Monday, March 5, 2012

RNAi Therapeutics Investors Are Getting More Selective

The recent share price performances of RNAi Therapeutics companies have confirmed that clinical data have become the critical new bar for investors. Even discounting the fact that biotech in general has performed well this year, it is clear that the SNALP-enabled clinical phase I results for ALN-TTR01 (transthyretin amyloidosis) and ALN-PCS02 (hypercholesterolemia) have had the desired impact on the share prices of Tekmira and Alnylam: +57.5% and +73.5% increases since the ALN-TTR01 results were announced in November ’11, respectively. Moreover, the recent $80M+ financing by Alnylam, and to a smaller degree the $4M private placement by Tekmira, underline that new money is flowing into these companies.

Other companies have had a harder time. In fact, with the market capitalizations of Marina Biotech and microRNA Dx company Rosetta Genomics reaching a point where the companies become increasingly unsustainable, and Galena (formerly known as RXi Pharmaceuticals) ridding itself of its RNAi Therapeutics heritage, the shake-out in the field of the publicly traded RNAi Therapeutics-related companies has only intensified. Consequently, aside from Tekmira and Alnylam, the most significant remaining public RNAi Therapeutics companies are Silence Therapeutics, Arrowhead Research, and Benitec. To what degree they can be joined by the likes of Quark, re-surrected RXi Pharmaceuticals, or Calimmune remains to be seen as not too long ago, RNAi IPOs were all but unthinkable.

Here a quick run-down of the companies:

Tekmira: SNALP systemic delivery technology has emerged as the major value driver in the industry. Overly focused on technical progress rather than brand building, Tekmira is still fighting with a market perception that because it’s market cap is so small (<$40M), Alnylam must rightfully have full ownership of Tekmira’s technology. Especially the analyst community has largely been ignoring their position, but it looks like the courts are starting to see through Alnylam’s strategy (e.g. here). The recent financing will give Tekmira some breathing room albeit at the cost of further dilution. Besides the litigation, additional clinical results from the TKM-PLK1, TKM-EBOLA, ALN-TTR, and ALN-PCS02 programs expected this year will be critical to Tekmira shareholders.


Alnylam: Good clinical execution with its new crop of SNALP-enabled therapeutic candidates. One year after announcing 5x15TM, the company has become much more narrowly focused on introducing only a select few products in the market itself. This, and the recent financing, could be interpreted as preparing for a potentially adverse outcome to the Tekmira litigation, but it is also a structure that will allow the company to sell itself more easily. This is in stark contrast to the strategy of antisense partner/competitor ISIS Pharmaceuticals which has stretched itself out onto so many different therapeutic areas and partnerships that it is difficult to see that company being acquired any time soon.

The successful offering has confirmed once again that Alnylam is well connected in the biotech financial machinery. After receiving upgrades and (re-)newed analyst attention from the likes of Leerink Swann (!- because of the infamous 2008 report on the company), MLV, and Rodman and Renshaw, the company reciprocated by letting them all participate in the offering. As a shareholder of Tekmira, this to me is frustrating as these analysts would never say a critical word about Alnylam’s position with regard to the Tekmira litigation. And, of course, the legal process is not exactly fair when a cash-rich company apparently does its best to delay the litigation so that it can financially outlast its ‘small’ opponent.

Continued positive clinical results will be important to extend the positive trend in ALNY, but all bets are off as we approach the late October 2012 trial date with Tekmira.


Arrowhead Research: The company arguably made a good deal with the acquisition of the Roche RNAi Therapeutics assets for a few pennies on the dollar originally paid by Roche. Critical to the success of that company will be how quickly DPC delivery technology is ready for clinical development. The absence of peer-reviewed non-human primate data and knowledge of how advanced DPC manufacturing is increases the risk that the DPC-enabled HBV program may take longer to enter clinical development than hoped for.


Silence Therapeutics: Following promising phase I data with Atu027 for solid cancer and positive developments on the IP front, recent developments were not so positive. Most discouragingly, Thomas Christely unexpectedly resigned after only a short stint as the CEO. In the absence of any cogent explanation besides the usual ‘personal reasons’, one may come to the conclusion that after the 6-month data delay with Atu027 and the apparent failure to extend the critical AstraZeneca and Dainippon Sumitomo collaborations, another painful round of dilution may be inevitable.


Benitec: The fortunes of that company are looking up as Gradalis and Calimmune are progressing their ddRNAi Therapeutics products. Just this morning, Benitec announced that Calimmune has taken a non-exclusive license to Benitec’s ddRNAi IP for HIV/AIDS. It is critical to Benitec’s strategy to make sure that the early ddRNAi candidates that are in or close to the clinic are licensed under their IP. As its fundamental Graham IP matures, however, it will have to wean itself off its focus on IP and instead execute on product development. Particularly the pain program looks promising here.


Marina Biotech and Rosetta Genomics: With their tiny market caps of $2.5-5.0M, it becomes increasingly difficult to further justify their coverage. It’s a pity because some of their technologies have some value. The erratic strategies of these companies, however, seem to have destroyed all investor confidence.


ISIS Pharmaceuticals: The topline data evidence is quite strong that ISIS RNaseH antisense can knock down genes in the liver, kidney, some cancer, and possibly other tissues in the clinic. Safety and tolerability issues and other delays, however, seem to still come up with regularity when it counts and only by presenting the full dataset can it be determined whether continuously high phosphorothioate concentrations, particularly following systemic administration, are sufficiently well tolerated for broad clinical use. In terms of technical progress therefore, the corresponding liver and kidney concentrations at which a knockdown is achieved is a key parameter to watch going forward.

If mipomersen does not get approved for anything beyond hoFH and/or does not sell well, the company’s strategy of giving away value early in development could start to hurt as it will be some time until another in-house development candidate can reach regulatory approval.

15 comments:

bioduediligence said...

I don't get your last sentence...if KYNAMRO doesn't get expanded indications, or doesn't sell well...then it is GENZYME which made a terrible deal, not ISIS...

Dirk Haussecker said...

The last sentence did not express who made a good deal. Once investors become focused on the quarterly recurring income instead of on the fundamental platform story, a $800M market cap could suddenly appear quite big.

Anonymous said...

I think if you bother to check with the company they will tell you Thomas Christely was simply not performing and the new Chief Business Officer they had taken on at the same time was extremely good so the change was a positive move to shake the company up and make the most of it's IP.ATU 027 trial is on time for full publication before ASCO as they have always said once they had the first and only delay near the beginning of the trial and some expect a very successful result to the trials.Silence has always said it will need to raise capital in the second half of the year as its cash runway is exhausted before Christmas.

Dirk Haussecker said...

Thanks for the update on Silence. It would be great to see a (full?) publication of the Atu027 trial before ASCO and maybe some of that biomarker work they had hinted at.

HOWEVER, critical to a Silence investment strategy would have been that they realize at least one of the non-dilutive funding opportunities. Not doing so would be certainly a disappointment. Silence has reduced its burn, so maybe the anticipated financing will not be as brutal as the last one.

Anonymous said...

Realistically they have little chance of a partnering before year end even with a full publication of very encouraging results and some (limited) biomarker evidence.Silence has been so badly run for so long it will take time to recover,I just think you are normally too harsh in your criticism.I will be amazed if they do not succeed with their delivery platform(s) and if they could ever get their genius CSO of his arese to tell Silence' story big phara would be panting to join forces with them.I bet if they kick out the Alnylam CEO thye would look for a merger in double quick time.I am agreat fan of the blog Dirk,dont let them all grind you down.

Anonymous said...

Why you do not bother to contact the new ceo of silence and get his take...
You alsways mention the departure of the old ceo as a bad thing, without realising that Silence has put in place a whole new team. Sometimes change management works only with new people at the top.

Anonymous said...

also the news about delaying Atu027 is not accurate.. Atu027 is proceeding swiftly and with good results that will be shown at Asco.
I think Silence really looks its getting its act together. FInally new management with BD credentials, ATU027 validating all the technologies, IP granted, delivery deals with microRNAi companies. I am sure with the new management we will see more of the scientists at conferences....
You can argue that the difference between US RNAi companies is that they look good and have average science, while Silence managed to look bad through poor PR but has good science

Anonymous said...

I've noticed that you haven't commented on ALNY's Jan 30/2012 news that the USPTO issued a Notice of Allowance for a patent covering the company’s proprietary second generation LNP platform, including the “MC3” lipid. Doesn't this recognition of MC3's novelty weaken TKM's claim that MC3 was an "obvious" step (or derivation)from TKM's MC2 or KC2 work?

Dirk Haussecker said...

It was 'obvious' to try if you used Tekmira's trade secrets, not if you were an outsider. MC3 is not about patentability.

Anonymous said...

Looks like someone woke up the Silence supporters!!They're a funny lot sitting on far more competitve IP than Alnylam and your little darlings Tekmira-the RNAi for patients who want to die whislt on immuno-suppressants.

Anonymous said...

Looks like someone woke up the Silence supporters!!They're a funny lot sitting on far more competitve IP than Alnylam and your little darlings Tekmira-the RNAi for patients who want to die whislt on immuno-suppressants.

Anonymous said...

any good news for Rnai companies will help the whole area.... But, dirk, do not be so heavy biased towards tekmira and Alnylam...
Silence did a pretty good job with far less cash and managed to to what tekimira and Alnylam have together, A RNAi FTO platform, 3 delivery technology and clinical programme....
David against Golia...
We are all expecting a new stir with the new management, but the technology is there........

Arja Timonen said...

No wonder why they are very selective on getting investors they have a lot of good reason to do it.

Anonymous said...

Maybe Marina's deal with Monsanto will make them still worth covering?

Anonymous said...

Why do you write about and cover ISIS's antisense and yet you never say a word about AVI Biopharma? Muscular Dystrophy is a disease with no therapy and yet they just reported clinical results that would indicate they can create 22% dystrophin in the boys - and 15% is generally considered sufficent for close to normal muscle function. It'll take time for muscle function to get up to speed but they're creating the amount of protein they'll need. Seems like a note-worthy RNA development. But I guess you don't think so.

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