Wednesday, December 13, 2017

Dicerna Exploits HBV Biology For Less Frequent RNAi Dosing

Despite recent findings by Arrowhead Pharmaceuticals suggesting that finite treatment with an RNAi medicine might be possible in the search for a (functional) cure of HBV, less frequent dosing is always a plus.  It now seems that fresh HBV entrant Dicerna may have stumbled across a way to reduce dosing frequency and at the same time uncovered an intriguing piece of HBV biology involving the mysterious HBV X protein (HBx).

Search for perfect RNAi target site uncovers important HBV biology

Gene knockdown trigger selection has become critical in a highly competitive field featuring not only Arrowhead and Dicerna, but also Arbutus, Ionis (along with partner GSK), and the Alnylam-Vir alliance in the Western World alone.  This is because ‘by rotten luck’, Arrowhead found that an RNAi trigger that was designed to hit all the HBV transcript did not take into account the absence of the target site on transcripts that derive from host chromosomally integrated HBV.    

The finding that in many patients, e-antigen negative patients in particular, most viral transcripts derive from integrated HBV, has to be considered the most important new discovery in HBV biology and  disease progression since the finding of NTCP as the viral entry receptor.

This has established the selection of a target site upstream of the integration breakpoint as the new industry standard.  Little did we know that the search of the perfect RNAi target site should yield another fundamental insight into HBV biology that could also be therapeutically valuable and provide for some important competitive differentiation for late entrant Dicerna.     

HBx-sparing RNAi trigger has dramatic impact on HBV core protein localization

When scanning the HBV genome for target sites, Dicerna found that an RNAi trigger that hits all HBV transcripts except for HBx was associated with considerably more sustained gene silencing following a single dose (>>8 weeks in a mouse model where GalNAc-RNAi is generally less long-lived compared to humans) compared to an RNAi trigger hitting all HBV transcripts without exception (~3 weeks until knockdown was considerably lessened). 

Further underlining the longevity of the effect, Arbutus’ LNP-based formulation was only able to produce 1 week of good gene silencing in the same (HDI; slide 6) mouse model.

Interestingly, this effect was correlated with striking differences in the cellular localization of the HBV core protein: when all gene products were equally targeted, core protein was predominantly in the nucleus.  By contrast, core protein was almost exclusively cytoplasmic when HBx was spared.  Since phosphorylation of the C-terminal domain is known to be important for HBx nuclear trafficking, it was speculated that HBx may bind in that region and thus mask the nuclear localization signal.  This would be useful during the late stages of a viral infection when core protein would be needed for pregenomic RNA packaging and ultimately viral release.

The reason why gene silencing would be shorter lived when core was in the nucleus is likely due to its stimulating activity on transcription from the HBV cccDNA which would increase transcript dynamics and thus more quickly dilute out the anti-HBV-loaded RNAi machinery in the cytoplasm.

Indeed, in a non-cccDNA-dependent mouse model (e.g. more reminiscent of e-antigen negative patients), this beneficial effect was not observed.  

In summary, while the mechanistic basis of the differential silencing phenomenon remains to be fully fleshed out by further experimentation, Dicerna has found a way to quite dramatically extend gene silencing and thus decrease drug administration frequency.  This is a useful competitive feature in antivirals in general where drug resistance due to missed doses is always a concern and also simply due to patient convenience.

Disclosure: long DRNA.

Monday, December 11, 2017

Gene Knockdown in Disease Involving Gene Expression Throughout Brain Reported

Today, Ionis issued a press release revelaing that their drug candidate for Huntington’s Disease was able to knock down the huntingtin target gene in a dose-dependent manner.  This is the first clinical demonstration that single-stranded phosphorothioate antisense technology cannot only engage gene targets, as had been shown in the gain-of-function approach for spinal muscular atrophy (SPINRAZA; slide 58), but that it could do so in a sufficiently robust manner so that a knockdown could be measured.

This, of course, has broad implications for the Ionis antisense platform which is similarly being developed for other RNaseH-based knockdown applications ranging from the rare and severe (e.g. ALS, spinal cerebellar ataxias) to the more common neurodegenerative diseases such as Alzheimer’s and Parkinson’s.

The reason why this feat is remarkable and a great de-risking event for the technology is that in some of the indications, the target gene is expressed and needs to be suppressed more or less throughout the brain.  Assuming Ionis didn’t take brain biopsies, but instead looked for protein expression by taking CSF samples which would +/- give you an average of target gene expression in the entire CNS (a safe assumption), the ability to assess a dose-dependent gene knockdown is a testament to the robustness of the gene knockdown.

The actual numbers, however, remain under wraps as Ionis and partner Roche (which has exercised its option to IONS-HTTRx in the wake of the data) plan to present them more formally through a publication and a conference presentation with key thought leaders in the disease present.  My guess is that peak knockdown is in the 50%+ range which Frank Bennett from Ionis has recently referred to be in the desired knockdown range.

Given that dosing in the study only lasted 3 months in this slowly progressive disease, it is unlikely that actual clinical benefits will be reported from this phase I/IIa study.  But given the so called 'huntingtin knockdown holiday phenomenon' and some remarkable comments from investigators in the study and KOLs, one cannot but hope that we’ll be in for a positive surprise.  

Wednesday, December 6, 2017

New Arrowhead Data Shows RNAi Ratting Out HBV

When Arrowhead suffered its DPC fiasco a year ago, it got a chance to re-prioritize its pipeline.  It therefore caught my attention that despite the significant theory risk that still persisted, it chose HBV as one of its lead indications.

To wit, knocking down HBV genes promised to re-awaken the host immune system thought to be exhausted in chronic HBV patients.  The HBV surface antigen (HBsAg) had been regarded to be the main culprit for this exhaustion, although other gene products are now thought to play a role, too.

Previous update suggested long road ahead

When Arrowhead left off, clinical data had shown robust HBV gene suppression (~1-2log range) when the RNAi trigger target sites were present (in treatment-naïve e-antigen positive patients).  Curiously, in e-antigen negative patients where many HBV transcripts lack the ARC-520 target sites, a modest, protracted anti-HBV response could be observed.

Unfortunately, data presented this spring at EASL suggested that long, if not chronic RNAi dosing might be necessary since viral rebounds were seen in all but one subject once ARC-520 dosing had been stopped after half a year of treatment.

Chronic dosing, if indeed it can be shown to lead to a reduction of cirrhosis, liver cancer, and death, is conceivable with a subcutaneously administered RNAi agent.  The road, however, to proving such value and broad adoption in the clinic would be harder and longer compared to demonstrating host control of the virus after a finite treatment period.

New update shows host gaining upper hand

Based on the latest data presented yesterday at HepDART, including ~8 months of additional follow-up in the same patients, this may not be the case anymore.  This is because in 50% of the subjects (in 2 out of 3 e-positive and 2 out of 5 e-negative) given ARC-520 along with polymerase inhibitor entecavir, there have been sustained anti-viral responses after the initial rebound. 

In all cases, HBsAg continued trending down until the last time-point reported, and in 3 of these 4 subjects HBsAg was approaching the limit of detection.   Intriguingly, this was accompanied by a modest spike in liver enzymes, consistent with the host immune system regaining the ability to spot and remove infected hepatocytes. 

Of note, the HBsAg declines are more robust (5.0, 3.1, 2.0, and 0.6) and faster than would be expected based on entecavir treatment alone (~0.5log per year).

Since the enzyme elevations generally followed on the heels of the viral rebound, it is possible that treatment cessation and getting HBV to come out of hiding is actually beneficial.  Nevertheless, in the one subject (patient 01-7985) where there was no viral rebound, ALT values still rose.  

Experimenting with treatment schedules will therefore be an important component of future HBV trials.

In the meantime, we can look forward to an update on the same subjects after another few months. Could it possibly be that we are witnessing  the first HBsAg clearances and host control of HBV brought about by RNAi?

Wednesday, November 29, 2017

Non-RNAi Oligonucleotide Therapeutics Stocks

In the final instalment of the stock market-focused mini-series, I will turn my attention to the non-RNAi Oligonucleotide Therapeutics sector.  With last year’s approval of EXONDYS51 (Sarepta) and SPINRAZA (Ionis/Biogen), two highly impactful exon-skipping drugs, Oligonucleotide Therapeutics has finally gained widespread acceptance as a mainstream drug modality and arguably de-risked biotech investment vehicle.

Ionis Pharmaceuticals
This is a stock where tremendous value is waiting to be unlocked.  All it takes is a change in corporate strategy.  At present, Ionis needs ~4 groundbreaking medicines for every one developed by more traditional biotech companies such as Alnylam for it to reap similar market cap appreciation.  This is because it has readily given away ownership over its drugs regardless of needs, be they financial or related to a lack of disease expertise.

A striking recent example of this is the creation of Akcea as a subsidiary tasked with the commercialization of cardiometabolic drugs discovered by Ionis.  In addition to instantly giving up 1/3 of its ownership through an IPO of Akcea at very low prices, Akcea also partnered much of its assets with Novartis, thus further diluting Ionis’ ownership.

So what should have easily been a value of $3-4B to Ionis on the eve of the approval of the first important cardiometabolic antisense drug (triglyceride lowering Volanesorsen for FCS), Ionis’ stake in Akcea now probably accounts for barely $1B of Ionis’ ~$6.5B market cap.

To add insult to injury, Ionis this summer purchased close to $100M worth of real estate related to their R&D and manufacturing operations. $100M of valuable drug development monies!  This apparently they consider a better prospective return on investment than keeping full ownership of the cardiometabolic franchise or spending a few millions to just buy the marketing muscle they keep whining about lacking.

Not all may be lost though.  There are signs that Ionis, and perhaps even the CEO (Stan Crooke) himself who had been propagating the marketing-is-evil myth to justify Ionis’ business strategy, has started to realize that they need to change their ways to keep up with the market capitalizations of peers, including organizations driven by strong platform technologies (etc Alnylam, Regeneron).  With Brett Monia assuming the role of COO and Crooke’s right hand Lynne Parshall stepping aside, we are in the midst of a change of guards in this company.  But don’t hold your breath given that Dr. Monia, as a founding member (in his mid-20s!) of Ionis, still ought to be considered a part of status quo until proven otherwise.

Inotersen as an inadvertent opportunity

Just as Ionis was looking to be locked into its royalty play model with Volanesorsen (à Akcea) and GSK-partnered Inotersen for TTR amyloidosis as the next approvals on the 2018 horizon, GSK handed back full rights to Inotersen to Ionis.  Suddenly, Ionis is in full control of a drug competing for a market currently supporting ~$10B in market capitalizations between Ionis and Alnylam.  With peak sales expectations (even without the wild-type TTR cardiomyopathy opportunity) topping $5B, this number should only grow as the commercialization phase begins.   

If Ionis is smart, they will retain most marketing rights to Inotersen as any misstep by Alnylam around its first-generation TTR drug Patisiran could provide Ionis with an unanticipated upside (as an investor, I always look for the upside compared to market expectations).  Also, learning the TTR marketing ropes now will prepare them for the battle of the respective next-gen drugs between Alnylam and Ionis as this is where the TTR game will be won in the mid-term.

Chances are that Ionis will find commercialization less daunting and even rewarding, including to the R&D staff getting closer to the patient experience.  They should also then realize that through the exposure to the patients and medical community, they will gain a better understanding of the demands on follow-on products.  Drug discovery and commercialization in the orphan era is certainly a virtuous circle and Ionis may be the last one to find out.   

Better late than never.

In the interim, look to clinical results, especially from partnered CNS franchise drugs (Huntington’s, ALS) as tradable catalysts.  With a position in IONS that is approaching the size of my largest holding (ARWR) following the recent mini-sell-off in biotech, I also speculate that as the commercialization of Inotersen approaches and the market understands the impact of the SPINRAZA loading dose issue on sales numbers, IONS should be a solid outperformer in the biotech market. 

Strong buy.

Wave Life Sciences
I consider the CNS where currently the most value is bottled up in antisense therapeutics whereas in the liver, RNAi in general holds the edge in terms of safety and convenience (long-term I believe the battle will be won based on off-targeting, one gene at a time).

Since Ionis has given up substantial rights to its CNS drugs through its broad partnership with Biogen and the next hot CNS candidate is partnered with Roche (for Huntington’s), consider Wave Life Sciences not primarily as a stereopure ASO investment, but an ASO CNS play with the company likely retaining significant commercialization rights.

Of most interest to investors should be its two early clinical-stage drug candidates specifically targeting the mutant alleles in Huntington’s disease.  Initially, I had been skeptical about the actual need for targeting mutant huntingtin specifically given that we are unlikely to see the 90%+ type knockdowns that *could* spark safety concerns if the degree of knockdown also applied to wild-type huntingtin. The observation by Ionis, however, that ASO knockdown in the various areas of the brain is uneven and that the deep brain structures thought to be most involved in Huntington’s pathology may be some of the least sensitive to ASO knockdown made me realize the potential value of the allele-specific approach.  This is because in order to drive substantial knockdowns in the deep nuclei, the corresponding drug doses might lower wild-type huntingtin to very low levels say in the cortical neurons.

Still, since the huntingtin knockdown concern remains theoretical and is largely based on animal models where huntingtin has been knocked out since around birth (please correct me if wrong), I still consider the allele-specific approach as a needlessly complicating measure.

With a healthy market cap of $1B, I feel that WVE is a very interesting ASO investment for the long-term, but that price-wise better buying opportunities could be ahead for this clinically nascent company.  Also, I am skeptical about Wave’s unforced fast-follower strategy and would like to see first-in-class candidates entering clinical development.

And yes, if stereopure chemistry can get around some of the safety issues of phosphorothioate oligos that will likely remain relevant (due to dose levels) for systemic applications outside the liver, additional competitive value is to be realized there.

Disclosure: no position as of November 29, 2017.

Sarepta Therapeutics
One of the fast-follower indications pursued by Wave is exon skipping for DMD- the domain of Sarepta Therapeutics.  Soon, Wave may not find themselves chasing a modestly potent EXONDYS51 and related PMO-chemistries for other exons, but what could emerge as a much more exciting exon skipping chemistry for the muscle: peptide-conjugated PMOs (PPMOs) which has recently cleared the preclinical safety hurdle to enter clinical development.

PPMOs easily outperform simple PMO chemistry in terms of potency, but arginine-rich precursors have suffered from unacceptable preclinical toxicity.  Sarepta now claims that it has found PPMOs with increased potency (see slide 16 of this presentation), but a much better safety margin.

If first clinical biomarker data support substantial exon skipping, then I believe Sarepta’s control over the DMD market will be cemented. Currently it somewhat hinges on confirmatory clinical evidence of therapeutic benefit for their mildly active PMO exon skippers entailing considerable clinical and competitive risk.  Add to this a number of other modalities in the quiver to treat DMD which Sarepta has acquired rights to more recently, Sarepta looks like a Vertex-/Alexion-type single orphan disease-focus play in the making.  Think $30-40B market cap (now: $3.6B).

Disclosures: long SRPT.

Regulus Therapeutics
After the miR-122 desaster in HCV and new management in place, it looks like a fresh start for Regulus Therapeutics.  The new mantra is quality over quantity as Regulus and partners alike have axed a number of microRNA Therapeutics programs.

As a result, it is clinical data from two development candidates that will most likely determine the shareholders’ fate in the years to come (note: I still think there could be tremendous opportunity in microRNA Therapeutics from addressing complex neurological diseases like Alzheimer's, but his seems of less interest to Regulus currently).  

One is RG-012 targeting miR-21 for the treatment of Alport Syndrome, an orphan disease impacting kidney health.  The advancement of this program into patients was recently slightly delayed by a few months after insights from a natural history study of the disease made the company re-focus on only X-linked cases of the disease for purposes of better stratification.

Instead of considering the change in study design as increasing the quality and therefore odds of success for the study, the market penalized this 3-6 month delay by selling off the stock from $1.4 to sub $1.  I call this a buying opportunity.

Regulus Therapeutics stands out from the oligonucleotide therapeutics crowd in that also its second candidate, RGLS4326 for autosomal dominant polycystic kidney disease (ADPKD) now in the clinic, is also targeting cells in the kidney.  I don’t think that this was by design, but the result of the liver programs falling by the wayside for various reasons.

While the kidney is certainly an interesting organ for oligonucleotides due to its high exposure to this class of molecules, it is a complex organ and not all that much is known about cell type-specific pharmacodynamics outside the proximal tubule epithelial cells.  Add to this the uncertainty about the relevant therapeutic cell types that need to be targeted for a disease like Alport’s, and you end up with considerable target risk around these programs so that in the end we largely have to rely on the mouse models here being relevant to human disease.  

I am long RGLS given (1) that Alport Syndrome makes for a nice orphan market opportunity with some important groundwork laid by Regulus itself,  and (2) the fact that sentiment around Regulus can only get better and if targeting miR-21 does not have a measurable on fibrosis in the kidney, maybe it’s time to give up on microRNAs for therapeutics altogether.

Wednesday, November 22, 2017

RNAi Therapeutics Stocks (Part 2)

Having covered the most developed RNAi companies (Alnylam, Arrowhead, Dicerna) yesterday, this blog entry will discuss RNAi plays that are somewhat less established, but nevertheless could represent interesting investment opportunities.

Silence Therapeutics (SLN.L)
This London-listed company is roughly 2 years behind Arrowhead Pharmaceuticals and Dicerna.  Similar to those, Silence has set its sights on exploiting targets in liver hepatocytes using GalNAc conjugate technology.  Its first program targeting TMPRSS6 for iron overload disorders should enter the clinic in the first half of 2019.

The strength of Silence is partly its RNAi trigger IP position which, if the claims stand, should read on Alnylam’s 3-4 drug candidates that could come on the market over the next 2-3 years.  In my opinion, it would take a generous interpretation of what constitutes a ‘pattern’ for LNP-enabled Patisiran to fall under Silence IP, but it is much less of a stretch for the more stabilized GalNAc-enabled Givosiran, Fitusiran, and Inclisiran molecules in late-stage development.
Part of the potential upside could  therefore come from a settlement of the IP litigation that Silence has filed against Alnylam as it could hamper the commercialization of Alnylam's RNAi drug, especially as it ramps up for the launch of Patisiran. 

The reason why such revenues would be meaningful to the company is that Silence is run extremely well in financial terms such that these funds would neatly feed into Silence's operations as it is about to expand clinically all the while minimizing shareholder dilution. 
This, however, could also be viewed as a necessity since it is much more difficult for a London-based company to raise the kind of biotech ‘risk capital’ that allows companies like Alnylam in the US to really press down the gas pedal to pursue a grand vision without killing shareholders.   

Silence Therapeutics is an investment for those that value the pursuit shareholder return instead of mere market cap growth (=management bragging rights).  While I support this strategy, I am still largely on the sidelines as the company needs to address the anemic trading volume which makes it very costly to trade in and out.

RXi Pharmaceuticals (RXII)
Who doesn’t dream of striking it rich overnight?  If so, RXII is the type of stock that in the right biotech environment could be your daily biotech double in the not-so-distant future.

After all, which other biotech with a market cap of ~$15M can boast about 3 clinical data read-outs before year-end and one additional in early 2018?

1) Q4 2017: phase II results dermal scarring (RXI-109)

2) Q4 2017: phase II results warts (samcyprone, non-RNAi)

3) Q4 2017: UV-induced hyperpigmentation results, consumer testing (RXI-231)

4) Q1 2018: phase I/II results retinal scarring (RXI-109)  

It is possible that the first 3 data read-outs could show that the agents are active and well tolerated, but where there will be a discussion about the commercial adoption of these agents in the real world.  Therefore, the real fireworks may occur following the results from the retinal scarring phase I/II trial in early 2018.  Here, the self-delivering RNAi trigger technology is tested for the first time in the eye where for reasons of technical feasibility (more equal biodistribution throughout eye than in the skin) and clinical application I see the most potential for this technology.
Downside risk comes from management that is pitifully ignorant about the workings of the financial markets and shareholder value creation.  If RXi fails to ignite investor interest in the wake of any of these 4 shots on goal, we could well see a continuation of the financial death spiral that has seen RXII lose 98-99% of its value in the last 3-4 years!!!

I own approximately 3% of the outstanding shares of RXII and will try to add on any weakness ahead of data release.

Arcturus Therapeutics (ARCT)
In sharp contrast to RXi, I view management of Arcturus as far more savvy when it comes to the financial markets and building a biotech company of decent size.

Arcturus, which has recently gone public via a reverse merger, has its roots in RNAi technology, largely by copying liposomal delivery technology from Tekmira (now Arbutus) and then licensing related RNAi IP from Marina Biotech.  In light of the Patisiran APOLLO results, you could view the platform as fundamentally de-risked.
In fact, its lead program was an RNAi program to address TTR amyloidosis.   Since then, however, Arcturus has largely re-tooled itself as an mRNA Therapeutics company using LNP delivery technology.  Although its pipeline is not as prolific as that of much-better known Moderna, it appears impressive for a company with a market cap of still less than $100M just as its partnering activities.

Therefore, Arcturus is a bet on a management that can take average science to build a significant biotech as it talks the language of Wall Street and Pharma deal makers.  It was one of my early biotech investment mistakes to undervalue big-mouthed management relative to science. The best science can always be acquired once you have lowered your cost of capital by growing market cap.
I have a starter long position in ARCT as I wait for it to be discovered by larger hedge fund manager.

The final instalment of this series will cover oligonucleotide therapeutics companies Ionis Pharmaceuticals, Wave Life Sciences, Regulus Therapeutics, and Sarepta.

Tuesday, November 21, 2017

RNAi Therapeutics Stocks (Part 1)

According to the RNAi calendar, a calendar characterized by 3-year sentiment cycles, we are coming to the end of the first third of another RNAi Therapeutics stock bull market. 

The current cycle follows one (2014-7) that I had referred to as The Wait when the stock market had priced in the ability of RNAi to knock down genes in humans, yet still needed confirmation that this would translate into overall therapeutically beneficial drugs to justify a further increase in the valuation of RNAi companies.  As you know, the phase III APOLLO study of Patisiran in hATTR amyloidosis has provided us with just that.  Expectedly, this has not only lifted the stock price of Alnylam (+70% since results 1 ½ months ago), but positive sentiment has trickled down to 2nd tier companies like Arrowhead Research and Dicerna vying to be the next Alnylam.
The following blog entries will give you a quick run-down on my thoughts about the most bona fide, publicly-listed RNAi companies and stocks as well as the most interesting plays in the oligonucleotide therapeutics arena at large.

Alnylam (ALNY)

Love them or hate them, this company and management has stuck to their belief that RNAi is a major drug development platform to support the development of major biotech companies.  Such belief is shown by the fact that Alnylam has long chosen to retain main commercialization rights to their drug candidates while building 100 million $ manufacturing and sales operations around that.  Talk about planning for success!
While this company has recently received most recognition for the outstanding APOLLO data, it has another three (!) drug candidates (Fitusiran for hemophilia, Givosiran for Acute Hepatic Porphyria, and MDCO-partnered PCSK9 inhibitor Inclisiran) for which pivotal phase III data will read out over the next 2 years.

Nevertheless, I suspect that their share price will be largely driven by the launch of Patisiran in 2018. While the base case of ~10k patients on drug seems to be baked into its $13B market cap, there is an upside from the identification of more TTR amyloidosis patients which I feel is quite likely.  And if the amyloidosis, largely heart disease, from wild-type TTR becomes more widely recognized as a significant disease in the elderly along with diseases like Alzheimer’s, TTR amyloidosis alone should be able to support the $30-40B market caps enjoyed by similar niche players like Alexion (àsevere complement-related diseases) and Vertex Pharmaceuticals (àcystic fibrosis).
The main risk is that the competitor TTR drug Inotersen by Ionis will gain a larger market share than is currently widely anticipated, partly because patients prefer the convenience of a simple at-home injection to a day spent in an infusion center every 3 weeks.

I currently view ALNY as the RNAi stock in most need of a breather and am playing the stock from the short side as a hedge for temporary dips in the oligonucleotide and wider biotech stock market.

Dicerna (DRNA)
Long a neglected laggard in RNAi stocks, DRNA has been catching up with the competition with a solid ~200% increase over the last 3 months.

The bullish view of why you might want to ride up the stock further (note: unlike you constantly luck out on binary events, riding a stock up in bull markets is your best bet to make outsized stock market returns) is that DRNA sits now where Alnylam was in 2011/12 when it first demonstrated solid gene knockdown in humans.  It’s been a ~20x return since then. 
Actually, Dicerna’s technology is more advanced than Alnylam’s was back then.  On the other hand, there is now more competition for knocking down genes in the liver which is where Dicerna is focused on almost exclusively.  Still, I love Dicerna as they have a chance to bring two distinct, impactful drugs for severe orphan diseases towards marketing application by 2022 (for primary hyperoxaluria and an undisclosed one).  

A currently diluted market cap of slightly more than $300M is attractive given this realistic opportunity, and in hindsight their widely poo-poo’d March 2017 convertible stock offering now looks like genius as they keep hitting on all the milestones for lowering the inherent cost of the convertible. 
Some of the main 2018 potential catalysts will be (1) the conclusion of the litigation with Alnylam, (2) the disclosure of the second orphan drug candidate and subsequent IND/CTA filing, and (3) positive clinical biomarker data from the hyperoxaluria program.

DRNA is my second largest position along with IONS. 

Arrowhead Pharmaceuticals (ARWR)
While the discontinuation of their DPC-based pipeline was certainly a setback, for the long-term development of the company it wasn’t nearly as dramatic as its once ardent supporters, now harshest critics make it out to be. 
DPC, as illustrated by the cardiovascular deal with Amgen preceding the DPC fiasco, was on its way out and simpler conjugates on their way in as enhanced RNAi trigger stabilization chemistry has been able to close the potency gap with DPC and is now able to provide more sustained gene knockdown.
To play in that area, Arrowhead has been assembling an able, integrated drug development team with a proven track record of quickly advancing drug candidates towards the clinic using best RNAi practices.  Pair that with one, if not the industry’s most commanding IP estates and a proven ability to deal with Big Pharma (à partnering opportunities), I consider Arrowhead as the most likely ‘2nd tier’ company to achieve or even exceed Alnylam greatness.
Look for continued progress of them getting back into the clinic and advances of achieving robust gene knockdown outside the liver.
ARWR has been my largest position for the last few months.

To be continued…

Thursday, November 16, 2017

Artificial Intelligence for RNAi Gene Target Discovery Still Early

It’s not every day that you can see a person like chess playing legend Gary Kasparov at a biotech company’s Investors Day.  And if you did, you might wonder whether this was  some kind of stunt.

I was therefore pleasantly surprised to find that Kasparov was indeed a very fitting appearance investor event by Silence Therapeutics this week (for presentation here).  In the 80s, Kasparov apparently gained an edge over the competition by analyzing opponents’ playing habits using ‘big data’ at a time that personal computers were only about to take off.  As a former professional chess player himself, the CEO of Silence (Ali Mortazavi) therefore believes that there similarly must be ways to more efficiently take advantage of the realms of genomic data being generated to gain an edge over the pharmaceutical competition in finding attractive targets and indications for RNAi gene silencing.

Herd mentality

One of the main reasons I used to look down at Big Pharma  with disdain was their herd mentality especially with regard to the targets and indications they are pursuing.  You can bet that if there is general hype around a certain target, or that once a target has been validated for a commercially attractive indication in a clinical proof-of-concept study, almost all Big Pharma companies will be pursuing corresponding programs.
Unfortunately, such herd mentality is not restricted to Big Pharma, but can also be observed in the biotech space (see PD/PD-L1 for cancer etc etc), even in the subsector dearest to my heart: oligonucleotide therapeutics.  Be it TTR, AAT, DMD, or HBV: once there is a compelling therapeutic rationale for pursuing a gene target, multiple companies will be on its case.
It is for this reason, particularly the fear that an Alnylam or Ionis will scorch the earth around these targets, that many companies now delay disclosing the nature of their most promising preclinical programs.  This is remarkable since small biotechs like Dicerna typically rely on disclosure of their of these programs to garner the necessary investor interest.

Target scarcity?
The fact that the lead programs of RNAi therapeutics companies frequently overlap also beckons the question of whether there is a biological scarcity of targets available.  This would be in contrast to Alnylam which have limited themselves to GalNAc-RNAi trigger conjugates for gene knockdown in the liver, claiming- in the flowery languish of its CEO- to be ‘drinking from a firehose of opportunities’ in just the hepatocyte.
To Alnylam’s credit, it has not only duplicated some of the programs initiated by antisense competitor Ionis Pharmaceuticals and that of its smaller RNAi competitors, they have done some of the heavy lifting themselves.  It was e.g. Alnylam that realized the true value of going after transthyretin for TTR amyloidosis and it was Alnylam that selected a target as unorthodox, but promising as antithrombin for the treatment of a protein deficiency: hemophilia (à ALN-AT3/Fitusiran). 
Other companies like Dicerna and Arrowhead Research can also be complimented for unearthing gene target nuggets for orphan indications like primary hyperoxaluria and liver disease due to certain mutations underlying alpha-1-antitrypsin disease.

Mining for targets
I am not concerned about a dearth of suitable targets that could inhibit the continued growth of RNAi Therapeutics.  This is because there are thousands of rare and severe diseases for which there should be straight-forward genetic solutions and because genetic/genomic information continues to explode.  Still, there is certainly tremendous value if you are the first to gain high conviction around a new target and it was the CEO of Silence who bemoaned what seemed to him like an archaic, manual process of sifting through the genetic ideas one by one.

The panel discussion largely cautioned that human curation will remain dominant for the foreseeable future.  I am slightly more optimistic (or pessimistic, depending on your attitude towards AI) and give AI 5 years or so until it will become a more and more compelling means for driving gene target discovery.  This delay relative to areas like the internet is largely explained by the fact that whereas genomic information has exploded, databases that link them to careful, systematic medical phenotyping are still in their infancy. 
In the meantime, some low-hanging fodder for oligonucleotide drug development may come as a by-product of genetically diagnosing rare diseases when often the last hope for getting a grip on a condition is to genome sequence the patient.
There are beneficiaries already from the recognition of the importance of pairing phenotype with genotype databases such as 23andMe which is said to be getting quite a bit interest from pharmaceutical companies and investors. This comes after the pioneer of sifting through genomic/phenomic data for target discovery, deCODE of Iceland, was acquired by Amgen in 2012.  deCODE rose to fame by linking population-wide genetic information to national health-record databases.  I would think that we will see quite a few more similar endeavors linking existing (à nations with a high level of social bureaucracy such as the Nordic countries) or IT-driven newly generated (à Google, wearables) health records to genome and transcriptome databases. 

And as these databases grow and become more intelligent, it will be those that first understand to harness them that will gain a Kasparov-style edge over the competition.  But don’t be afraid: AI should not make human gene target discoverers/evaluators redundant any time soon and their cost relative to the cost of developing drugs is too low.  If anything, they will be needed to make the ultimate decision of whether to pursue a proposed target as each disease is unique and it will take a long time until enough billion-$ clinical experiments will have been run to provide sufficient feedback for the AI to improve.

 Silence Therapeutics: Ready for Take-off
I usually do not attend biotech companies’ Investors Days, but since London is not too far away from home, I took advantage of the proximity to get a feel for how the company has matured. 
Silence Therapeutics has long been a player in the area of RNAi trigger design and IP (see also their claim on Alnylam products), but has struggled to come up with compelling therapeutic programs.  It was as if they never really tried.  This can probably be attributed to them having lacked the personnel with the experience of taking an idea through the clinic and onto the market.
It now seems as if they not only got the technology (à focus on GalNAc-RNAi) to the point of clinical maturity, but also have assembled the management with the skill and will to succeed in developing game-changing RNAi drugs.  First up will be SLN124 targeting TMPRSS6 for iron overload disorders with a projected CTA/IND filing in Q4 2018.

Friday, November 3, 2017

RNAi Drug Trounces Antisense Rival in Paris ATTR Showdown

The audience gasped when Alnylam finally revealed the full dataset from the APOLLO trial in ATTR amyloidosis.  For the first time, patients and docs will have access to a drug that not only delays or just barely halts, but starts to actually reverse disease manifestation in a majority of patients afflicted by this debilitating, multi-systemic disease. 

Efficacy: reversal versus slow progression

A few minutes before the Patisiran RNAi data presentation, Dr. Benson, the lead investigator from the corresponding NEURO-TTR with rival antisense drug Inotersen was not met with nearly as much awe.  Yes, Inotersen did delay disease progression and was quite a bit better than the placebo control.  However, unlike Patisiran (-6 at 18 months), the mean change from baseline in the critical mNIS+7 score was well in positive territory (+5 at 15 months) indicating disease progression.
As such, Inotersen does not appear to be much better than TTR tetramer stabilizer diflusinal (given off-label in the US) which registered a +9.2 score in a trial over 24 months compared to +29.6 in the control.

Patisiran similarly came out ahead in the quality of life (QoL) assessment (improvement versus in this case a halt for Inotersen), although this was not a primary endpoint in the APOLLO trial. 
The NEURO-TTR trial could score some brownie points here as it not only made QoL a co-primary endpoint, it also scored positively in another patient-reported health score, SF-36.  Although investigators seem to prefer ‘hard’ outcomes measures such as the mNIS+7 and biomarkers, regulators and payors seem to prefer QoL endpoints according to comments at the meeting.

That the efficacy was better for Patisiran should probably not have surprised too much given that its knockdown was slightly better (82% mean median in APOLLO) than that of Inotersen (according to Benson: 75-79%, although I am a bit skeptical here as I do not understand what this range means).
As a side note and although everybody likes to see Patisiran versus Inotersen as an either-or issue, if you combined them both, you would easily exceed the 90% amyloid source protein reductions that amyloid researchers believe is necessary to allow tissue clearance exceed fresh amyloid deposition.

Safety: Patisiran once again exceeds, Inotersen disappoints expectations
If you still had difficulty deciding whether to take a drug that likely makes you better or a drug on which you will likely progress, the relative safety profiles should remove any remaining doubt.  Contrary to suggestions by the ‘counter-detailers’ at Ionis, Alnylam could not find any evidence that the steroid treatments to prevent untoward reactions around the time of infusion had any measurable adverse impact on patient health. 

Maybe this should not come as a surprise either given that immune suppression is given only transiently, every 3 weeks.  To make it clear, none of the many cardiologists in the audience voiced any concerns throughout the two days of the conference (where Patisiran was the star) about steroids in patients with cardiac disease manifestations.
If anything, the Patisiran group suffered from less adverse events compared to the placebo group, probably the result of addressing the disease.

The same, namely exceeding expectations, could unfortunately not be said for Inotersen: in addition to the previously disclosed renal and platelet SAEs, there was a 5:0 death imbalance against the drug candidate.  While the drug-related thrombocytopenia case had already been known and the 4 other deaths were attributed to disease progression, one cannot but notice that strangely, when it comes to safety, all the disease-related, random events always end up going against the Ionis drugs. What a coincidence!  And given that Ionis partner GSK had abandoned Inotersen even before the APOLLO trial were announced, I am wondering what other safety findings (in addition to thrombocytopenia, renal AEs, pyrexia, chills, and nausea) will come to light with the FDA briefing documents next year.

Alnylam and the RNAi field could not have hoped for better outcomes from the high-profile APOLLO trial.  If anything, the full results presented at this first European combined patient-doc ATTR conference are more impressive than first indicated by the topline data a month ago.

And regarding the competitive profile compared to the antisense rival, it makes me wonder about the magic of feeding into a biological mechanism that has evolved to do just that: gene silencing.
There are still some questions around the label that these data will support.  Importantly, how much credit will be given to the positive cardiac outcomes since these were not the primary focus of the studies?  But since this is a multi-systemic disease and given the totality of the data, a number of doc presenters made it clear that they will be looking hard for polyneuropathy manifestations in ATTR patients to justify (to payors) treating them with the new agents.

Disclosure: I am short ALNY since the stock may be gasping for air up here, at least in the short-term; long IONS since this public humiliation by the fiercest rival may make them realize that in the orphan drug age, commercialization is a must.

Thursday, November 2, 2017

Two Promising RNA Therapeutics to Face Off in Paris ATTR Amyloidosis Meeting

I’m en route a high-speed train to Paris to witness how RNA Therapeutics are starting to revolutionize the care of patients afflicted by ATTR amyloidosis.  Towards that end, the presentations on pivotal trials with Patisiran (APOLLO; RNAi) and Inotersen (NEURO-TTR; ASO) to an audience of key opinion leaders and patients at the inaugural European ATTR meeting will critically inform the adoption of these medicines.

Top-line data for these agents in the polyneuropathy-leaning form of the disease (FAP) have been disclosed previously (here and here).

This will only be the beginning though, with more potent, safe, and better tolerated follow-up RNA Therapeutics being developed and patient identification becoming more sophisticated.  Ultimately, I envision a world where, for the inherited version of the disease, patient identification based on genetics will be possible such that TTR lowering therapies can be initiated before organ damage through TTR deposition occur.

Patisiran seen leading

When Alnylam disclosed a month ago that intravenously infused Patisiran not only halted disease progression as had been reported for Ionis’ subQ Inotersen, but apparently improved symptoms compared to baseline, the stock shot up ~60% while Ionis stock dived ~15%. Furthermore, safety and tolerability looked solid with much less treatment discontinuations (7.4% vs 37.7%) and nominally less deaths observed in the Patisiran treatment arm versus placebo control (4.7% vs 7.8%). By contrast, Inotersen has been living under a safety shadow ever since deaths due to phosphorothioate ASO-dependent thrombocyte lowering wereseen in addition to renal toxicity.

Can Inotersen stage a comeback?

So even before Patisiran data were presented, the Big Pharma partner for Inotersen, GSK, dumped the drug (by not exercising the option).  Obviously, Ionis wants this to be seen as an act of Dumb Pharma throwing away highly valuable drugs under the directive of bean counters and smartly dressed corporate overhaulers (here: GSK leaving orphan drugs).  Nevertheless, it is difficult to believe that GSK gave rights to Inotersen back for free when it saw Inotersen competitive with Patisiran which easily accounts for roughly half of Alnylam’s  $11B market cap.

Still, while to many it is a foregone conclusion that today’s presentations won’t change much in the competitive dynamics between Patisiran and Inotersen, there are a few scenarios which could change it.

Firstly on efficacy, we still have to learn whether the disease improvement over baseline as reported for Patisiran by Alnylam is medically meaningful over the disease halt reported for Inotersen.  As such, it is possible that the (mean and median) mNIS+7 scores were barely negative (i.e. nominal improvement) as the phase II open-label extension trial results with Patisiran would have predicted.  And who knows, mNIS+7 values for Inotersen could actually be nominally negativ!

Somewhat complicating mNIS+7 matters is that the two companies are using slightly different scales, but I don’t expect this to have much impact on the discussion.

In addition to closing the gap on absolute efficacy, Inotersen could emerge as the winner in terms of treatment efficacy versus placebo.  Importantly, the placebo group in the Patisiran study received steroid treatment around the time of infusion since Patisiran treatment entails this to manage potentially dangerous reactions around the time of infusion and subsequent hours.  Although Patisiran clearly outperformed placebo, steroids, albeit given intermittently, should have some impact on perceived disease symptoms and I found it notable that while Inotersen was statistically better than placebo (no drug at all) at an intermediate time-point 9 months, Patisiran wasn’t yet at 8 months.

It’s therefore possible that Inotersen has the delta advantage over Inotersen which, of course, would influence how docs regard the inherent efficacy of Patisiran alone.

Finally, the placebo issue could also negate another apparent advantage of Patisiran over Inotersen: safety and tolerability. Notably, there was a ~40% SAE rate in both the Patisiran and placebo groups which are historically high for TTR amyloidosis clinical trials.  For example, an 18 month trial with TTR tetramer stabilizer Tafamidis had SAEs of less than 10%.  Is it therefore possible that steroid treatment accounts for the high SAE rate and that the overall SAE rate for Inotersen (to be disclosed) is much lower? 

 With the presentations being less than 8 hours away, we shall find out any time now as my train reaches the outskirts of Paris…

Friday, October 20, 2017

RNAi Companies Ought to Look Beyond Their Platform

This week, Alnylam announced in their roundabout way that it has discontinued the development of ALN-HBV for the treatment of chronic HBV infection.  Instead, it has come to an agreement with well-funded start-up Vir Biotechnology to select a new GalNAc-based RNAi compound, ALN-HBV02, which Vir will largely take control over clinical development.  Alnylam meanwhile retains considerable back-end loaded opt-in rights, milestones and royalties.  

As alluded to in a post last week, ALN-HBV seemed always doomed to fail due to target site selection issues. Also, Alnylam’s heart never really was into ALN-HBV with project leader Sepp-Lorenzino functioning as a one-woman show while competitor Arrowhead mobilized considerable internal and external resources.  She’s, of course, left the company not long ago.

We may never find out the real reasons for their decision although Alnylam would like us to believe that it was a specificity issue since ALN-HBV02 will now be ESCplus-based. Please don't fall into that trap.

My expectation is that ALN-GO1 for primary hyperoxaluria (PH) will suffer the same fate as the initial biomarker data from clinical studies have indicated that likely prohibitively high doses would be necessary to achieve robust oxalate lowering (a modest ~2x increase in glycolate biomarker at a single dose of 6mg/kg).

Once again, a much smaller competitor, Dicerna, has been running circles around RNAi juggernaut Alnylam.  Importantly, it has conducted detailed work on the biochemical pathway of oxalate metabolism and closely studied the natural history of the disease.  The reward was the discovery that the lactate dehydrogenase A (LDHA) is in all likelihood a much better target.

In hindsight it is quite clear that both HBV and PH were only chosen by Alnylam to scare investors away from their competition to cement RNAi dominance.  Not only that, it then filed a frivolous lawsuit against Dicerna alleging trade secret violations.

Will RNAi platform companies have to broaden their tech base?

Given the need to immerse oneself into individual diseases, and also as RNAi is about to open the commercialization chapter, frequently developing drugs for entirely new disease categories served by medicines, a new question arises for the industry: do I remain a platform company or do I have to open my technology base to best serve patient communities and shareholders?

While I do like to criticize Alnylam for shamelessly behaving like the industry's big bully, TTR amyloidosis is one of the diseases they deeply care about.  With 10-20k TTR amyloidosis patients in developed markets, a number that should grow due to increased disease awareness, better diagnosis tools and access, and hopefully prolonged lives, this could well develop into a $5B+ annual market over the next decade.

As the company behind what promises to be the first dominant drug for this disease and a next generation product candidate (ALN-TTRsc02) that should remove any doubt who owns TTR gene knockdown following on its heels, Alnylam would be irresponsible not to try and control the whole patient experience, including complementary non-RNAi treatment options.  In other words, Alnylam would cease to be a pure-play RNAi Therapeutics company while continuing to rely on RNAi for conquering new markets.

This evolution of corporate strategy, of course, is not new to biotechnology and has played out at companies like Vertex Pharmaceuticals (small molecules à cystic fibrosis focus), Biogen (recombinant proteins à multiple sclerosis/CNS focus), and indeed in the Oligonucleotide Therapeutics space before.

Sarepta, once singularly based on morpholino antisense technology, for example has been on a Duchenne muscular dystrophy (DMD) business development spree as their first antisense drug (EXONDYS51) was getting approved.  Sarepta sports a solid >$3B market capitalization illustrating that the financial markets reward such commitment to commercialization and category dominance.

On the other end of the spectrum is Ionis Pharmaceuticals.  

This company is happy to cease control over its groundbreaking compounds and disease insight quite early in their drugs' development paths. Consequently, it finds itself in situations where it either only gets a pittance from breathtaking medical and commercial successes such as SPINRAZA (for spinal muscular atrophy) or it gets caught with their pants down when a partner returns a compound late in the game as has just happened with IONS-TTR/Inotersen and GSK.

The market cap of Ionis, a company that shames $100B+ Big Pharma in terms of its pipeline and which will have close to a dozen compounds on the market and/or in pivotal clinical trials in a year or two, is comparatively paltry: $8B.

And the reason for this?  They are considering themselves a scientific company with a mindset of ‘we are better than organizations with corrupt sales departments’ that is difficult to find even in academia nowadays.  OK, management keeps drawing nice salaries and humongous stock/options rewards, so its really only shareholders that suffer.  

So as much as it hurts me as an RNAi scientists, when it comes to maximizing shareholder returns, the platform serves the purpose of capturing dominant footholds in new disease categories of high unmet needs, but this position has to be fortified by deep relationships with the patient community and an equally deep understanding of disease pathology.  And if necessary, develop and/or license complementary non-RNAi compounds.  

A word on the Arcturus-Janssen HBV deal

In addition to the Alnylam-Vir deal, another HBV RNAi-related deal was announced this week, namely between newly public Arcturus and Big Pharma player Janssen, a unit of Johnson & Johnson.

According to the agreement, Arcturus will work together with Janssen to develop an RNAi drug for HBV utilizing Arcturus’ intravenously administered RNAi triggers formulated in LNPs.   Arcturus uses fancy names for these components, but this is what's behind 'LUNAR' and 'UNA Oligomer Chemistry'. 

Given the availability of potent, but subcutaneous GalNAc-conjugation options in the industry, this interest by Janssen may come as a surprise to some and will serve Arbutus bulls as ammunition in claiming that Arbutus’ HBV RNAi LNP formulation has a future.  A Big Pharma deal after all is a knighthood in the industry.  

Still, I highly doubt it.

It is more likely that similar to Merck which had used LNPs internally as a disease interrogation and target validation tool, but not for commercial development before- even before GalNAc had come to prominence- J&J may view LUNAR-RNAi as a relatively speedy, but inexpensive way to test RNAi for its potential as a backbone therapy in HBV.  If it likes what it sees, watch out for the real deal with Dicerna or Arrowhead.  

Wednesday, October 18, 2017

Can Transient RNAi Augment Cell Therapy-based Immune Oncology?

Unlike all the major RNAi pure plays (Alnylam, Arrowhead, Dicerna, and Silence Therapeutics), RXi Pharmaceuticals is not pursuing GalNAc-based gene knockdown in the liver.  Instead, it applies its self-delivering RNAi (sdRNAi) triggers to local and, more recently, ex vivo gene suppression.

Its ex vivo efforts involve the addition of the silencing triggers to immune cells in the absence of extraneous transfection reagents with the goal of enhancing the performance of cell therapy-based immune oncology.  Immune oncology, of course, is a hot area in drug development.  Notable clinical successes mechanistically aim at immunologically unmasking tumor cells (à checkpoint inhibitors) or sending T-cell killers after them (à CAR-T).

Transient RNAi non-obvious application to cell therapy

When sdRNAi licensee MirImmune, now part of RXi came forward with the idea of applying transient RNAi strategies to cell therapy, I was very skeptical.  Cell therapies after all suggest that long-lived pharmacodynamics are desired, whereas RNAi gene silencing in dividing cells is known to be limited in duration, maybe a week or so.  Wouldn’t therefore gene therapy and in particular genome editing for gene ablation be much more useful?  Or what about that half-forgotten DNA-directed RNAi?  

Certainly, for gene silencing effects that ideally should last throughout the active life of the adopted cells in the patient, transient RNAi is not attractive given all the alternative technologies out there such as genome editing and of monoclonal antibodies.

On closer inspection, however, transient RNAi may be able to uniquely achieve a number of goals that could uniquely enhance adoptive cell therapy for cancer and potentially other applications, too.  One of them is to simply increase the number of cells with the desired phenotype.  After all, the patient-derived cells used for adoptive cell transfer are a precious resource and manufacturing issues could result in cell numbers too low to be useful.  Accordingly, self-delivering RNAi triggers may increase the number of useful cells either by expanding them, e.g. by targeting cell cycle-related genes, or by more effectively directing them to the desired phenotype (e.g. tumor-attacking vs protecting/tolerogenic cells).   

Importantly, as sdRNAi does not require electroporation or transfection reagents, there is less risk that the procedure itself reduces cell numbers or has undesirable effects on the cell phenotype. 

Out of the test tube and into patients, transient RNAi could also be useful in helping in the early tasks of the adopted cells.  One such early step is infiltrating the tumor which is thought to have a major impact on immune oncology treatment success.  While tumor infiltration can be expected to be largely guided by proteins interacting on the cell surface and would seem a suitable application of monoclonal antibodies, monoclonal antibodies often have difficulties getting into tumors.  

It is also conceivable that an early performance provided by transient RNAi may have a lasting effect on eventual therapeutic outcome, e.g. by hitting the cancer hard initially so that the risk of immunologic escape by mutation is minimized.  This is similar to how early reductions in pathogens predict the treatment success of most infectious diseases such as HCV.

Finally, RNAi may be applied to multiple genes at once.  This is more difficult to do with systemically administered monoclonal antibodies, and unlike monoclonal antibodies, RNAi can also inhibit proteins not accessible to monoclonal antibodies; multi-targeting is also less effective with genome editing.

Looking ahead

Transient RNAi for adoptive (immune) cell therapy is in its early stages.  Given some of its unique characteristics, it could be a useful addition to the gene toolbox next to genome editing, DNA-directed RNAi, or simple gene addition.  While RXi is planning to plod along with preclinical proof-of-concept studies, as a non-immune oncology person and given the poor capitalization of the company, I particularly look towards clinical collaborations and corporate partnerships to judge just how compelling a tool transient RNAi really is here.

RXi as an investment or trade

RXi Pharmaceuticals is a small biotech company with a tiny market cap of ~$13M and I would be remiss not to mention that I currently own somewhat more than 2% of the outstanding shares (ticker: RXII).  This is a relatively small gamble on my part, but certainly enough to keep me interested and engaged. 

Right now, it is probably not much more than a gamble given that RXi’s management has displayed an extraordinary degree of naivete about the capital markets.  Accordingly, their continued operations currently largely rely on an ATM-type arrangement with Lincoln Park Capital Fund which appears to only have accelerated putting down the stock, and possibly eventually the company down a death spiral. 

Near-term, RXII is therefore a bet that management will finally stop this nonsense and instead rely on the upcoming multiple (!) clinical trial outcomes catalysts by year-end from at least 3 (dermal scarring, cutaneous warts, consumer skin products) of its non-immune oncology portfolio to create some excitement about the stock.  Results from a retinal scarring trial are expected in early 2018.  Considering the tiny market cap of ~$13M, the sheer number of upcoming data read-outs alone could result in mouth-watering stock returns if the stock gets discovered.  Such a run-up would of course also provide financing opportunities to feed its immune oncology ambitions, so please management: don't put a lid on it by activating the ATM.

Monday, October 9, 2017

HBV RNAi 2.0

Gene knockdown, in particular RNAi and RNaseH antisense, holds great promise in the treatment of hepatitis B viral infection.  It is currently the only practical means to potently inhibit all viral gene products*.  It therefore is poised to become a cornerstone of future treatment regimens aiming at functionally curing HBV, an infection predisposing more than 200 million patients worldwide currently to liver failure and cancer.

Arrowhead- lessons learned

Unfortunately, the field took a big hit last year when HBV RNAi trailblazer Arrowhead Pharmaceuticals had to abandon its efforts due to preclinical toxicity resulting from its particular approach to releasing the RNAi triggers into the target cell cytoplasm (monkey deaths due to the DPC).
Nonetheless, after more than a dozen trials in WoMan, the company had learned a great deal about HBV and how to best tackle it by RNAi.  Chief among those lessons were the observations that RNAi can suppress viral genes, most notably the surface antigens HBsAg by sometimes more than 2-3 logs.  Moreover, in HBe-antigen negative and those HBe-antigen positive patients previously exposed to polymerase inhibitors (‘nukes’), Arrowhead painfully found that most HBsAg is derived from host genomically integrated HBV.  Consequently, RNAi trigger target sites placed downstream of the HBsAg ORF may be lost and RNAi rendered futile (ARC520àARC521 transition). 
Finally, consistent with the experience with nukes and interferons, it appears that RNAi treatment success (functional cure) should follow complex viral and host immune dynamics and while intriguing changes were observed in the clinic with ARC520/1 (e.g. new lower baselines following treatment cessation), it remains unclear how long an RNAi agent would have to be given.  This has implications for whether intravenous routes of administrations are practical or not.

The competition
Arrowhead Pharmaceuticals, however, has not been the only RNAi game in town developing HBV therapeutics.  Its main competitor in terms of scientific prowess has been Arbutus Biopharma (renamed from Tekmira after biotech wonder boy Vivek Ramaswamy of Axovant fame spectacularly raided the company in 2015).  Its lead RNAi candidate ARB-1467 comprises of 3 RNAi triggers which are formulated in lipids (LNP) and is given intravenously alongside steroids.

While I like the 3-trigger strategy for pangenotypic coverage and for minimizing the risk of the virus developing drug resistance (including by genomic integration), the more cumbersome intravenous route of administration- now reduced to short 2-week intervals in an effort to increase potency- and the steroids makes ARB-1467 uncompetitive in a world of more potent and less frequent simple subcutaneous competition.  The use of immune suppressive steroids, of course, in HBV patients is a dicey proposition and would also seem to run counter to the ultimate aim of achieving immune control of the virus.
Unless it turns out to promote a functional cure along with other agents in short order, say less than 6-12 months, ARB-1467 will likely end up as a science project without much clinical impact.

RNAi powerhouse Alnylam Pharmaceuticals meanwhile is the third RNAi company that has begun clinical development of an HBV RNAi agent.  Importantly, it has been the first company using a simple subcutaneous GalNAc-conjugate format, therefore positioning it to be useful even when more prolonged treatment will turn out to be necessary.
After review of the program, however, it appears that the company prematurely rushed the single trigger ALN-HBV into the clinic without thinking too much about resistance issues.  To start with, ~2% of tested HBV genotypes have mismatches with the trigger that mitigate targeting efficiency.  As a single trigger candidate, ALN-HBV will also have to be given alongside highly potent replication inhibitors (nukes) as one can easily see how ALN-HBV resistant genotypes would otherwise eventually take over.

ALN-HBV moreover targets a site downstream of the HBsAg ORF, around the DR2 repeat element with marks the integration hotspot that has bedeviled ARC-520 before.  While Alnylam has been going around claiming ALN-HBV doesn’t suffer from ARC-520-type issues, I would challenge them with two points:

1)     under selection pressure by ALN-HBV to maintain HBsAg expression and thus evade host immune detection, the virus may ‘choose’ to break up upstream the ALN-HBV target site without affecting the HBsAg ORF; 

2)      more troublesome, closer inspection of the very paper Alnylam points to for making its claim (Jiang et al. Genome Research 22: 593) and which analyzes HBV integration hotspots, shows that ~40% of DNA break points appear to be upstream of the ALN-HBV target site (compare ‘position 1600’ below).      

One can therefore easily see why the project leader behind ALN-HBV, Laura Sepp-Lorenzino, has recently left the company to join Vertex Pharmaceuticals.  One has to get the impression that ALN-HBV, just like ALN-GO1 have only been rushed to the fore as a front in order to keep a lid on their competition by creating doubt about the ability of Arrowhead Pharmaceuticals and Dicerna, respectively, to compete with juggernaut Alnylam. 

It is yet another lesson that in drug development, a detailed understanding of the disease is as important as the technology used to tackle it.  Half-hearted side projects typically lead nowhere.

Lastly, I would be remiss if I did not mention the RNaseH antisense efforts by Ionis along with partner GSK, and those of Roche.  Ionis/GSK are not only developing an unconjugated fully phosphorothioated antisense molecule, which I believe has little chance of competing in the market due to predictable safety and potency issues, but also a more interesting GalNAc-conjugate version (IONIS-HBV-LRx).  Although I currently see RNAi ahead of antisense in gene knockdown in hepatocytes (potency, frequency of administration, and safety), the GalNAc-conjugate version potentially has the advantage of also being able to access the pregenomic RNA directly, while direct pgRNA cleavage by RNAi of this non-mRNA remains to be shown.  My prediction is that  while RNAi can to some degree access pgRNA, this is not as effective compared to its cleaving mRNA.  What all of this means biologically remains to be seen.

Arrowhead HBV RNAi 2.0

Therefore, after all the drama and competitive noise, Arrowhead is poised to recapture the HBV RNAi lead with its new GalNAc-based candidate.  ARO-HBV is poised to enter the clinic in the first half of 2018.   It is subcutaneously administered and involves 2 RNAi triggers that are claimed to cover the viral resistance bases, including HBsAg derived from genomically integrated HBV.
The company expects the agent to be used once a month or less frequently, an attribute valuable should functional cures take longer to emerge.

Given knowledge leadership in HBV gene knockdown and prior practical experience, Arrowhead should also be able to navigate through the HBV clinical development maze faster than its competition.  As can be seen from its resurging stock price, this view is also shared by an increasing number of investors. 
Arrowhead has paid for taking some short-cuts when it was compelled to push ARC-520 into the clinic to give it a shot of becoming a serious player in RNAi before it ran out of capital.  It took some risks and failed, but that failure could well be the soil from which future success will emerge. 

Disclosure: long Arrowhead Pharmaceuticals







* it is unclear whether RNAi can directly cleave pregenomic RNA, whereas RNaseH antisense should be able to do that.
By Dirk Haussecker. All rights reserved.

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