Monday, April 23, 2018

Dicerna Focuses Operations Following Settlement With Alnylam


Last Friday, Dicerna and Alnylam announced that they had settled all ongoing litigation between the parties just as the acrimonious fight was about to court. 

Settlement terms
As part of the settlement, Dicerna will pay Alnylam $25M in stock and cash and drop its anti-competitive practices counter-suit against the RNAi behemoth.  In addition, Dicerna has agreed to not pursue certain targets/indications (see discussion below).  In return, Alnylam will drop its trade secret lawsuit it had filed on grounds of suspected GalNAc-conjugate trade secret misappropriation in the wake of Alnylam’s acquisition of the Merck RNAi assets in early 2014.

Litigation background
Allegedly, ex-Merck employees who had been hired by Dicerna had taken along competitively advantageous information that Alnylam claimed that it paid for.

Personally, given the timing and fuzziness of the litigation, I had always believed that Alnylam primarily filed the lawsuit to drain a much smaller, but direct competitor of vital financial resources.  In particular, even if these ex-Merck employees took with them information important to Alnylam, Merck obviously didn’t protect such knowledge as expected for trade secrets.  Moreover, Dicerna’s application of GalNAc-RNAi conjugate looks extremely different from that of Alnylam.  Even a more negative outcome should therefore not have adversely affected Dicerna's ability to further develop its technology.  

Coming out from underneath the litigation cloak
Still, this strategy had almost worked out.  Ironically, it was Alnylam’s own success in the clinic (à primarily Patisiran phase III APOLLO data last fall, but also GalNAc-related data) that had provided Dicerna stock with sufficient strength for the company to be in a position to ward off the existential threat posed by the litigation: $25M just 15 months ago would have been a mortal blow to ~$50M market cap minion Dicerna.  Today, the $600M market cap makes the $25M almost immaterial.

Nevertheless, based on the extremely bullish market reaction to the deal (up close to 40% following announcement of the settlement before settling the day at +18%), I believe that an important facet of the deal has been widely underappreciated.  Specifically, the fact that Dicerna had to agree not to pursue certain targets could completely change the face of this company. 


'Dicerna will be restricted in its development and other activities relating to oligonucleotide-based therapeutics directed toward a defined set of Alnylam targets, for periods ranging from 18 months up to four years.'

Instead of a broad pure-play GalNAc RNAi company, Dicerna now probably needs to be considered a 5-or-so development candidate company for which the end game will be its sale to a larger company.  Except for the long-promised deal on the mystery candidate (AAT?), this reduces expectations for future strategic blockbuster deals.

Disclosure: Especially in light of the target selection restrictions, I view the settlement as incrementally negative for Dicerna and expect the market to realize the same soon.  Following Friday's strong move to the upside, Dicerna is a short-term conviction short with a $10 near-term price target.  Also expect Alnylam to sell the 2M million Dicerna shares almost as soon as it receives them (please read comments section below for correction).  Long Alnylam.

Friday, April 20, 2018

Ionis Re-Sells Neuro Assets to Biogen for $500M and Improved Terms


This morning, Ionis Pharmaceuticals rattled my world by announcing an update to its neuro parnership with Biogen.  After recovering from a shock reaction thinking that $6B market cap Ionis Pharmaceuticals had sold the rest of its crown jewels in the neurological space for $500M and little more (upfront and premium paid by Biogen for the stock consideration), I noticed that this was merely the renewal of an earlier partnership that was about to expire in 2019.

Clearly, Biogen was eager to continue the partnership with sales gushing in from its first neurological disease partnership candidate, SPINRAZA for the treatment of spinal muscular atrophy, and other neuro antisense programs such as the one for Huntington’s Disease showing great clinical promise.  

As time was running out on the previous deal, Biogen wanted to buy itself additional time to be able to pick the right neuro antisense candidates.  In return for the 10-year extension, Biogen will now have to make its picks already by the end of IND-enabling studies instead of with clinical proof-of-concept.  This makes it likely that as Ionis can be expected to churn out IND-enabling studies one after another, quite a few candidates will slip by that deadline and become wholly owned by Ionis Pharmaceuticals.

Equally exciting is the fact that despite the earlier exercise term, instead of earning single digit to midteen royalty on drug sales, Ionis now stands to receive midteen to 20% royalties on sales.

On the downside, in the wake of the latest Akcea deal re-arrangements and this neuro deal extension which effectively shuts off other suitors to become owners of a significant part of the Ionis neuro franchise, we can wave good-bye to any hopes of a quick buy-out.  More likely, Ionis will largely remain a royalty play for the next 8-10 years by which time it surely will have a new CEO.  And then Biogen.

Tuesday, April 17, 2018

Givosiran on Track for Accelerated Approval, but Anaphylaxis Event Rattles Investors


Alnylam last weekend provided an update on its early clinical experience with Givosiran in patients with acute intermittent porphyria (AIP), a severe ultra-orphan disease characterized by debilitating abdominal pain.  The results further demonstrate that the ALA 1 Synthase (ALAS1)-targeting GalNAc-siRNA conjugate has a profound impact on disease symptoms, an impact that, excitingly, appears to improve over time based on the open-label extension data.

Given the severe nature of the disease, with intermittent acute pain by some referred to as being ‘incompatible with life’ and chronic pain in between attacks, the attack rate results and their remarkable correlation with ALA/PBG biomarker changes point towards smooth sailing towards accelerated approval of Givosiran in early 2019.  Accordingly, the ongoing registrational ENVISION phase III study has now recruited its 30th patient, setting up for a biomarker read-out in the second half of this year which would form the basis of an IND submission.

Despite the solid efficacy results, biomarker and attack rate reductions down about 10x and 4x, respectively, the EASL update wasn’t all positive.  To begin, increasing the dose to 5mg/kg did not support the sustained ~70% ALAS1 mRNA and ~90% ALA/PBG lowering seen with 2.5mg/kg monthly dosing when given quarterly.  Such sustained reduction in neurotoxic ALA/PBG appear necessary for Givosiran disease-modifying efficacy.  Since there is no real competition for Givosiran on the horizon, this is a minor issue that will likely be addressed by next-generation AIP compounds by Alnylam.

More important, however, was the revelation of the first case of GalNAc RNAi-triggered anaphylaxis in the open-label extension (OLE) part of the study.  Within hours of a subcutaneous injection, a patient suffered anaphylaxis which, fortunately, was not fatal, but sufficient for the patient to drop out of the study.  Of note, there was no evidence of pre-existing anti-drug antibodies and this patient had a history of allergy.

The overall implications of this adverse events for Alnylam and the RNAi industry remain to be seen.  This was the first case of anaphylaxis among close to 3000 subjects dosed across various GalNAc-RNAi trigger studies by Alnylam, Arrowhead, and Dicerna.  This includes the hundreds of subjects exposed to PCSK9-lowering Inclisiran.  

At worst, anaphylaxis is a rare, unpredictable event to GalNAc-RNAi triggers in general which would have most impact of using this technology for less severe, large non-orphan indications.  More likely, however, anaphylaxis is a risk of specific compounds in this class and only seen in patients with a pre-disposition to allergy as in this instance.  

Both Alnylam and Arrowhead traded down 5% on the news, likely reflecting investor caution in light of the new data.   With Alnylam now trading over 35% below its recent all-time high and strong Patisiran and Givosiran approvals on the near-term horizon, Alnylam has now become my number one position.  Any such sustained weakness in share price makes it vulnerable to a hostile takeover attempt in this hot biotech M&A environment.

Monday, April 2, 2018

Pfizer Study Clears Way for Broad Cardiomyopathy Label of TTR-lowering Drugs


TTR amyloidosis represents a major market opportunity for RNAi Therapeutics.  The pivotal trials underlying the expected approvals of Patisiran from Alnylam and antisense rival Inotersen from Ionis/Akcea were focused on the neuropathy aspect in the inherited form of the disease.  It is hoped, however, that approvals will be obtained that will also cover the cardiomyopathy spectrum of the disease. 

Nevertheless, the absence of a prospective study focused on cardiomyopathy raises the concern that the largely biomarker-related and post-hoc analyses conducted by Alnylam and Ionis/Akcea will not hold up when hard endpoints like mortality are considered.  This uncertainty could lead to resistance by payors to cover the drugs for cardiomyopathy uses.

Data released last week from Pfizer’s ATTR-ACT study should greatly aid in addressing this concern, paving the way for broad product labels and reimbursements not only for the familial form of TTR cardiomyopathy, but even to encompass those with wild-type TTR cardiomyopathy.

Evolving disease understanding

TTR amyloidosis is caused by the deposition and accumulation of misfolded tranthyretin protein in various tissues thereby poisoning them.  Historically, TTR amyloidosis was not considered a single disease, but either TTR neuropathy or TTR cardiomyopathy depending on where disease symptoms are most pronounced.

Over the last 5-10 years, however, it has become recognized that a given patient may suffer from a range of symptoms across organ systems.  Whether an individual patient suffers from largely neuropathic or cardiac symptoms or both to similar degrees is typically informed, but not entirely explained by the underlying mutation in the familial forms of the disease.

Cardiac symptoms can also be caused by wild-type TTR protein alone.  This is referred to as senile systemic amyloidosis (SSA).  This population has not been the subject of any rigorous, randomized trial in the development programs of TTR-lowering drugs, but based on my impressions from last November’s seminal Paris meeting on the disease, there is great anxiety in this particular patient community about access to TTR-lowering drugs.  

Tafamidis as an underappreciated TTR trailblazer

Pfizer, through its 2010 acquisition of Tafamidis, was the original trailblazer in this orphan disease.  Tafamidis falls in the class of (small molecule) TTR tetramer stabilizers (along with widely used off-label generic diflusinal) which prevent TTR tetramers to fall apart in the rate-limiting step to forming misfolded pathogenic TTR aggregates.

As is often the case in orphan disease drug development, being the first means that you have to do a lot of the heavy-lifting in terms of understanding the natural history of the disease to design adequately powered clinical trials with the appropriate endpoints.  Consequently, the first pivotal trial of Tafamidis in V30M early-stage neuropathy patients fell short of garnering FDA approval and only got a narrow label from European regulators. 

The problem was that, although the data strongly suggested efficacy, it turned out to be an underpowered study due to unexpectedly high drop-outs for patients undergoing liver transplants: starting from 125 intent-to-treat (ITT) patients, the efficacy evaluable (EE) number dropped to just 87 in this placebo-controlled study.  

Nevertheless, if you disregarded the liver transplant patients in the statistics (very reasonable in my opinion since a liver transplant throws everything off), the study would have met the quality of life and NIS-LL co-primary endpoints by greatly halting, although not stopping disease progression.  In addition, all key secondary endpoints were positive.

Given the improved understanding of TTR amyloidosis and a much more forgiving regulatory environment, this study, despite its limitations, would have ensured FDA approval today.       

Tafamidis succeeds in cardiomyopathy study

Last week's announcement by Pfizer represents another breakthrough for those living with TTR amyloidosis.  Its phase III ATTR-ACT trial in patients with pronounced cardiac symptoms, including those with wild-type TTR SSA with largely cardiac symptoms, has met the co-primary endpoints of reducing overall mortality (!) and cardiovascular-related hospitalizations.

Having learned their lesson, Pfizer went out of its way to make sure that this study would show a positive signal if the drug were active: instead of 18 months, 30; instead of 125 patients, 441; and instead of just one daily 20mg dose of tafamidis also 80mg.  Talk about not taking any chances!

Tetramer stabilizer and TTR lowering results mutually beneficial

When Pfizer announced late last trading week the ATTR-ACT results, the sponsors behind the TTR lowering RNAi and antisense drugs Alnylam, Akcea, and Ionis took it on the chin with 5-13% sell-offs in their stocks due to competitive concerns.

The main concern apparently is that while Tafamidis has now succeeded in a trial specifically targeted at the cardiomyopathy ‘population’, the APOLLO study of Patisiran and NEURO-TTR study of Inotersen have not specified this aspect as a primary endpoint.

This concern is lessened, however, due to the recognition of TTR amyloidosis as a single disease with the relative degree of various symptoms varying between patients.  Of course, let’s be frank and admit that this is also a self-serving agenda that has been mainly promoted by Alnylam so as to increase the market size of Patirisan without having to wait for another 3-4 years. 

On the other hand, since the root cause of the various manifestations is the same, TTR aggregation and tissue accumulation, a drug that works in addressing it should be beneficial for all these manifestations.  In fact, strong evidence on improved cardiac outcomes has come from the APOLLO and NEURO-TTR study as well as an open-label investigator-instigated study of Inotersen specifically in the cardiomyopathy indication (both mutant and wild-type forms; ‘Benson study’).

Similarly, since the mechanism of action of TTR stabilizers and TTR-lowering drugs are essentially the same, lowering the pool of aggregation-prone TTR, success in ATTR-ACT is highly supportive of the cardiac benefits of Patisiran and Inotersen as much as APOLLO and NEURO-TTR strengthen the case for Tafamidis use in addressing TTR-related neuropathy. 

All this mutually reinforcing data should ultimately help in Inotersen and Patisiran getting a very broad label and helping with reimbursement, perhaps even in the SSA indication which I believe the market could not have priced in yet.  Having said this, we have yet to see the SSA vs hereditary subgroup analysis from the Pfizer study.

Relative drug efficacy

Finally, in terms of drug efficacy, Tafamidis is unlikely to challenge Patisiran even in the cardiomyopathy indication, since Patisiran improved outcomes in the APOLLO study while Tafamidis stabilized or merely delayed disease progression.  

The efficacy of Inotersen based on Quality of Life data should end up being somewhat ahead of Tafamidis (QOL in EE population vs placebo of -9 for Tafamidis in the neuropathy study vs -12 for Inotersen in NEURO-TTR and -20 for Patisiran in APOLLO), although its safety profile appears to lag that of Tafamidis.  Because of the new data indicating efficacy similar to diflusinal, but with better safety, Tafamidis ought to replace generic diflusinal which has dominated the tetramer stabilizer market until now.  

Ultimately, if patient welfare was a top concern, TTR stabilizers probably ought to be used on top of TTR-lowering drugs to prevent any TTR protein that survived TTR knockdown from misfolding.

By Dirk Haussecker. All rights reserved.

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