The Race between RXi, Marina, and Silence to Do Deal by Year-End (RNAi Therapeutics Portfolio Update)

It is not the first time in RNAi Therapeutics history that we hear of promises that cash-generating deals will be closed by the end of the year. This year is no different: RXi Pharmaceuticals, Marina Biotech, and to some degree Silence Therapeutics by disclosing an approach 2 months ago, all have the markets expect lucrative Big Pharma partnerships or even acquisitions as the year winds down.

Judging by the number of early-stage technology evaluations, there is good reason to believe that some partnerships will eventually materialize. However, because these 3 companies are likely to compete for a similar set of partners, the RNAi Therapeutics portfolio has been updated to take advantage of the recent increases in the shares of RXi and Silence Therapeutics, and after selling some of these shares add back Marina Biotech which is relatively attractively valued followed the share price decline ever since the merger with Cequent. Benitec was also added back following the re-grant of a fundamental ddRNAi patent in the US.

Marina Biotech

With the initiation of trials for the trans-kingdom RNAi Therapeutics candidate CEQ-508, Marina Biotech now sports a clinical program and that the Company may be able to develop all on its own. In addition, they have a good-quality program in synthetic RNAi trigger molecular biology and chemistry as exemplified by the recent publication on the utility of unlocked nucleic acids (UNAs), exclusively licensed from RiboTask, for siRNA trigger design. As previously indicated and supported by research from other groups, including Merck, these modifications can be used to abolish off-target effects mediated by the passenger strand. Even more importantly, UNAs can also mitigate microRNA-type off-targeting by the guide strand when judiciously placed in the seed region without compromising on-target RNAi-type silencing. Interestingly, inhibiting passenger strand incorporation by 5’ end UNA modification may simultaneously increase the potency of the guide strand. Hence, it fulfills is similar function as the Zamore thermodynamic end-stability rule.

While this molecular biology makes sense, the IP situation around ‘usiRNAs’ is less than apparent. I have long been puzzled by the usiRNA freedom-to-operate opinion that Marina had said a venerable intellectual property firm provided it with. I finally learned more about this during a Q+A session at an investor presentation by Marina where CEO Michael French answered this question as follows: usiRNAs are blunt-ended siRNAs with non-nucleotide 3’ overhangs (and thereby do not infringe the Tuschl-II 3' overhang IP)! Wow, somebody apparently got paid for this opinion. but who knows maybe Merck might subscribe to this interpretation of the scope of Tuschl-II should they lose access to it as a result of the Tuschl Litigation.

Whether you buy it or not, by committing itself to 3’ UNA overhangs, Marina consciously compromises siRNA activity, especially with 3' UNAs in the guide strand (typically some reduction in activity). UNAs in the passenger strand 3’ overhan, however, appears to make scientific sense and it will be interesting to see whether Marina will adopt asymmetric overhang designs in the future.

With CEQ-508, and maybe also relatively soon the topical bladder cancer candidate, Marina has bought itself some time to try and catch up on the systemic delivery front where it still seems to be stuck at the rodent stage and behind the likes of Tekmira and Alnylam.

As the number one wheeling-and-dealing company in the space, Marina Biotech has to be considered a serious contender in the race to find a partner by year-end.

Silence Therapeutics

Following the exciting news of a possible takeover, I am getting a bit concerned that the longer a deal takes to materialize, the weaker the negotiating position for Silence Therapeutics and the more complex for the company to secure alternative capital. In light of the recent positive development in Silence’s share price, it might not be a mistake to reduce the exposure should no deal materialize any time soon.

On the IP front, it appears that one can now expect more of the same also for Zamore: patent litigation galore. At least it shows that somebody, I wonder who, considers Zamore to be a threat. It cannot be Alnylam, of course, since it stated that the Zamore end-stability rule patents are of no concern at all. I guess the RNAi trigger players harvest what they sow. In the big picture, everybody could benefit from preserving IP around the fundamental discoveries in RNAi biology.

RXi Pharmaceuticals

My view on their technology hasn’t changed, but as the clock runs down one is reminded by RXi’s history of missed partnership promises. Whether Pfizer’s recent comments that intravenous delivery is not a viable delivery route makes a deal with RXi more or less likely is an open question. Since RXi has a new CEO, however, I will give him the benefit of the doubt.

Tekmira

Hopefully a highlight for the RNAi Therapeutics portfolio for the rest of the year will be the NASDAQ listing of Tekmira. With Tekmira being a well recognized player in RNAi Therapeutics, the US listing and a share price above $5 could mean that US institutions like Fidelity take meaningful positions in the company.

Tekmira under its new leadership is the only company in the space that has never explicitly promised a partnership and also happens to be the only 2^nd tier RNAi Therapeutics company that does not desperately need a deal at this moment. In recent weeks I am starting to get the impression that Alnylam understands the value of an amicable relationship with Tekmira. On the other hand, this could mean that upcoming deals will have to be Roche-like deals, possibly with Novartis and Takeda, deals that are focused on developing specific LNP-formulated candidates.

OK, it’s now time for the companies to wow us with scientific results and the promised deals. No pressure, of course. RXi, Marina, Silence…which one is most likely to close a deal by year-end? Have your say by participating in the poll on the top right hand side.

Notice: None of the above is meant as investment advice, and as always, do your own due diligence before considering an investment in RNAi Therapeutics. Also, please read the important disclaimer at the bottom of this blog page.