Tuesday, February 26, 2013

Functional Cure of Chronic Hepatitis B: RNAi Therapeutics May Be the Only Game in Town (Part I)


Today, I wanted to post the first of a two-part series on the hepatitis B virus (HBV) candidate by Arrowhead Research which is set to enter clinical development in the first half of this year.  But as if on cue, the company just announced the publication of extremely potent ('multi-log') reductions in gene expression with their systemic DPC delivery technology.  This thus bodes very well for what is shaping up to be an RNAi Therapeutics pipeline highlight: ARC520 for the treatment of chronic hepatitis B viral (HBV) infection. 

Are you wondering what could be the next HCV-type or maybe even larger drug development opportunity?  HBV may well be the new HCV.  With HCV increasingly curable, the pharmaceutical industry has increased appetite for finally also developing a cure for chronic HBV.  Based on the potent preclinical data with DPC delivery technology and the view of thought leaders in the field that the specific suppression of HBV proteins may be the single most promising mechanism by which this can be achieved,  I am more and more thrilled by the prospect that ARC520 could become a poster child for an RNAi Therapeutics that addresses a major public health burden.

In anticipation of the March webinar by Arrowhead where the company wants to talk more about the concept behind ARC520 and their most recent data on the drug candidate, two blog entries over the coming week will first explain the rationale for why HBV is such an attractive RNAi Therapeutics opportunity and then discuss the features that make ARC520 a particularly promising (including in a commercial sense) RNAi Therapeutics candidate.


Only RNAi Can Suppress HBV Proteins in a Specific, Potent, and Rapid Manner

About 2 billion worldwide are infected with hepatitis B virus (HBV).  300-400 million of these have subsequently developed chronic HBV, meaning that they are at increased risk of prematurely dying from liver-related complications such as cirrhosis and liver cancer.   Every year, more than one million chronic HBV patients die of such complications.  In East Asia and developing countries where mother-to-child transmission is the predominant (and highly effective from a viral point of view) mode of infection, HBV is responsible for more than half of primary liver cancers; in Western countries where transmission largely occurs via body fluids, esp. blood, it still accounts for about one quarter of cases.

This means that the public health burden of chronic HBV infection already surpasses that of HCV and is extending its lead as the new direct antiviral agents against HCV prove quite effective at eliminating HCV.  An important difference between HBV and HCV is that HBV is a DNA virus that will persist for life in hepatocytes.  This explains we can only dream of a ‘functional’ cure, not a cure full-stop.  HCV, by contrast, is an RNA virus which, in the absence of replication, will disappear due to the relative instability of RNA.  

Vaccination works almost 100% well to protect us from HBV infection. but its therapeutic application so far has failed and it also does not address mother-to-child transmission. Interferon and viral polymerase inhibitors (nucs) are currently only recommended for those with active chronic HBV as determined by increased liver enzyme levels in the presence of HBV.  These drugs, however, only work to convert 10-30% of those treated into the inactive carrier state with normalized liver enzymes and very little HBV DNA in the blood.  Nucs have the added benefit of very effectively inhibiting active viral replication, meaning that it does a good job at minimizing the ongoing inflammation in the liver.  Unfortunately, only very few of these patients can be considered to be cured and they are thus still at risk for viral re-emergence.

It is widely accepted that a functional cure for chronic HBV, meaning viral suppression in the absence of drug treatment, can only be achieved by harnessing adaptive immunity.  Here, the name of the game is achieving hepatitis B surface antigen (HBsAg) seroconversion, meaning the development of antibodies to HBsAg.  People who stably carry such antibodies can be considered cured.  Although the exact mechanism by which this is supposed to occur is being debated, it is widely accepted that immune exhaustion due to the presence of abundant HBsAg in the serum in the form of subviral particles and in the liver is the cause of why our immune system tolerates HBV, instead of eradicating it.

While nucs, which inhibit viral polymerase, not mRNA transcription of viral mRNA which is performed by our own RNA polymerase II off the viral cccDNA, and interferon can have some suppressive effect on HBsAg levels (on the order of ½ log), it seems that RNAi Therapeutics is the only means to achieve the specific, potent, and rapid inhibition of HBsAg that is considered to be necessary for a successful relief from immune exhaustion. In doing so, an RNAi Therapeutics can do everything that a nuc can do and more.  This means that such an RNAi Therapeutic may also significantly expand the pool of chronic HBV patients on therapy and should become a core component in any combination therapy such as with an interferon.

Look out for the next post on why I think ARC520 is an excellent RNAi Therapeutics candidate to achieve the stated objective.

Thursday, February 21, 2013

The RNAi Therapeutics Money is in the Product Candidates


If you believe, like I do, that the RNAi Therapeutics money ought to be in delivery, the track record suggests that you are mistaken: with the exception of what was euphemistically referred to as a $65+10M 'restructuring' of the agreement between Tekmira and Alnylam, over the last 4 years there has not been one deal where an RNAi delivery company reaped substantially non-dilutive funding for their delivery technology.  By contrast, the money was to be made in RNAi triggers and especially in partnering/licensing out RNAi Therapeutics candidates (for more details, see the RNAi Therapeutics in 2013 Report).

The failure of companies like Tekmira, Arrowhead Research, Silence Therapeutics, and Marina Biotech (plus many others not so much in the spotlight), to capitalize on the uncontested value of delivery may be due to one of the following factors:

1) their respective delivery technologies do not meet the expectations of the pharmaceutical industry;

2) RNAi Therapeutics has lost its attraction as a platform technology. Consequently, an investment in platform technologies such as delivery is not compelling;

3) Potential partners want a One-Stop Shop. Licensing in delivery AND the RNAi triggers separately can be burdensome and may mean decreased potential profits down the line (royalty stacking);

4) intellectual property issues around the payload when monetizing delivery; Alnylam and ISIS have famously sued Tekmira for their delivery deal with BMS (litigation terminated now) claiming that Tekmira was indirectly selling RNAi triggers it did not own.

I believe that all the above factors have contributed to some degree with the relative weight of the issues varying depending on the specific technology, geographies, and other company-specific factors such as the trade secret litigation between Tekmira and Alnylam that has delayed deal flow related to the most advanced RNAi delivery technology.

However, RNAi Therapeutics is regaining favor as a platform technology and I am hopeful that this will translate into the long overdue transactions, also involving the SNALP and DPC technologies by Tekmira and Arrowhead Research, respectively, which have technologies of clinical maturity (disclosure: I am a shareholder of both companies).  The two most likely customers here are Novartis and Merck.  Novartis has an active interest in RNAi Therapeutics, but the scientific and patent literature suggest that they have no tangible delivery technologies and their internal efforts are not even half-hearted so that I expect them to go out and buy in the technology instead of replicating Merck's inreasingly costly mistake of investing hundreds of millions in internal delivery research, including SNALP and DPC lookalikes, when the combined market caps of the originator companies is a fraction of that (please somebody explain that logic to me).

Nevertheless, RNAi delivery companies cannot rely on such platform partnering and need to push ahead with creating RNAi Therapeutics candidates.  This last mile is currently the most rewarding way to monetize on their delivery technologies.  Alnylam has long understood this (see recent partnering around TTR, PCSK9 and VSP), and is now reaping the rewards. 

What Alnylam has done, however, is no magic, far from it: identify genetically attractive gene targets, formulate into established delivery tech (e.g. SNALP, GalNAc), and do some biology around them to build a scientific story to be sold to the pharmaceutical and investor world.  With an established delivery technology, the hard work, or maybe better, the most uncertain factor has been removed, so it's pretty smooth sailing from there as long as the gene target is good and desired by the industry.

It is thus ironic that platform companies get loved for their specific product candidates (not just in RNAi Therapeutics it seems), and not for the technologies that critically enabled them. For RNAi delivery companies, it is important to swallow this scientific toad and invest the additional $5M or so it takes to build that IND-enabled package to reap disproportional rewards.

Sunday, February 17, 2013

RNAi Therapeutics, My Long View


Warning: disorganized thoughts gathered on a long plane ride.  Having followed the development of RNAi Therapeutics since it took off in 2001, I submit that its trajectory continues to strongly suggests that it will become an important new class of drugs.  I am not saying that capital has always been well spent and that the field has been free from scientific and securities 'fraud' (meant in a broader sense).  However, from a 30.000 feet level, a dozen years from the demonstration of RNAi activity in mammalian tissue culture cells to demonstrating potent gene knockdown in Man following systemic administration is more than satisfactory progress. 

If the sound of a dozen years makes you uncomfortably aware of your own mortality already, then consider that nearly two dozen years have passed since the RNAi phenomenon was first described in plants- and it still feels to me like it was yesterday, especially with the lightning speed with which our understanding of the RNAi mechanism unfolded between 1996-2006.

With the momentum fairly intact, certainly somewhat dented by a financially trying spell (2009-12), I expect that RNAi Therapeutics will have real clinical impact over the next dozen years.  In addition to the marketing approval of orphan drugs, RNAi should make deeper inroads into public health by addressing widespread diseases such as metabolic disease and hepatitis B.

There are, of course, also fundamental challenges that could hold up progress in RNAi for knockdown in certain tissues where we don't even have a good idea to start with on how to theoretically overcome the biophysical obstacles in reaching and penetrating them.  Until that becomes rate-limiting, however, there will be plenty of work to be done in exploiting the already existing therapeutic opportunities that come with the ability to silence genes in a few tissues.  


Not just the science

Unfortunately for investors, this optimistic long view for the technology is no assurance of financial success.  We have seen great volatility and an industry shakeout during which a number of companies either went bankrupt or as a result of which existing shareholders were wiped out following a reorganization.  In fact, we are not entirely through this period and it will be interesting whether and how some of the remaining first-generation RNAi Therapeutics companies will come out of the past crisis and re-establish themselves as bona fide pharmaceutical companies.

In addition to the sector sentiment swings and turmoil in the wider economy that can wipe out shareholder value without the direct fault of companies, it has also dawned on me, how scientific illiterate managements can destroy valuable science or fail to seize upon obvious opportunities.  Does the old management of RXi Pharmaceuticals perhaps realize that they were on the right track with their 'self-delivering' chemistries, but for the really stupid decision to stay below 15bp dsRNA lengths for putative, and at that European IP issues, other companies are going to eat the self-delivering cake now?  Scientific illiteracy can be forgiven as it does not suggest willful mismanagement.  Worse are cases where companies have become the personal ATMs of Directors, managements and close friends with retail shareholders helplessly watching how their equity is taken away from them.

In addition to scientific illiteracy and the violation of fiduciary duties, the value of good science may also fail to be exploited because especially science-focussed, early-stage biotech companies do not understand the full value chain of drug development and commercialization.  A related commentary was made about John Maraganore when Fierce Biotech selected him as one of the top 25 influential people in biotech.  Even if I am vigorously opposed to what I considered unethical and monopolistic business practices, I admit that JM's mathematical product of scientific insight times financial market savvy must be one of the highest in the industry. 

Needless to say, such a talented person would look pretty stupid if he found no supporters on Wall Street and if he weren't in touch with the people and institutions driving health policy.  He also needs to exude the type of confidence that Wall Street associates with success.  If you believe you have a great technology and that you 'ought to' become a major pharmaceutical company, better line up your financial and other supporters before starting to invest accordingly.  An important lesson that I've learned on this journey is that if you just call, they won't necessarily come.  


Investment Principles

Considering that in terms of a financial investment the translation of RNAi Therapeutics into marketed drugs is taking a long time which increases the risk of getting wiped out along the way, my current working philosophy for investing in the sector is taking into account the following factors: 

1) pure-play RNAi Therapeutics companies with a hot, clinically mature delivery technology in the industry, hotness also reflected by the buzz the technology is generating in the industry; 

2) one or two flagship products that capitalize on the strengths of RNAi Therapeutics and their specific technologies and which can capture the imagination of healthcare investors (RXi has famously taken years and years to bring their first RNAi Therapeutic candidate into the clinic and failed to live up to expectations of becoming No. 2);

3) a vibrant, yet capital-efficient lab to maintain tech leadership and support potential partnerships (sorry Marina and Benitec shareholders, without a lab keep waiting for that blockbuster partnership deal);

4) a small market cap such that a non-dilutive funding event can generate explosive returns, but not too small to avoid a financing death spiral (a caveat is that from an institutional investor perspective small market caps can be prohibitive);

5) a seasoned, well-connected and yet hungry management that I feel are good stewards of shareholder value and are respectful of retail shareholders (good luck finding that);

and last, but not least 6) avoid exposing a large position to binary events unless you have reeaaal conviction about its outcome.

All of the above, of course, can only be food for thought as different backgrounds necessitate different investment strategies.



Sunday, February 10, 2013

Is Alnylam Foolishly Betting the Farm on GalNAcs?


It is remarkable that Alnylam seems to be embracing GalNAc subcutaneous delivery for all pipeline candidates, but for perhaps ALN-TTR02, that are most important to its 5x15TM development and commercialization strategy: ALN-TTRsc (TTR amyloidosis), ALN-AT3 (hemophilia), and ALN-AS1 (acute intermittent porphyria).  Considering that gene knockdown has not been demonstrated in Man with GalNAc conjugates, and potency could be a critical issue determining whether this really is a subQ approach, this apparent high-risk strategy is uncharacteristic of a company with the laudable attitude of raising capital when the company does not need it.   


ALN-TTRsc: The Missing Clinical Trial

One possible reflection of the fact that management does not really feel as confident about the strategy as it may seem, is the missing entry of the ALN-TTRsc phase I clinical trial on clinicialtrials.gov (and other registries I looked at).

I like to look at clinical trial registries, esp. clinicaltrials.gov, also for the reason that information contained therein often provide interesting clues into otherwise undisclosed safety and efficacy issues.  For example, is it a single and/or multiple dose, what are the dosing ranges, etc. 

With ALN-TTRsc, I do not expect safety to be necessarily the dose limiting factor.  Rather, it may well be the ability to show robust efficacy with an injection volume of 1ml or less, the magic upper limit for subQ approaches.  It turns out that adequate efficacy was seen in non-human primates only starting at 2.5mg/kg which apparently corresponds to the 1ml volume in humans.  Moreover, the dose-response curve is relatively shallow making it difficult to extrapolate predicted doses from preclinical models into humans (being off by a factor of 2 in the ED50 could already prove disastrous).

Is the omission to list ALN-TTRsc on clinicaltrials.gov an attempt at hiding that the dose escalation schedule indicates that 2.5mg/kg is an optimistic guess? Of course, the secrecy could also be for competitive reasons in light of its race with the competing antisense approach by GSK-ISIS.  But for a company that so far has listed every clinical trial, including ALN-TTR01 and ALN-TTR02 all of which have been conducted exclusively outside the US, there will be a reason for it and doubts about GalNAc potency is a plausible one.


GalNAc Steals Spotlight from DPCs

Recently, Arrowhead scientists presented impressive subQ hepatic knockdown data with the DPC polyconjugate platform.  While the response to the presentation at the Oligonucleotide Society Meeting in Boston last year was tremendous, possibly the most enthusiastic one among all the presentations (and one of the reasons why I am bullish that there is wider industry demand for DPCs), Arrowhead has been getting no love from the financial markets, thus putting it at a disadvantage in any licensing negotiations.  One factor for that might be GalNAcs which take away in the typical investor’s mind the uniqueness about it being a subQ RNAi delivery approach.  So if Alnylam eventually realizes that it needs an alternative, it might get access to it on more affordable terms.  The phase I ALN-TTRsc results expected mid-year could be the critical event in that dynamic: poor results would benefit Arrowhead Research.


GalNAc Plus

Of course, the confidence in GalNAcs may rest in the knowledge that ALN-TTRsc is actually the pipeline candidate with the weakest potency, and if IT shows efficacy, it will be a stroll for all the others.  These apparently have proven to be more potent in preclinical studies.  

I consider this a possibility, but am not fully convinced that these conjugates can really be called GalNAc-siRNA conjugates.  This is because the TTR siRNA is a particularly potent one already and I am wondering how you would achieve a 10x increase in potency from ALN-TTRsc to ALN-PCSsc with stabilizing nucleic acid chemistry alone.  Moreover, it is a small miracle already that a simple siRNA with a targeting ligand can achieve ED50s in the low mg/kg, because the related cytoplasmic release would likely rely on spontaneous endosome rupture (miracle probably explained by the high volume ASGPR receptor-mediated trafficking).

Consequently, my feeling is that the GalNAc Plus conjugates involve additional functional moieties beyond stabilizing chemistries such as 2'-o-methyl and 2'-F…such as endosomolytic activities.  In a 2009 patent application by Manoharan et al. (WO 2009/126933) such endosomal release activities, melittin included, were indeed contemplated in the context of GalNAc-siRNAs.  In fact, the claims would cover GalNAc-targeted DPCs such as the one described in the Mirus/Arrowhead in the 2007 PNAS paper (Mirus cientists Publish Elegant Paper on Targeted siRNA Delivery to Hepatocytes).


The patent application, somewhat of an attempt at an early land-grap being devoid of any actual experimental data, is not very remarkable really as it is obvious to somebody skilled in the art that in order to significantly enhance GalNAc-siRNAs such functionalities will be highly desirable, so a lot of it would come down again to chemistry and figuring out which exact compositions are functional and safe.

In my mind, it is fair game to pursue promising (delivery) technologies, especially under the Research Exemption in the US.  However, as the Tekmira-Alnylam relationship has shown, it is foolish for two companies to collaborate on delivery when both are working on GalNAc conjugates internally.  At best, the technology is useless and the whole thing will be forgotten.  At worst, the technology is valuable and both parties will try to control it and not pay the other party their dues.   


Overall, I think that betting the farm on GalNAcs is taking on more risk than warranted considering the advancements and validation achieved with SNALP technology.  Also, if Alnylam considered the subcutaneous approach to be that much more attractive than intravenous, you would think DPCs are the logical fall-back, if not more desirable than simple GalNAcs.  But maybe GalNAc Plus and DPCs are not all that dissimilar and we are on the same page after all.


Note added in proof (March 27, 2013): the ALN-TTRsc clinicaltrials.gov entry has now appeared.  As expected, however, no insights were provided into the dosing range. Only interesting tidbit: the volume of the placebo injection will be matched to that of ALN-TTRsc.  Injection volumes will be critical.

Tuesday, February 5, 2013

Alnylam and The Medicines Company to Position RNAi PCSK9 Drug Candidate as Fast Follower


Yesterday, Alnylam made the somewhat surprising announcement that it partnered with the ~$1.6B market cap The Medicines Company to develop and commercialize its RNAi Therapeutic program targeting PCSK9 for hypercholesterolemia.   This program includes ALN-PCS02 which had completed a phase I study last year and contemplates subcutaneous formulations, too.  

This means that as a number of PCSK9 monoclonal antibodies are moving forward in clinical development at lightning speed, including phase III trials involving more than 20k patients, the ambition here is not to have a Big Pharma try and catch up (maybe they did try, but nobody was willing to partner), but to carefully study the experiences of the monoclonals and exploit the biological differentiation that an RNAi approach offers over antibody.  With The Medicines Company on board, some of that potential at least is seen in the hospital setting.   


Mechanism of Action of RNAi vs Antibody 

There are various points of differentiation which might translate into a clinical benefit for RNAi. Expect the companies to look hard for such evidence and, if found, beat the drum about it. These differences include: 1) reduction of both intra- and extracellular PCSK9 thus replicating human genetics from which PCSK9 emerged in the first place; antibodies merely bind existing extracellular PCSK9; 2) because antibodies form complexes with their targets and do not act catalytically, the percent target inhibition efficiency of antibodies depends on target abundance; therefore, in patients that have many more PCSK9 molecules than the number of antibodies you can fit in a subQ syringe, PCSK9 antibodies will not work well; RNAi, however, works with similar percent knockdown efficiency more or less regardless of target gene expression levels.


Efficacy

In general, the LDL cholesterol reductions with monoclonal antibodies have been between 40-70% in multi-dosing regimens.  In Alnylam’s single-dose phase I trial, the liposomal ALN-PCS02 achieved a ~30% reduction (area under the curve). 

Frankly, given the number of clinical trials involving PCSK9 monoclonals, I have given up tracking the results of each and every study.  Having said that, in reviewing the phase II trials of the candidate that may be viewed as the most advanced/exciting one, AMG145 by Amgen, it seems that the higher end of LDLc reduction was only achieved when given on top of statins.  Althought to me this seems a bit counterintuitive since statins are thought to act mechanistically essentially the same as PCSK9 inhibitors, namely via increasing LDL-receptors on hepatocytes, that's the way it looks right now, and the ALN-PCS02 trial may have been disadvantaged as it was mono-therapy.

Finally, with continued improvements in the potency of RNAi Therapeutics technologies, it should be possible to achieve similar LDLc reductions with RNAi as with PCSK9 antibodies. 
  

Acceptance

I like the fact that PCSK9 has become a small battleground between RNAi and monoclonal antibodies as this may be the best way for RNAi Therapeutics to work on its wider acceptance by the medical and investor community.  Notably, the often glorified monoclonals frequently suffer from injection reactions (some notable serious ones were observed in Regeneron’s PCSK9 trials), other immune-related issues and manufacturing challenges to name a few issues.  RNAi Therapeutics, of course, are facing some of the same challenges, but it irks me that when it comes to this technology, they suddenly are supposed to be show-stoppers.


Financials

The financials (including a $25M upfront, up to $180M in sales and commercialization milestones and double-digit royalties) were not all that exciting for Alnylam and reflect the fact that only one single-dose phase I trial had been conducted.  Also, as Alnylam cannot claim a blocking IP any more and has licensed hepatic targeting rights to other companies, including Roche/Arrowhead, the value of ALN-PCS as the only RNAi candidate for PCSK9 has been lost.

Still, $25M is serious money for a company the size of The Medicines Company and you do not turn this over just to help out an old friend.  
By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.