Monday, January 12, 2015

Tekmira Merges to Create HBV Powerhouse as ex-Pharmasset Geniuses Seek an Encore

Last night, Tekmira startled the RNA Therapeutics world by announcing that they would combine with OnCore Biopharma in a merger-of-equals to create the HBV drug development powerhouse.  With eight investigational HBV assets in the pipeline, this model follows the HCV space where combination therapies and companies with a single-minded focus on HCV were able to create tremendous shareholder and patient value.

Most often cited here is Pharmasset which gave Gilead HCV wonderdrug Sovaldi for an at the time (2011) unprecedented $11B.  Of note, OnCore Biopharma was founded by ex-Pharmasset people, including the inventor of Sovaldi.

This also makes it clear that despite paying lip service to the combined Tekmira to continue to value their other liposomal RNA Therapeutics assets ex TKM-HBV1/2, it is a good guess that the RNA Therapeutics platform will not have a long life in the merged company.  This is also because with $100M in cash, the company will have to look for ways to raise capital, some of it in a non-dilutive manner.

Combination and speed

Before the merger, OnCore had already started sweeping up a number of HBV-related assets intended to tackle chronic HBV infections at multiple stages: 1) replication and gene expression; 2) promoting, by stimulating and de-repressing, an immune response against the virus; and 3) even removing cccDNA, thus aiming not only at an already extremely valuable ‘functional cure’, but complete cure.

It is likely that only a multi-pronged approach will be able to achieve that.  The two RNAi candidates by Tekmira which have just entered the clinic are expected to form the cornerstone of that since they target ALL the viral genes.  Moreover, in the challenging chimeric mouse model, TKM-HBV1/2 had an unexpected impact on cccDNA abundance. 

The fact that TKM-HBV is administered intravenously is acceptable for this disease as long as a (functional) cure is achieved after a finite treatment period which, of course, is the goal. By contrast, the other assets contributed by OnCore are largely, if not all oral, including agents designed to inhibit immunosuppressant HBsAg secretion. 

Unlike TKM-HBV, these are at the pre-clinical stage, at least regarding their use for chronic HBV (the TLR9 agonist has already been tested in humans for non-HBV applications).  It is expected that many of them will enter the clinic this or next year. 

Regarding clinical development, the initial goal is to establish the safety of these agents individually before combining members from the three different classes pairwise and in triplicate in phase II.

The fact that all modalities are now under one roof will also greatly accelerate development timelines as, again in analogy to the HCV experience, it would otherwise have made necessary protracted partnering negotiations, sometimes with direct competitors.

Merger a good deal for Tekmira shareholders

Although I bemoan the loss of Tekmira as an RNA Therapeutics platform company, creating the strongest drug developer in the hot HBV space is the more attractive alternative also given the importance of TKM-HBV to Tekmira even before the merger. 

Accordingly, it is more likely that this setup will yield Pharmasset-type returns (say 10x in 3 years), e.g. following an acquisition after showing >40% cure rates in phase IIb, compared to a more balanced RNA Therapeutics platform play which has faced considerable competition from increasingly potent and more convenient technologies. 

Congrats to Tekmira management and Directors. The seeming investor relations breakdown recently has now been explained. Well played!


Anonymous said...

Bemoaning the loss of TKMR as platform company ignores the fact that it is a failure as one.

According to presentation BLT made to AZ, TKMR were using ddRNAi as its payload. This shows the paucity of data publicly available is probably due to its failings. Couldn't see if they were maintaining the use of it or employing something else.

ARWR looking more and more like a takeover target as next generation comes on.

Ebola program now history it appears.

Can't believe the participants in the shelf offering paid that much money just to give half of it away to Oncore.

If this is the Deal of the Year for RNAi it is not a signal that instils confidence in an investor. If you want that, show me the money!

Anonymous said...

Shorts well and truly in control of ARWR still.

So much for Tufulipo's Patchetts Charge analogy.

These days, if one wishes to make militaristic comparisons to stock market strategies, gaming the tactics of modern warfare is the better option. This includes assaults on civilian aircraft branded with sovereign identity and the destruction of iconic landmarks.

Meaning, don't worry about the collateral damage. Just achieve the desired outcome at all costs. Then blame someone else.

Anonymous said...

Dirk, do you think all of ARWR, TKMR and Oncore could all be bought out by the one company and housed under a single umbrella?

The outcome would be a HBV super co. with pipeline from pre-clinical to market if the acquisitor has PIII or product in market already.

Inlicenceing would make a complete R&D toolbox possible.

Such a company could partner with distributors by region instead of a single MNC.

Anonymous said...

Well, I'm not Dirk but such a concept would be a way more efficient allocation of those resources that represent capital and labour.

Far more efficient then the current model of every man and his dog trying to find the next increment of progress in any one disease then selling it for the highest price to those wanting to protect revenues first.

So perhaps this move is a move to get a little fish like Oncore in on the act because without TKMR they may well be overlooked, bought for a much lower price or simply left to fend for itself.

Doing this, they get a much higher price than otherwise.

The chance still exists that the ultimate buyer will move before closing anyhow.

Newsurfer said...

Perhaps the recent departure of Ian MacLachlan portended the change of direction for TKMR from an RNA Therapeutics platform company to an HBV focused company as outlined by Dirk.

Anonymous said...

Is Latebloomer off contract?

Hard to believe someone so opinionated doesn't have an opinion on these developments.

Anonymous said...

Dirk: How concerned should AWRW shareholders be about the announced partial hold on dosage levels in their new clinical trial? More importantly, what was the reason for the partial hold?

Dirk Haussecker said...

TKMR has not been using ddRNAi.

ARWR...wouldn't be too concerned about the Partial Hold. They were overly optimistic though to run parallel studies for 2 and 4mg/kg right away. I was surprised to see that they pushed for that.

Anonymous said...

Ian McLachlan was systematically booted out, as he is an absolute disaster from an HR point of view.

No one wanted to work with him, as he lacks the ability to collaborate in a group R&D environment.

Good riddance!

Anonymous said...

Reading details of merger it is not apparent by when the stockholders meeting must take place. First half of 2015 is mentioned in PR but typically once a pronouncement like this is made a meeting is called within 2-8 weeks with the date provided very soon after. Depending on what local laws, stock exchange regulations and company constitution stipulate.

Roivant is registered in Bermuda. Probably a mask for someone who doesn't want to be seen atm.

Have to wonder how many CoI's are hidden in such a registration. Especially if this is just the opening gambit of a larger play.

Anonymous said...

That Tekmira will no longer be a platform RNAi company after this merger shows us that the strategy of being one has been recognized as wrong given the science they were using and the IP around it.

In other words, efficacy has been elusive.

It makes me think of their loudest supporter on IV who continually batted away any setback or criticism with the oft repeated mantra of the truth of the science will prove them all wrong.

Now the catch cry is, what a great deal (forget the truth of the science, it doesn't work).

Anonymous said...

The science doesn't work? Let's see what the trial results for Ebola treatment look like in 3 months. Maybe you will eat your words.

Anonymous said...

The science doesn't work? Let's see what the trial results for Ebola treatment look like in 3 months. Maybe you will eat your words.

Anonymous said...

HBV is the name of the game.

Ebola has gone already.

Anonymous said...

Not quite sure what those implying the science doesnt work get their data from.. The science does exactly what its intended which is to silence the gene, what that gene may or may not do may be in question but the LNP platform appears to do its job quite well...

Is it the right gene to stop a specific cancer?? We may not know that yet but the gene was silenced.

Anonymous said...

Not sure what RA Capital are playing at.

They have now upped their stake in TKMR after being diluted out by half at a price cheaper than they entered in at. Plus they already hold significant stakes in BLT and VLA as well as others.

The message being not a little bit conflicted since apparently TKMR doesn't use ddRNAi despite BLT saying they do and VLA is in the business of viral delivery for oncology.

But when Kolchinsky is extolling the virtues of RGLS over BLT for their one shot cure, then you know not everything is what it appears and perhaps some half truthes are being said. Like, TKMR a platform RNAi company.

Anonymous said...

Have to wonder what is going on or what are the differences in trial design for both RGLS and TKMR to be able to initiate their trials so quickly but BLT is left squandering month after month with theirs.

Smells like a rat in the kitchen to me.

Anonymous said...

When is the TKMR - Oncore merger scheduled to close?

I assume it needs shareholder approval making a general meeting necessary. But I don't know what date that is scheduled for.

Despite all the plaudits it seems as if something is missing for TKMR to still be so cagey and mysterious about everything.

Perhaps those Jan. 26th calls and PFE's Q4 presentation on Tuesday are connected somehow.

Shorts covering in anticipation of a major announcement or a greedy lawyer making an inside trade perhaps.

Anonymous said...

The TKMR-Oncore merger is looking about as authentic as the platform RNAi company enabling data they have talked about so much and have now given up on.

Where is the General Meeting notice?

Is beginning to look like nothing more than a statement of desire?.

See that blonde over there, I really fancy her. Am gonna ask her out one day. Extrapolation; one day I'm gonna marry her.

TKMR credibility plummeting.

Anonymous said...

Meeting is March 3rd, sooner than I expected.

Anonymous said...

With the introduction of Neurovive the deal just had another layer of complexity added to it.

First of all, anything neuro doesn't suggest it has anything to do with hepatitis. Though the company description says they specialize in cardio and neuro, ie, not liver.

Secondly, it does suggest Oncore are just rainmakers. The real value, and not much of that either going by the upfront and termination fees, lies in Neurovive and the whole deal is just an engineering of values to allow certain people to get rich quick.

This is barge pole stuff. But probably good for a pump.

Anonymous said...

TKMR meeting to ratify this deal with Oncore is held Monday.

Since the announcement there has been nothing of note.

I am not convinced this is a good deal for TKMR holders and am wondering what may happen to the share price afterwards aside from the obvious decline due to dilution.

PfizerSloth said...

If its true TKMR was using ddRNAi as presented by BLT's CEO to Astra Zeneca, the subject of a PFE takeover bid, then it will be interesting to see what, if anything happens to BLT.

TKMR-Oncore is essentially a reverse takeover by Oncore with Neurovive. It can only happen with the approval of RA Capital

RA Capital have been selling down their holding in BLT. It must be because they see cause of little upside. Especially after Voyager's cap. raise.

Would not be surprised to see BLT sold cheap some time soon. Perhaps to Pfizer now that BMY and MRK are beginning to make moves.

William Joletti said...

I don't where the poster above gets his information but factually incorrect statements should be removed from here.

Benitec have never stated that Alnylam are using ddRNAi. They have an agreement whereby they can share their wares in certain projects. The poster should do some real research.
RA Capital have sold a minuscule amount of their shares, quite likely the result of a distressed seller. Maybe the second sale of some one million shares was a follower (sheep) do of the infamous Dr KSS. His inaccurate diatribes unfortunately influence quite a few of the flock.
Peter Kolchinsky has publicly stated his continued excitement about Benitec after being asked to explain the reason he left them off a list of good HCV stocks to own. He declared the list was for stocks that CURRENTLY offer a large upside. He stated Benitec are six months away from this and he can't wait to see the results come to hand.

Anonymous said...

What's with the speedy closing of the deal?

Usually, these things require BoD approval at a convened BoD meeting that complies with the Constitution governing such things after the shareholders have voted on it.

In this case, it seems to have happened simultaneously?

Is there more to come from this?

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.