures and scalable manufacturing, and the proven ability to assist partners in bringing their RNAi triggers into the clinic, I am particularly fond of SNALPs and Tekmira. I cannot believe that companies like Novartis or Pfizer do not consider it a risk that access to Tekmira could be lost due to an outright acquisition of the company.

In times of cost-cutting, it is important for companies that want to partner or sell their technologies to keep the necessary talent to make technology transfer possible. Such a group of people would also enhance the attraction to acquire a company as an important pillar of the broader RNAi Therapeutics efforts of a Big Pharma, similar to what Alnylam Europe was for Roche or Coley for Pfizer. Losing such capabilities could quickly render a technology stale as Targeted Genetics seems to be running the risk.

All the ingredients of a small acquisition wave of RNAi Therapeutics technologies and companies are therefore in place: a limited supply of enabling technologies and scientific talent, capital markets that make it difficult, if not impossible for small RNAi Therapeutics companies to realize the full value of these technologies on their own, and big pharmaceuticals that will consider the recent results by Tekmira and Calando/Arrowhead as important de-risking events and feel the urgency to act now.