RXi Pharmaceuticals Could Be Much More Than Skin Wound Healing

RXi Pharmaceuticals today commenced a secondary offering setting it on course to raise ~$10M, enough to finance the company for another year while expanding its pipeline and technology.  It could thus mark a new chapter in the life of this company which had shoe-boxed itself into a single-product (RXI-109 for dermal wound healing) company following a toxic 2012 financing that gave Tang Capital Partners de facto control over the company (pro tip: when you see the likes of Tang or Deerfield getting involved, it usually is not to the benefit of common stock holders). 

The news this morning that the preferred stock overhang (àTang Capital Partners) had finally been cleared, then paved the way towards the financing (amount and pricing to be determined).  

With RXI-109 winding its way through phase II studies, it became clear that RXi had to open itself up to new opportunities enabled by its promising self-delivering RNAi platform.  The financing will initially allow RXi to develop RXI-109 also for ocular (retinal and corneal) scarring-related indications such as wet AMD and cataract surgery.  First eye-related clinical trials with self-delivering RNAi triggers are expected to commence later this year.

The eye is an interesting application of sd-RNAi technology not only for the lucrative eye disease market (both genetic and age-related of considerable unmet medical need), but also because they seem to be able to penetrate throughout the eye (see image) whereas in the skin, distribution currently is limited to areas close to the injection site barring new delivery breakthroughs (patches, creams and the like).  In addition to cholesterol, it may also be interesting to test other ligands such as Vitamin A and E for enhanced uptake into certain ocular cell types.

Lots of unexplored potential

Beyond the skin and eye, self-delivering RNAi strategies hold considerable promise for other tissue targets, both by direct/local and systemic delivery.  In terms of local delivery, I would be highly interested in the biodistribution of intrathecally administered sd-RNAi triggers in non-human primates.  This is because of their long phosphorothioated single-strand overhang and thus similarity to phosphorothioate antisense oligonucleotides which are starting to show amazing results in the clinic for CNS applications (watch out for update on the infant ISIS-SMNRx study by Isis Pharmaceuticals).

In terms of systemic delivery, sd-RNAi chemistry and structure may synergize well with conjugate-RNAi approaches, both in their simple (--> Alnylam GalNAc-type) and more refined form (--> Arrowhead DPC-type).  Even without further modification, RXi-type self-delivering RNAi has shown surprising knockdown efficacy in models of pre-eclampsia as shown by respected UMass scientists Melissa Moore and Anastasia Khvorova (formerly of RXi Pharmaceuticals).  

If RXi can get the backing from serious biotech investors and eventually a new management fit to lead a modern biotechnology company, the current $16M market valuation (for RXI-109 in the clinic for dermal scarring and soon in the eye; self-delivering platform potential; stake in MirImmune) of the company could make it an irresistible investment opportunity.  If management, however, continues to dig in their heels and refuses to listen to outside advice chances are that the financial death spiral will continue. 
   

Suspicious shorting into financing

It used to be common biotech practice that investors-in-the-know were allowed to short into financing resting assured that the offering will allow them to cover at a lower share price.  It is therefore remarkable that in the days and weeks before the financing, the short interest has sky-rocketed from virtually none to around 10% of the float and possibly much more by now due to the delays in reporting short interest.

RXi Provides Disappointing Clinical Update for Scarring Drug

At the Rodman & Renshaw investor conference today, the CEO of RXiPharmaceuticals dropped a little bombshell in the form of a disappointing clinical update on their lead clinical candidate, RXI-109 for the treatment or prevention of dermal scarring.  In that interim look for efficacy, RXI-109 and placebo were not really distinguishable in scar severity sending the stock down 30-40% in the middle of today’s trading session.

1301 study design

The 1301 study is the first of three phase IIa studies evaluating 109 in a number of different scar settings.  In this case, RXI-109 was administered following scar revision surgery on the lower abdomen.  Part of the same scar received either 3 injections of the self-delivering RNAi compound, another part placebo solution.  Half of the subjects (50% of the study/16 subjects have enrolled as of today), received 109 on days 1, 8, and 15 following surgery (cohort 1), the other half received injections on days 14, 21, and 28 following surgery, the latter apparently inspired by clinical design trends observed for competitor antisense drug from Pfizer/Excaliard.

I find that blindly adjusting your clinical design based on such competitive intelligence is a worrisome sign of lack of confidence.

1301 study results

The first interim look for efficacy took place at 1 month post-surgery.  Results were based on the blinded visual assessment of scar severity on a scale from 1 (good fine-line scar) to 10 (worst scar imaginable). 

Unfortunately, the close to 50% knockdown of target CTGF observed in a similar 3-dose phase I study, did not translate to an obvious improvement in scar severity: for the immediate treatment group, the VAS score was 2.0 for both the 109 and the placebo side of the scar; for the delayed treatment group, the VAS score was slightly better in the 109 side (2.0) than on the placebo side (2.5) even reaching statistical significance.

Before you get excited and buy into the biological rationalizations by the CEO for why it makes sense that delayed, but not immediate would exhibit such a benefit, note that a VAS difference of 0.5 on a scale from 1 to 10 would appear to be clinically meaningless despite the statistical significance.  Moreover, looking at the VAS scores across the board, it seems that the placebo side in the delayed treatment cohort is a statistical outlier as it should not have performed any different than the placebo cohort in the immediate treatment group.    

On the other hand, given that the scars have not had time to fully develop and the VAS scores were still so low, it is possible that real differences will emerge at later time-points such as month 3 when the next interim look will take place and it may thus be premature to declare the study or drug for that matter a failure.

RXi needs a plan B and investors patience

In light of the disappointing trial update, it may not be a coincidence that Geert Cauwenbergh today took the opportunity to talk more about their other, preclinical pipeline candidates in the dermatology and ophthalmology space in much more detail than had been the case.   

I am less excited about the prospect of RXi expanding their dermatology footprint given the relatively modest gene knockdowns observed, limited tissue penetration from the site of injeciton, and the cosmeceutical nature of their current line-up (acne, depigmentation etc).  By contrast, I am much more excited about  the prospect and value of self-delivering RNAi triggers in the ophthalmology space given the great unmet medical needs there and the highly encouraging tissue penetration/biodistribution data for self-delivering RNAi in that organ.

There will be more to talk about that in the future.  As stock market investors, however, one has got to wonder whether management is aware of that value and knows how to best exploit it (pro tip: VEGF is a no-no for RNAi in the eye).  Even more concerning is the fact that the majority shareholder (Tang Capital) still holds close to half of the company and is in the process of unloading it thereby putting constant pressure on the stock. And with only $10M in the bank, you know what the trip to the Rodman & Renshaw conference was all about.

So no more than a small starter position for me despite the steep sell-off today.

Delivery Advance Illustrates Influence of Cosmetics Skin RNAi Therapeutics

The skin has always been a target organ of considerable interest to the RNAi Therapeutics industry due to its apparent accessibility for delivery purposes plus the fact that there are various unmet needs ranging from the severe genetic disease (e.g. epidermolysis bullosa, pachyonycia congenita) to cosmetic desires.  Interestingly, it is the latter that in many ways is driving skin RNAi Therapeutics these days.

Motorized microneedle array with unprecedented silencing efficacy

    

In an important advance in the rate-limiting area of delivery, Hickerson and colleagues from TransDerm and various other collaborators recently published 80% gene silencing efficacy in a mouse model for epidermal gene expression using a motorized microneedle array borrowed from the cosmetics industry (in particular the Triple-Mby BomtechElectronics of cosmetics hot-spot South Korea).  This compares to 50% and 33% gene silencing in the same model using simple (static) microneedle arrays and intradermal needle injection, respectively, before.  Accordingly, this represents a 2.5 to 3.5-fold increase in gene silencing efficacy when considering how much of the undesired target protein you are left with!

I have to admit that I did not double-check that indeed the same siRNA sequences and self-delivering RNAi trigger modifications were used in the various studies which could have affected results.  However, since these results have all been reported by TransDerm and the goal of TransDerm was to compare delivery efficacies of various technologies, I am willing to accept the comparability claim by the authors. _­

The trick with the motorized microneedle array appears to be that following penetration of the stratum corneum barrier motion (oscillation) allows for a larger volume of drug to be deposited in the epidermis than with a static needle array.  Moreover, the depth of administration can be adjusted for optimal epidermal delivery and to make it pain free as well, unlike the original high-pressure hypodermic needle attempts by TransDerm.   With this, it should be possible to deposit low single-digit milligram of RNAi triggers to an area the size of a tip of a thumb- which is quite a bit.

A possible limitation of such microneedle arrays is that the administration itself causes microinjuries to the skin.  Therefore, you want to make sure that you do not end up making things worse, especially in applications where wound healing and restoration are the goal.  Since the technology is apparently used in the beauty industry already, it is unlikely that its application will leave insightly scars and the likes.

I look forward to seeing a technology like motorized microneedle arrays in conjunction with self-delivering RNAi trigger formats being used in the clinic.  Initially, the technology is most amenable to applications where the focus is on locally defined areas such a skin parts prone to blistering.  However, taking advantage of imaging technologies and 3-D printing, I envision a future in which the technology would also be possible to treat large areas of the skin, if not the entire body surface.  As TransDerm illustrates, combining the capabilities of existing technologies from disparate areas often enables the biggest advances.

RXI-109 for dermal anti-scarring now available under the ‘Specials’ provision in the EU

Anybody that has gone to a dermatologist knows how blurred the lines between medical and cosmetic applications have become when it comes to the skin (cosmeceutical concept).  Taking advantage of the regulatory grey zone, it is skin applications that are leading the charge in the commercialization of RNAi gene silencing in WoMan.  Following a claimed treatment for skin blemishes marketed as Britena Whitening & Anti-blotch Cream by Biomics (partnered with Benitec on HepB), it is now RXi Pharmaceuticals that has signed a distribution agreement for its dermal anti-scarring drug candidate RXI-109 with Ethicor. 

The goal of this arrangement is to drive early sales based on an exception of European drug legislation that allows for the use of experimental drugs prior to proper marketing authorization.  All it apparently takes is a judgment call by the treating physician.  I can see the point of this ‘Specials’ provision for severe, orphan diseases as a form of compassionate use when there is intriguing early clinical evidence of efficacy and safety, but for an anti-scarring treatment, mmh...you can easily see how consumers willing to take risks in the quest for beauty will make their physician give them an injection of the stuff.

But then again, when you see how much unproven, potentially harmful potions and lotions are being sold on the cosmetics market, it is hard to argue why you should make an exception with RNAi as long as care is being taken that somewhat riskier (depending on chemistry) systemic exposures remain low and yours truly does not have to pay for it via increased insurance premiums.  I guess my biggest problem with all this is that the company distributing RXI-109 calls itself ‘Ethicor’ just as I get nervous when somebody starts a sentence with ‘to be honest’ and what follows is more often than not a lie.

Can RXi Pharmaceuticals Spot the Difference?

The imminent announcement of phase I results for RXI109 will be a clinical highlight of RNAi Therapeutics in 2013.  RXI109 is the self-delivering RNAi trigger against dermal scarring and is developed by RXi Pharmaceuticals.  Needless to say, as the company is committing 90% of its resources to this trial and indication, the results should cause major volatility in the stock.

While the dermal anti-scarring landscape is complex, RXI109 for the present indication can safely be categorized as a cosmeceutical.  According to RXi Pharmaceuticals, already $100M are spent each year in the US on non-FDA approved ointments against dermal scarring.  The interest in RXI109 is thus for its commercial potential and the clinical results are a milestone in the development of so-called ‘self-delivering RNAi triggers’.

Self-delivering RNAi triggers are a concept coined first by Dharmacon (although one could argue that was largely a branding achievement as it essentially involved known cholesterol conjugation), but is getting more widely adopted these days.  Beyond its local indications for which they self-delivering RNAi triggers were initially developed, I expect the concept to also be applied to certain systemic delivery strategies.  I could imagine that in an effort to render GalNAc-siRNAs more potent, self-delivering chemistries will be useful.

Phase I studies

RXi has conducted two phase I studies.  In both studies, volunteers got multiple surgical incisions symmetrically on both sides of the abdomen.  For each pair of incisions, one side either received RXI109 or placebo by intradermal injection.  In the first study, RXI109 was given just once before incision, from 1mg to 10mg per 2cm incision (similar range as in the Excaliard antisense trials).  In the second study, RXI109 was given three times within two weeks from 2.5mg to 7.5mg per 2 cm incision.

In addition to safety and tolerability, the important endpoints will be a visual assessment of scarring and then, based on a biopsy obtained from a tummy tuck at Day 84, important biomarker data in the form of CTGF levels (the target gene) and a histological evaluation of the scar tissue.

Although this is a blinded study, the company has discussed blinded results in extenso.  On the safety front, there seems to be little cause for concern, and adverse events are consistent with what you would expect from an incision.  Management appears to be very bullish on the therapeutic outcomes since in many cases left and right sides look different.  So if they are different, the side that looks better should have been given RXI109, right? 

Unfortunately, you have to look very hard to spot the differences.  In one example shown, the ‘average differences’ in scar tissue area were 31%.  Since they will put their best foot forward with this example, the largest effect size that we can expect is 31%.  And this assumes that in each case, it is the drug-treated side that outperforms the placebo-treated side. 

It is thus difficult for me to be optimistic that this trial allows for a therapeutic effect to be demonstrated.  For this, the natural wound healing variability would have to be really small (I admittedly don't know what this is).  On the other hand, it is with this symmetrical, intra-patient control design that such small differences might be teased out.  Regardless, I expect enough data to be collected from the studies that it will make for a nice headline and narrative about how RXI109 had improved wound healing and the correlation with CTGF (I bet there will be a correlation, whether due to knockdown or not).

So while I think that RXI109 is a decent RNAi Therapeutics (not the best possible one given the short dsRNA length), it will be important to conduct future studies in patient populations more prone to scarring to increase signal to noise.  This could be for example in the scar-revision setting or in Asian populations.

   

Trading the event

As I expect major volatility and have some confidence in the science behind RXI109, I have taken a long position ahead of the event.  It is not clear whether the results from the two studies will be presented separately or together.  I suspect the latter given that the CEO of RXi in February/March guided the results from the first study to be forthcoming in April.  Since it is almost June already, it is likely that the company expects the biggest bang from presenting the results together.  This should happen before July.  Once again, given that there is so much potential for data-mining, I expect positive headlines- justified or not.