mdRNA Wants to be Opportunistic, Does not Rule out Further Participation in Sector Consolidation

Yesterday, I had the opportunity to talk to the combined mdRNA management team about the maturity of their science, intellectual property, and corporate development objectives. This is a particularly fascinating topic for students of corporate strategy on the eve of their merger with trans-kingdom RNAi company Cequent Pharmaceuticals which combines two ends of the RNAi technology spectrum: chemistry-driven synthetic siRNA therapeutics with bacterially mediated RNAi.

In this context, it may not come as too much of a surprise that the company is positioning itself to further explore the various corners of the RNAi and also RNA Therapeutics space (e.g. antisense approaches such as for microRNA inhibition, a possibility also pointed out here in a comment by former CEO of Nastech/mdRNA Steven Quay) and take advantage of technologies that they come across and perform particularly well in their hands. For example, like myself and I believe an increasing number of other people in the sector, mdRNA agrees that DNA-directed RNAi could be very powerful for neurological applications and therefore be of interest.

I would add, however, that mdRNA’s ability to further participate in M&A activity is limited by their challenging financial situation and would always have to take place in a setting that, like was the case with Cequent, adds cash to its reserves. One scenario to get on top of that issue would be to achieve their goal of reaching one significant Big Pharma partnership around the middle of the year and then, depending on the share price reaction raise some additional capital on the public markets, although management was keen to stress that this of course would have to occur in the least dilutive fashion possible.

In general, I was a bit positively surprised by their down-to-earth assessment of the maturity of mdRNA’s technology, unlike the impression that I had got at times when often very similar press releases had been issued touting the company's progress. The company is now focusing their internal development pipeline on the bladder cancer program where it has reported potent gene knockdowns with intravesical administration of DiLa(2) liposomes. Systemic delivery programs, meanwhile, are not imminent and largely the domain of their 4 active early collaborative efforts.

When asked for the reason of this slight adjustment of pipeline prioritization, it became clear that the rational development of systemic (liposomal) delivery can be a challenge. While they have mastered DiLa(2)-mediated knockdown in rodents, non-human primates (NHPs) appear to be quite a bit more tricky. They were quick to add, however (rightly so, I believe), that claims by a number of other companies about knockdown in NHPs would often have to be taken with a grain of salt. In my mind, the difficulty in making rapid progress in expanding systemic liposome delivery to primates could be a price to pay when one is quite broadly oriented instead of focused on core technology strengths. On the other hand, compared to a number in Big Pharma they are still advanced in that regard and attractive enough as at least an early stage collaborator. Moreover, the bladder cancer program where they seem to have seen the most promise and on top of that the Cequent pipeline should keep the company more than occupied with clinical and near-clinical development programs.

As alluded to before, the reason why Big Pharma appears to be interested in working with mdRNA is because mdRNA, as an RNAi-focused company, may be able to provide their partner with general RNAi Therapeutics expertise. MdRNA may disagree with me here officially, but it has also been my view that, more than IP, it is this general platform know-how that may lend itself as a launch pad into RNAi Therapeutics for a Big Pharma entrant worth maybe $100-150M? A similar case could be made for Silence Therapeutics and RXi Pharmaceuticals.

Intellectual property, of course, was then also discussed, and, as you would have expected, mdRNA believes to have broad freedom-to-operate (FTO) in RNAi trigger, especially usiRNAs, and liposomal delivery. As evidence for this, they cited outside patent counsel that attested them to have such FTO, and a Roche that apparently did extensive due diligence before taking, what I believe to have been a UNA-focused license to RNAi triggers a year ago. Furthermore, there are a number of patent applications being prosecuted now that may see the light of day. It will probably remain an area of disagreement between myself and mdRNA that while it is possible to see such patents being issued, it is important to keep in mind that a patent still only gives you the power to exclude, but does not give you automatically FTO which is particularly relevant for more narrow patents, e.g. a patent that covers a double-stranded RNA containing at least one UNA, but that would still fall structurally under the more general Tuschl designs.

In light of this, it is possible that Roche paid mdRNA to play in UNA-modified siRNAs, with UNA being a “modified nucleotide” [this is btw not how mdRNA wants to define it, but that’s the way I define it :)] with admittedly interesting biophysical characteristics that could lead to unanticipated beneficial effects for siRNA potency and specificity, some of which apparently is in the publication pipeline. Maybe it is because I am still too much of an academic at heart, but I still care for those publications as they are the best way to be scientifically credible in the eye of a potential suitor. If the patent examiner can be convinced of the beneficial properties of a UNA in an siRNA, just as Silence Therapeutics was able to convince at least two examiners about such properties for the Atu-siRNA modification pattern, then Alnylam may not be able to exploit UNAs without mdRNA’s permission, the loss of which to Alnylam would be debatable (there are a lot of other modifications to be explored). A similar difference in opinion between myself and the company applies to their liposomal formulations and the use of cationic/titratable lipids and possibly (not discussed) formulation methods, although some of this may be too premature to speculate on as we have yet to see the eventual formulations.

In summary, mdRNA is certainly not afraid of the challenges ahead as it hopes to leverage its proven adaptability to be an opportunistic RNA(i) Therapeutics investment vehicle. While some differences in opinion exist, I certainly wish them well and am quite hopeful for their FAP and bladder cancer clinical candidates, both as product opportunities per se and what RNAi Therapeutics can learn from them.

It is the first time that I publish such an interview on this blog and still need to learn how journalists manage to come up with all those quotes (are they recording their interviews, or reconstruct quotes from memory?). Instead, you were served with a highly ‘interpreted interview’ and I will be happy to provide space here for the company should they feel that I misrepresented their views.