Only 3 months after the Silence-Intradigm merger, synthetic siRNA Therapeutics company mdRNA just announced that they would combine their RNAi Therapeutics assets with that of trans-kingdom RNAi company Cequent Pharmaceuticals. Unlike the Silence-Intradigm merger, however, this merger is less about synergy, more about complementing each others’ strengths, and by this make it successfully through a biotech climate that is only now starting to thaw for platform technologies like RNAi Therapeutics.
Technically an acquisition by mdRNA of Cequent, the transaction benefits mdRNA in that the access to Cequent's cash enable it to finance operations until the end of the year, possibly long enough to convince one or two of their early-stage Big Pharma collaborators to pay $10-20M in upfront payments each for a platform license. Equally important, the transaction transforms mdRNA into a clinical-stage company, with one trial start imminent and possibly 3 additional INDs by the middle of next year (an inflammatory bowel disease program by Cequent and two cancer programs by mdRNA) that should be considerably helped by Cequent’s proven expertise in moving innovative drug candidates into the clinic. This profile, with a stretch-goal of being ready to commercial in 2014 CEQ-508, Cequent’s clinical candidate for the prevention and treatment of colon cancer in familial adenomatous polyposis, or FAP, an orphan disease (reviewed here). This more mature profile may allow the combined company to reach new types of investors.
On the other hand, similar to Intradigm, this transaction provides Cequent’s VC investors with what in the current biotech climate can be considered a successful exit by valuing Cequent at $44M at the time of the announcement, although the present value should be somewhat less following huge volume trades earlier this week. This is also the result of the feat of being able to grow a healthy pipeline of drug candidates in just 4 years, one that is based on a rather unorthodox technology that uses bacteria as delivery agents for the RNAi trigger to sites such as the GI tract (the current focus), genitourinary tract, and skin.
The technology diversification provided by tkRNAi gives the New mdRNA a wider choice of development options. It would be good, however, to keep nourishing the molecular biology of tkRNAi as I believe that within a short period of time, through the wonders of bacterial genetics, significant technology improvements could be achieved. With up to 9 employees contributed by Cequent and about 50 by mdRNA, it remains to be seen to which degree this can be realized in the new company.
I believe both sides and their investors are well served by the outcome and it should be a case where the whole is greater than the sum of its parts. About 60 employees is also about the critical size to be attractive as a partner for Big Pharma with sufficient depth in the various disciplines (RNAi trigger, delivery, regulatory etc), but not too big for it to become too big a cash-burn burden. But this is no time for mdRNA to celebrate for too long. We’ll have to see what Michael French and the new team have up their sleeves next. Meanwhile, there is more potential for consolidation in RNA(i) Therapeutics and mdRNA-Cequent should not be the end of the story during this phase of the global and industry-specific economic cycle.
Disclosure: I have been an advisor for Cequent Pharmaceutical and will only discuss publicly available information. My views on mdRNA’s technologies and tkRNAi can be found by searching this blog with keywords like ‘mdRNA’; ‘Nastech’; ‘Cequent’; and ‘tkRNAi’.