Tysabri “News” Highlights Value of RNAi Therapeutic Against JC Virus

Tysabri made the headlines again late Thursday when Biogen Idec and Elan Corporation revealed the first two cases of progressive multifocal leukoencephalopathy (PML) following the re-launch of the multiple sclerosis (MS) drug almost two years ago. Although this had been widely expected, a sensational media and stock market reaction that wiped out $10B off the market cap of the two biotech companies, gives me an opportunity to discuss ongoing efforts to develop an RNAi Therapeutic against JC virus, the etiologic agent of the disease. Such an RNAi Therapeutic has the potential to play a crucial role in the risk management strategy of Tysabri and beyond.

Most of us are carriers of JC virus, a double-stranded DNA polyoma virus. PML is the result of re-activation of the virus following immunosuppression. PML really only became a medical problem with the AIDS epidemic, but cases of organ transplant-related and other immunosuppressive drug-related PML infections are increasing. In fact, it perplexes me why a drug like Tysabri that I believe, based on impressive clinical trial results and countless patient and physician testimonials, is the one in a dozen drugs that really makes a big difference for patients, has been singled out for this type of special treatment.

This is, however, not to downplay the potentially deadly nature of the disease. Tysabri, a monoclonal antibody aimed at neutralizing VLA-4 integrins, prevents the migration of leukocytes from the blood vessels into tissues, thereby preventing effective immunosurveillance of infections. In what the drug label estimates to be 1 in a 1000 cases, this allows the latent JC virus to become reactivated which may lead to de-myelination linked to viral replication.

An unparalleled surveillance program instituted by the companies with guidance by the regulatory agencies ensures that everybody involved in the treatment of Tysabri is fully aware of the risks. The heightened awareness should lead to early detection by PCR and MRI and the discontinuation of the immunosuppressive drug. In many cases this is enough to allow the immune system to catch up with the virus. An RNAi Therapeutic should increase the likelihood for that to occur both by decreasing viral load as well as potentially inflammatory viral protein expression which may cause the demyelination.

Clearly, in the absence of a proven antiviral, the potential of an RNAi Therapeutic targeting JC virus in the brain has not been lost on Biogen Idec. Three months after the re-launch of Tysabri in June 2006, Biogen Idec said that it would collaborate with Cambridge, Mass, neighbor Alnylam on the development of such a treatment. The last update was provided at the Keystone RNAi meeting earlier this year in Vancouver, and the data were quite encouraging and clinical trials may not be too far off.

The data supported those reported by others (here and here) that siRNA treatment is able to inhibit viral replication in vitro, both when administered before the initiation of viral replication, and more therapeutically relevant, after the initiation of viral replication. Since a reliable in vivo model for JC viral infection is lacking, further proof for true therapeutic potential came from demonstrating 55-75% target-specific knockdown of an oligodendrocyte marker gene (CNP) in rodents and non-human primates. Oligodendrocytes were chosen as the primary site of JC virus infection.

Given that localized delivery of RNAi to the brain appears to be closer to the clinic than systemic alternatives, with the exception of perhaps the intriguing publication last year on the use of rabies peptides for the delivery of siRNAs across the blood-brain barrier following systemic administration, the main question should be whether such delivery can not only get into the right cell types, but also achieve sufficient coverage to stall the virus.

Early detection will help by decreasing the size and number of viral replication sites that need to be treated. Unlike the name would suggest, PML infection is as often unifocal as it is multifocal, and localized siRNA/DNA-directed viral vector administration to limited numbers of infection sites based on the PML-diagnostic MRI seems reasonable.

Finally, a word on the stock market reaction to the Tysabri “news”. It is quite remarkable that the report of the expected PML cases was able to trigger 30% and 50% declines in the stock prices of Biogen Idec and Elan, respectively. Sensational media and scare-mongering analyst reports, some of them fabricated, accompanied short-selling tactics aimed at suggesting rock-bottom valuations. At one point for example, Elan traded down over 75% in relatively light German trading. Also noteworthy was that 5 minutes before the market close and announcement of the PML cases, 30,000 August '08 Elan put options were traded for what must have been an amazing $30M-dollar-in-5-minute gain.

As the financial world is starting to realize, abusive short-selling aimed at destroying the ability of companies to grow, which in the case of biotechs is designed to undermine their ability to fund drug development, is very real. This should be of great concern to the biotech industry, and it is hoped that trade organizations such as BIO seize the opportunity to put pressure on the SEC to address this problem not just for the benefit of a select number of financial companies.

The Potential for AAV-mediated RNAi Therapeutics

There is good reason to believe that synthetic siRNA-mediated RNAi Therapeutics should emerge as the most commonly used form of RNAi Therapeutics. Nevertheless, DNA-directed RNAi Therapeutics also has a number of potential uses where it should not only be competitive with, but even superior to synthetic RNAi. Unfortunately, the commercial development of DNA-directed RNAi Therapeutics has been somewhat hampered due to litigation and other management issues as well as funding problems that all things “gene therapies” face. In an effort to dispel some of the myths surrounding DNA-directed RNAi Therapeutics and since I’m somewhat familiar with particularly AAV-mediated DNA-directed RNAi, I would like to take the opportunity here to briefly highlight some of the potential applications for this particular technology.

DNA-directed RNAi can either by delivered by non-viral or viral means. For the most part, current systemic non-viral delivery technologies for DNA vectors that need to get into the nucleus for functional activity may not be adequate as a result of their inability to transfect sufficient cell numbers as well as support long-term expression. By contrast, viral vectors, particularly AAV and lentivirus, are capable of very efficiently and stably transducing many cell types. In fact, in vivo potencies are often greater than with most current synthetic RNAi methods with essentially knock-out phenotypes in the liver and eye observed for months and years using self-complementary AAV8 vectors in work reported by the laboratory I work in and collaborators to name just one example.

Before focusing more on AAV with which I am most familiar with (learning by osmosis), lentivirally delivered RNAi has much potential for disease of the CNS, largely for the same reasons as outlined for AAV below, and in combination with cell therapeutics. The latter would involve the ex vivo transduction of lentiviral RNAi constructs for example into stem cells similar to the ongoing phase I HIV-RNAi trial by the City of Hope and sponsored by Benitec, or also to enhance dendritic cell cancer vaccine strategies. Many of these applications take advantage the stable integration of lentiviral vectors into the host genome such that the vector and its expression/knock down will be maintained even in dividing tissues.

By contrast, due to its largely episomal nature, AAV gets rapidly during cell division thus limiting their applicability for cancer therapy or in other situations that involve cell division (regenerating liver, stem cell differentiation etc). Moreover, in certain settings humoral and T-cell mediated immune responses against AAV viral proteins present another challenge for achieving persistent gene silencing (the transduced cell may be recognized by the immune system and be eliminated) and where repeat-administration is desirable (due to neutralizing antibodies generated following the first administration).

For these reasons, AAV RNAi appears most promising for diseases of the eye and CNS as immuno-privileged sites. Although infusion pumps may address some of the challenges of allowing for long-term intracranial gene silencing by synthetic means, due to the ability to mediated sustained gene silencing for 6-12 months if not several years as suggested by canine AAV studies for hemophilia, the prospect of maybe having to subject a patient only once or very few times to an invasive operation makes AAV and lentivirus attractive alternatives for diseases such as Huntington’s Disease and other neurodegenerative disorders.

Not coincidentally, Targeted Genetics and the University of Iowa are currently pursuing an AAV RNAi program (pre-clinical stage) for Huntingon’s Disease that has shown promise. A critical factor for the success of this program should be the design of the shRNA expression cassette, and I personally would feel more comfortable with an H1 promoter-driven instead of a U6 promoter-driven construct that has been the front-runner so far. Another interesting application may be for the treatment of PML viral infection. Biogen Idec and Alnylam have been working on an siRNA-mediated approach, but due to serious nature of JC virus reactivation during PML, rapid onset of gene silencing by self-complementary AAV RNAi and the efficient vector delivery achieved for a number of neuronal cell types, AAV-mediated RNAi warrants consideration for this devastating disease.

Suitable non-CNS applications for AAV ddRNAi candidate may be instances where a single administration may already be therapeutic without the need for sustained gene silencing and repeat administration. HCV infection of the liver may be one such case as it is now possible to essentially transduce every liver cell, at least in mice, and effect long-term silencing after a single administration. AAV-medicated RNAi could therefore be an important component of combination therapies for patients that do not respond to current therapies and could also quite easily be tailored to the different HCV genotypes. Pfizer just recently acquired co-development rights for the pre-clinical stage AAV RNAi program for HCV from the Benitec spin-off Tacere.

AAV gene therapy is relatively new, but it is making rapid progress. Two independent phase I/II AAV gene therapy trial for Leber’s Congenital Amaurosis caused by RPE65 deficiency, a condition that leads to blindness later in life, demonstrated clear improvement in vision and treating children early on promises to even cure the disease. One of the studies was conducted by an academic group in London and was sponsored by Targeted Genetics, the other by a group from the University of Pennsylvania.

It is not clear whether an immune reaction that eliminated transduced liver cells in a hemophilia trial was specific for the AAV 2 serotype used, as most of us will have been exposed to this type of AAV during childhood and may therefore harbor some immune memory for it. A number of strategies have been proposed to minimize the risk of immune recognition in future trials, for example transient immune suppression or the use of alternative serotypes. The search for and development of alternative AAV serotypes is truly exploding and is rapidly yielding new AAV vectors with various tissue tropisms and immune properties.

The less AAV that needs to be administered the better also from an immune point of view. Very promising in that regard is the finding that the self-complementary AAVs which by-pass the rate-limiting second-strand synthesis step during the establishment of gene expression much more efficiently and functionally transduce target cells than conventional single-stranded AAV vectors. While this halves the vector capacity to less than 2kb, a size that is not very practical for expressing many protein-encoding genes, this does not matter at all in the context of small hairpin expression cassettes and appears to be just made for AAV RNAi. Actually, it was this property of self-complementary AAV vectors that was one of the main reasons for me to come to Stanford to conduct post-doctoral research. A patent for this possibly critically enabling technology has been issued to Targeted Genetics.

RNAi Therapeutics Portfolio Review: Increasing Position of Targeted Genetics

The technology is certainly there to be harnessed for therapy, but the development of AAV RNAi Therapeutics is not trivial and is a collaborative effort that requires careful gene target selection, safe and potent hairpin vectors, thoughtful clinical trial designs, and the manufacture of large amounts of high-quality AAV particles. Nevertheless, with the right team and some luck, it should possible to do.

It has both amazed and scared me to learn in a vivid report by RNAiNews that DNA-directed RNAi company Nucleonics whose lead program was a very long-shot (to put it mildly) RNAi program for HBV, was close to raising $25M in a series C round that would have included a venture capital arm from Johnson & Johnson. How that was even a remote possibility given the odds for that particular HBV RNAi program and the uncertain IP of that company is a mystery to me and makes the ~$13M market cap of Targeted Genetics’ look very cheap by comparison.

For this reason and given the promise of AAV-mediated RNAi Therapeutics in general, Targeted Genetics’ AAV gene therapy know-how and IP, including IP directly related to RNAi -especially the one for the double-stranded AAV and apparently another one for the expression of non-coding RNAs- I will add $680 worth of TGEN to the RNAi Therapeutics model portfolio and will pay for this with the sale of some stock in ISIS Pharmaceutcals (-$280), Oxford Biomedica (-$200), Silence Therapeutics (-$100) and Rosetta Genomics (-$100).

Remember, an investment in Targeted Genetics is highly speculative, its balance sheet somewhat ugly which is made worse by current market conditions which make it almost impossible to raise small biotech capital on reasonable terms. This investment thesis therefore is that Targeted Genetics will be able to win the race against the clock by being an attractive partner for other drug companies interested in RNAi Therapeutics with the resulting license fees and development milestones helping the company through the hard times. Maybe Genzyme with its considerable AAV gene therapy efforts and orphan disease management expertise or Biogen Idec with its long-standing ties to Targeted and interest in PML will bite.

Disclosure: The lab that I work in has an interest in AAV-mediated RNAi Therapeutics. The author has also been accumulating shares in Targeted Genetics between $0.58 and $0.72. The stock is not suitable for most due to adverse market conditions and the precarious balance sheet of the company. The thin trading volume of the stock causes volatilities in share price, usually to the downside, and there is a real chance that the stock will be de-listed from the Nasdaq exchange which will make this little company even more opaque to investors. On the other hand, conditions will improve at some point and in an environment where venture capital exits have become increasingly difficult and considering the attractive relative valuation and maturity of the company and technology, Targeted Genetics may represent an interesting, somewhat more liquid piece of RNAi Therapeutics real estate for investors otherwise specializing in private start-up companies.