Thursday, July 25, 2013

FDA Questions around Dystrophin Quantitation by Sarepta Delay DMD Drug

As most of you know, yesterday was the day that morpholino antisense company Sarepta would provide guidance on whether they would be seeking accelerated approval for the Duchenne Muscular Dystrophy (DMD) exon skipping drug eteplirsen based on their interactions with the FDA.  This was a widely watched event not just for eteplirsen and boys with DMD, but also because regulators highly supportive of Sarepta’s meager data package would indicate a new lowered standard for the approval of rare, severe diseases.

Dystrophin as surrogate biomarker

Accelerated approval may be granted by the FDA in the absence of full clinical evidence of drug efficacy if the results from surrogate biomarkers that are thought to reasonably predict clinical outcome pointed in the right direction.  For dystrophin exon skipping this is an important potential avenue given that for most genetic lesions causing the disease it would be difficult to conduct full-fledged placebo-controlled clinical trials.

Although this is not really the case for exon 51 candidates, the most frequently affected exon in DMD and that eteplirsen is addressing, Sarepta ran one of the worst designed and conducted clinical trials for this indication involving just 12 boys (in case you are asking again why I hold this view: minute size of study when larger patient numbers were clearly feasible as the Prosensa/GSK competition shows; single-center; key supportive data miraculously collected with unblinding of the trial; key secondary endpoint- 6MWT- added with unblinding of trial; exclusion of patients in results analysis as company saw fit etc).  As a result, obtaining approval by simply showing dystrophin production has been Sarepta’s best hope with the data at hand.

Hardly anyone would argue that dystrophin was an inadequate surrogate marker.  The loss/absence of dystrophin is what causes the muscle wasting, and there is strong evidence that restoring dystrophin or even a somewhat less functional Becker’s type truncated version would be beneficial.  It would also be no surprise to see some increase in dystrophin with a gain-of-function approach such as this exon skipping one. 

No, the key questions are how much of Becker’s type dystrophin production was needed to be clinically meaningful to patients and how you actually quantitatively measure the increase in such dystrophin.

Questionable science

I don’t want to argue here about the amount of Becker’s type dystrophin needed to be clinically meaningful.  The reason is that if you do not have reliable numbers, such a question is moot.  As I had explained in a post a few months ago, the data presentation by Sarepta on the amount dystrophin produced reminded me of some of the worse cases of ‘data management’ and misinterpretation that you sometimes come across in the literature: there was apparently unequal loadings between drug-treated and control samples which suggested a high amount of skipped dystrophin by Western blot, a molecular technique looking at protein content; the RT-PCR that was supposed to support meaningful skipped dystrophin production by looking at the RNA (not protein) level actually suggested the opposite as the PCR cycle number seemed inappropriately high. 

Moreover, choosing percent dystrophin positive fibers instead of the absolute amount of dystrophin produced as the primary endpoint in the clinical trial always seemed wrong to me as for this gain-of-function approach you could imagine a very low amount of dystrophin that can be detected by the particular assay could yield very high percent positive fiber numbers, but of which the clinical relevance would still be highly uncertain (e.g. if sensitivity of assay could pick up 1% of normal, and the restored dystrophin was homogeneously distributed between the fibers).

And these are only the obvious questions.  What I would also like to know (and the FDA may or may not know) following the piecemeal data release by the company and the surprising finding that after 12 weeks no dystrophin restoration could be observed, yet after 24 weeks the company apparently could, would be the comparability of the data (e.g. the immunohistochemistry/IHC) across the different time-points, who performed the analysis, the appropriateness of the antibody used in the IHC and the Western blots, the collection method of the biopsies etc etc

FDA also doubtful

It is becoming clearer with each report on the company’s interaction with the agency that this methods issue is a real sticking point before a proper evaluation can be conducted.  This can also be seen from today’s press release: ‘The Agency, however, requested additional information related to the methodology and verification of dystrophin quantification.’

Alas, this should come as no surprise.  It is still good to see confirmation that the FDA is taking a scientifically sound approach, but as the discussion around eteplirsen had become quite politicized, one could have been excused for falling for the belief (as I’m sure countless retail shareholders did) that politicians and not scientists have taken over the eteplirsen approval process.  I had even considered whether we were about to witness a landmark event lowering the evidence bar for the approval of orphan drugs to unprecedentedly low levels.  Apparently not.

PS: The fact that Sarepta would decide to file for accelerated approval sometimes in the first half of 2014 should not come as a surprising.  Even if they themselves had considerable doubts about the success of accelerated approval or even about acceptance for review following their FDA interactions, there was nothing to be gained from not stating such intent: the stock price would have plummeted much more than the roughly 20% it did yesterday.  The interim now can be used to exercise their ATM (=issuing new shares on the actively trading markets) at still much elevated levels.

Disclaimer: The above was written based to the best of my knowledge and belief. Nevertheless, no guarantees can be given as to the factual accuracy of the content. I should also add that I am not 'against' eteplirsen.  I just don't think that there is sufficient evidence yet to decide either way. And for parents eager to get their kids on eteplirsen now, I believe, given the apparent safety of the drug, that a way could be found in which Sarepta were to reciprocate the support by the patient community and provide the drug at cost until a possible full approval.

Friday, July 19, 2013

Delivery versus Product Candidates? RNAi Therapeutics Business Development Strategies Need to Adapt

Since the beginnings of the RNAi Therapeutics industry, it has been a mantra that platform/enabling technology licenses are the business development way to go.  Indeed, broad and financially attractive platform deals by Alnylam and Sirna Therapeutics supported that notion.

The time has come, however, for companies focused on developing RNAi enabling technologies to carefully reconsider their business development strategies.  The biggest warning sign is that despite of the clear technological value of delivery, in my mind there has not been a financially attractive transaction in this area for over 4 years now despite the intense and also public focus on this bottleneck.

On the other hand, unlike you have carried a halo since birth similar to Regulus and Moderna Therapeutics, it is product-specific deals and attractive capital raisings based on interest in certain product candidates (e.g. TTR amyloidosis) that gives you the most attractive cost of capital right now.  Also witness the ~1 billion dollar market capitalizations of RNA Therapeutics companies Prosensa and Sarepta Therapeutics where single ultra-orphan product candidates have captured the imaginations of investors willing to pay up for a slice of the dream.  Contrast this to anemic $100M and less market capitalizations of companies with much stronger technology engines such as Arrowhead Research and Tekmira.

Misled by Big Pharma

I have intensely followed the Tekmira story and how they invested in developing SNALP and their derivatives for not just knockdown in the liver, but cancer, respiratory disease and beyond.  The apparent motivation has been that Big Pharma companies are interested in respiratory disease and especially oncology, so work on something this constituency, once believed to be the only source of capital, wants.  But is it really the right strategy to invest in something where you may get 50-60% knockdowns rather than genetically much safer 80% knockdowns and more in other tissues, all in the hope of maybe fetching low double-digit upfronts in the end?  Wouldn’t be the capital better invested exploiting what you already have and drive forward specific development candidates for a few million dollars and which the public markets may value in the hundreds of million dollars in the not-so-distant future?

Arrowhead e.g. recently decided to double its share count to raise $30-40M when it probably easily could have sold its then preclinical HepB program for that amount (see also blog entry yesterday on HepB area getting hot).  It would have gotten even less for monetizing its DPC delivery technology. the key element in the HepB program.  In the end, also as a shareholder, I agree that a 50% dilution, but retaining full control of this product was the far more attractive option.

My advice to these companies: don’t build your future on the notion that Big Pharma makes rational decisions.  Big Pharma would rather pay $100M for a bundle of RNAi trigger and delivery (=product candidate) with some type of early clinical knockdown result than $5M each to essentially get the same thing.  And in the end, you have to realize that not many companies in Big Pharma land, maybe Merck, Novartis, Takeda, GSK and AstraZeneca, would consider a platform-type RNAi Therapeutics deal these days in the first place.  So why try to please a handful of Big Pharma players which have proven to be penny wise but pound foolish when it comes to RNAi Therapeutics?

In the end, I am still hopeful that the RNAissance will lead to large technology transactions and acquisitions.  I do not believe, however, that most of the companies developing enabling RNAi technologies will benefit from such deals.  Instead, you are most likely better off focussing your attention and capital where it can create the most promising and differentiated product candidates.

The times have changed.  If Big Pharma wants a piece of RNAi Therapeutics, they have to pay up to compete with the public markets.

Friday, July 12, 2013

RXi Reports 43% CTGF Knockdown in Multi-Dose Dermal Anti-Scarring Trial

Today, RXi Pharmaceuticals announced the results from its multi-dose phase I study of RXI-109, the company’s self-delivering RNAi compound for dermal anti-scarring.  Importantly, in the two highest of the three dose cohorts a credible 43% (average) gene knockdown was observed three days after the last (=third) intradermal injection of RXI-109.  It is the first time that a knockdown was reported for the so-called ‘self-delivering’ class of RNAi triggers.

The results followed those from a single-dose study lastmonth where dose-dependent gene knockdowns were claimed three months after the single injection (note the difference in the time points).  Turns out that this was a slightly misleading conclusion as in my book a numerical 15% target reduction does not constitute a clinically meaningful knockdown for the vast majority of target genes and indications, and I'm not even discussing the precision of gene expression measurements.

Whether a 43% knockdown of CTGF is clinically meaningful also remains to be seen as no data were presented on the actual impact of RXI-109 on scar formation.   Pfizer, following its acquisition of dermal scarring antisense company Excaliard, would probably know best what type of knockdown was required.
In a broader sense, the 43% number also raises the question of whether self-delivering RNAi triggers by RXi Pharmaceuticals will be a class of gene silencing agents that will struggle to achieve 50% gene silencing, instead of 70, 80, 90% and more that might be required for most indications.

Overall, mediocre results and it stands to reason that the future of RXi Pharmaceuticals will be in ocular indications and not in dermal anti-scarring.

Comment on Alnylam's $3B market cap

I, like many of you, have watched with wide open eyes Alnylam reaching a $3B market cap today. In less than two weeks, this company added over $1B in valuation based on highlighting in their press releases the best single datapoints from individual patients (e.g. 'over 80% knockdown' for ALN-TTRsc), instead of average knockdowns, area under the curves, and dosages.

While that does not entirely surprise me as a veteran of reading between 'topline data', a more intriguing question is what the company will do with such a low cost of capital.  Remember, the situation was similar about 5 years ago when Alnylam failed to either raise capital and/or acquire Tekmira to avoid the litigation.  I expect the company to act this time on its share price, a view supported by constant analysts upgrade on any news piece the company throws in front of them (--> fees for investment banking business).

Thursday, July 11, 2013

Alnylam Indicates that 80% Subcutaneous TTR Knockdown Achievable with Magic 2.5mg/kg Dose

This morning, Alnylam announced a milestone in the development of subcutaneously administered, systemically acting RNAi Therapeutics.  A ‘more than 80%’ knockdown was achieved in a phase I trial of ALN-TTRsc, the GalNAc-siRNA conjugate for the treatment of TTR amyloidosis.  It is the first time that a meaningful knockdown in Man was reported using the subcutaneous route of administration.

The key question as to the clinical attractiveness of the liver-specific GalNAc delivery platform versus intravenous alternatives such as SNALP (compare to just reported ALN-TTR02 clinical results) relates to injection volume and frequency of administration.  The hurdle to overcome here would seem a once weekly regimen with dosages of 2.5mg/kg or less.  2.5mg/kg is widely considered to be a threshold as this amount of drug can be accommodated in a 1ml syringe.  Higher injection volumes would likely be quite painful and possibly increase the risk of injection site reactions.  Higher dosing frequencies in order to stay within the 2.5mg/kg limitations would reduce the convenience factor.

Unfortunately, these data points were left undisclosed in today’s announcement.  Instead, we were given a riddle.  The company first stated that the results were in-line with observations in non-human primates.  At another point, they say that 80% knockdown with ALN-TTRsc were achieved in non-human primates with the magic 2.5mg/kg dose.  Logically, Alnylam stated that in humans 80%’ knockdowns were seen with the 2.5mg/kg dose. 

Curiously, the company also stated that dose escalation was continuing.  It makes, of course, sense to push the degree of knockdown.  The difference between an 70% knockdown (e.g. ISIS-TTRRx), an 80% knockdown (current ALN-TTRsc results), and 90% knockdowns (e.g. ALN-TTR02) is that compared to a 90% knockdown, the amount of remaining insulting protein (here: mutated TTR) is twice (80%) and 3x (70%) as high which could result in dramatic differences in the clinical outcome, or even whether a knockdown approach would even work for a disease like TTR amyloidosis.

Maybe we will get more clarity on dose and dose frequency at today’s R&D day.  If not, more detailed results are to be presented at the Annual Scientific Meeting of the Heart Failure Society of America (HFSA), September 22-25.

Monday, July 8, 2013

Arrowhead Research: The Next Two Years

Over the last year, Arrowhead Research has undergone a corporate transformation putting it into a position to develop important drugs and create sustained shareholder value.   After what must be a decade of chasing after the latest and hottest in nanotechnology, the company finally appears to have realized that it is in possession of a platform technology that can deliver not just dreams, but actual life-changing products: Dynamic Polyconjugates.

In the following, I will describe how I see the company go about creating value over the next 2 years.

ARC520, ARC520, ARC520

The current corporate messaging is clear: it’s all about the company’s potential cure for chronic hepatitis B, ARC520 (for review, follow this blog and Arrowhead's investor day).  ARC520, of course, is enabled by DPC delivery.  However, as its own experience and that of fellow Tekmira, Silence Therapeutics, and others have shown, the financial markets do not care much about valuing the key enabling delivery technologies in RNAi Therapeutics.  As a result, the company is focusing public attention on its lead product candidate which by now probably has commenced dosing in the first clinical study.

ARC520 has the makings of the start of an enormous franchise (note: I expect ARC520 to be followed by other versions should initial clinical results bear out the immune reactivation hypothesis).  Chronic HepB, a disease affecting over 300 million globally, has to be considered an incurable infection and there has not been an experimental medicine that can knock down the key surface antigen (HBsAg) as rapidly and potently as ARC520.  By knocking down HBsAg, it is hoped that the immune system can be reawakened to seroconvert against HBsAg which would be considered a functional cure.

We should find out whether the hypothesis is correct with the results from the first multi-dose phase IIb study which I expect to come in by the end of 2014/early 2015.  There is a slight possibility, however, that first functional cures may be observed in the single-dose phase IIa Hong Kong study with results in less than a year.

Beefing up the DPC-enabled pipeline

While ARC520 has enormous potential for which spelling out the market size would yield ridiculously high numbers, there are two main risks that need to be overcome. 

The first one is the safety of a DPC-enabled RNAi Therapeutics.  DPC has never been tested in Man before, so you always cross your fingers as it enters the clinic.  Nevertheless, the company has repeatedly reported in the peer-reviewed literature and otherwise that the safety profile, from rodents to a chimpanzee, is looking clean.  This gives me confidence that safety might actually be a strong point of the liver-targeted, short-circulating DPCs.

The second one is about the validity of the HBsAg immune reactivation hypothesis.  Key opinion leaders in the chronic HepB field support it, but as long as the direct link has not been demonstrated, it remains a risk.

As a result, the company would not do justice to DPC technology or itself by making ARC520 multi-dose results a binary event.  Instead, Arrowhead Research should add one or two additional DPC candidates to the pipeline by the end of 2014 when critical results for ARC520 are to be expected.

The first one is expected to be announced in 2013.  This should be another liver-targeted, two-molecule, intravenously infused DPC RNAi Therapeutics.  As Alnylam’s efforts show, there are numerous attractive, often orphan indications that involve gene expression in the liver.

In 2014, I would hope that a liver-targeted candidate based on their newly developedsubcutaneous DPC technology will be added to the pipeline.  Arrowhead presented first such subQ data in late 2012 so that with a few CMC refinements and gene specific development work, they might have a candidate in 2014.

Adding a subcutaneously administered DPC candidate to the pipeline would not only be progress in that this route of administration opens up new therapeutic opportunities, it would also mean that Arrowhead succeeded at where it historically has struggled with: making a single-molecule DPC at high enough yield and which can be properly analyzed.  Remember, Merck at the 2012 OTS meeting more or less announced single-molecule DPCs to be their RNAi delivery dream.  This means that Big Pharma will be and probably are already queuing up for the technology.  Big Pharma loves single-molecule solutions.

Going after the TTR cake: a proven path of value creation

Going by the analyst reports, more than half of Alnylam’s market capitalization ($2.4B) rests on their TTR amyloidosis pipeline: intravenous SNALP-based ALN-TTR02 in mid-stage phase II, and GalNAc subcutaneously delivered ALN-TTRsc in early phase I.  I believe that Arrowhead can create a candidate that is superior to both of them and thus claim a good part of that ~$1.5B in a relatively short period of time (~1.5 years from first IND to generate ALN-TTR02-type data).  Compared to ALN-TTR02, the subcutaneous mode, but equal potency could make it the preferred RNAi Therapeutic.  On safety, we have to wait, but this could be another differentiator.  Compared to ALN-TTRsc, improved efficacy and less frequent administration with lower injection volumes would make an ARC-TTRsc the winner in the market place.  Compared to phosphorothioate antisense-based ISIS-TTRsc, the winning differentiators would be potency and safety.

Arrowhead is a $70M market cap company.  It would seem like a no-brainer to go after the $1.5B market cap attributed to early-stage TTR amyloidosis data for their first subQ IND.  With a superior product and quite different molecular composition (delivery chemistry, possibly Dicer-substrate RNAi trigger) and superior clinical performance, no orphan drug designation by Alnylam or ISIS could hold it back.

Price Target: $30

In summary, by H2 2015, the time current funding is expected to last, Arrowhead Research could have demonstration of functional cure for chronic HepB (I won’t even start trying to value that), two additional product development candidates in the clinic one of which likely with a value between $1-2B, and a potent single-molecule delivery platform that will attract much attention in the industry. 

The achievements of these goals do not assume heroic operational feats.  Even in a worse-case scenario, namely that the immune reactivation hypothesis fails to live up to its expectations, ARC520 should add to the evidence of DPCs being a strong delivery platform thereby also de-risking the other two pipeline candidates.

Anybody laughing at a price target that is 15x that of its current price, by somebody who has put most of his stock market investment in that company at that, should perform an apples-to-apples comparison of clinical programs (ARC520 vs ALN-TTR) and delivery technologies (DPC vs GalNAc) with $2.4B market cap Alnylam.  Could it be that Wall Street has it all wrong?  Of course, Arrowhead Research is not the chosen one in RNAi Therapeutics on Wall Street, but I believe that clinical data on chronic HepB could lower Arrowhead’s cost of capital such that by mid-2015, a financing or business development deal would be on much improved terms.
By Dirk Haussecker. All rights reserved.

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