Last Friday (20 January, 2008), I was fortunate to attend a talk given by Dr. Kaspar from TransDerm about their Pachyonychia Congenita RNAi program (see 22 January, 2008 Blog). Although the talk covered essentially what is known from publications and previous presentations, there are some details that I think give interesting insights into such an orphan drug development program that underline the potential cost savings through RNAi Therapeutics.
First of all, the phase Ib volume-dose escalation trial involves just one patient with a mutation in a keratin gene that is specifically targeted by the siRNA. If there are no adverse events, then the other five patients in the world with PC known to harbor the same mutation may be given the treatment as well. Although animal genetic data would suggest that knockdown of the wild-type allele should be compensated by the expression of other keratins, the consortium apparently wanted to ensure the highest level of safety by tailoring the treatment to the specific mutation. Which platform technology other than RNAi/gene-based medicines would financially allow for the initiation of a clinical trial for such a minute patient population?
The work at TransDerm leading to the initiation of this clinical study was essentially accomplished by the three employees of this tiny company. This is quite impressive given the scientific and regulatory hurdles one has to overcome to actually enter the clinic. RNAi apparently was helpful in that regard with Dr. Kaspar noting that during his scientific life he had worked with a number of technologies, and well, his experience was a bit mixed. But with RNAi all this has changed. RNAi has exceeded all of his expectations, and judging from his enthusiasm I had every reason to believe him.
Of course, delivery remains an issue, and the talk confirmed that the current trial involves intradermal needle injection of unformulated and unmodified siRNAs. Based on staining results, a lower estimate of the cells that take up the siRNA administered this way is around 20%. This and the fact that the spread of the siRNA is limited to a small area around the injection site in my mind will limit the therapeutic potential of this treatment strategy. Although the observation that such unformulated siRNAs get taken up at all in vivo (but usually not in tissue culture) is very encouraging and should stimulate research into the relevant biological uptake pathways that could lead to advances in RNAi delivery, current conjugation or encapsulation technologies should be able to significantly increase knockdown efficiency following such intradermal injection. As I mentioned before, the company is also working on a lipid-alcohol-based “gene cream” which may also have applications for other tissues. Another promising approach the company is pursuing is the use of 1mm-spaced needle arrays which are sufficiently short so that the tips would not reach the nerves in the skin, thus rendering the treatment painless.
According to Dr. Kaspar, there are 10,000 monogenic congenital diseases, ~20% of which affect the skin. Due to potential cost savings and specificity, RNAi, the poster child of the personalized medicine revolution, is ideally suited to transform the treatment of many of such orphan disorders.
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Monday, January 28, 2008
Thursday, January 24, 2008
Alnylam Reports “Positive” Data from RSV Experimental Infection Trial: Human Proof-of-concept for an RNAi Therapeutic?
Alnylam got observers scratching their heads today as they announced “statistically significant anti-viral activity” for ALN-RSV01, an RNAi Therapeutic against RSV infection, in an early phase II trial, but without providing further details.
In this experimental infection trial, an siRNA delivered to the nasal epithelium is tested for activity against a non-pathogenic strain of RSV. The trial has two main purposes: firstly, to provide the first demonstration of RNAi activity in man (human proof-of-concept; HPOC); and secondly, to inform the design of late-stage phase II trials in naturally infected adults slated for the first half of this year, although in that trial delivery will be to the lung by nebulizer (see 13Dec07 Blog: Breaking News: “Alnylam Reports on the Safety of Inhaled RSV-01”).
The question then arises why did they not present any hard data? It is possible that, as often the case in biotech, initial press releases and top-line data are exploited for PR purposes while the warts-and-all data turn out to be less than impressive. However, given their usually well executed PR strategy with which they have earned themselves considerable credibility, I doubt that they would start playing around with the meaning of “statistically significant”.
One possibility is that they are still crunching numbers as to viral titers by PCR and plaque assay as well as symptom scores in the different groups, to then comprehensively present the whole data set at the International Symposium on Respiratory Viral Infections meeting next month in Singapore. Some meetings also do not like it when data are presented beforehand in press releases. In any case, I hope the company makes the full data set available on their website once they are presented. I am particularly curious as to whether they allow insights into the mechanism of action of this drug.
Another maybe more intriguing possibility for the strange lack of any concrete numbers may have to do with the rather equally unusual post-hoc christening of the trial as GEMINI. Assuming that they would not want a failed trial to be well remembered by giving it a name, one that could be maliciously interpreted as to mean “ambiguous”, the naming of an early stage trial AFTER the results are announced may have a deeper meaning. If the results hold up, GEMINI could be used in the future to refer to HPOC as another momentous de-risking event in the history of RNAi Therapeutics. Equally tantalizing is the possibility that the full data presentation of GEMINI may coincide with the announcement of a co-development partner. Although the initial adult market for ALN-RSV01 may be limited, this program should attract considerable interest as it will give the partner a pioneering role in RNAi Therapeutics, potentially associated with first dips for future respiratory disease programs.
So stay tuned on GEMINI as we are likely to hear it being referred to quite more often in the future. January 23, 2008, may have been another important milestone in the development of RNAi Therapeutics. In the meantime, the prize goes to he/she who can figure out first what the acronym GEMINI stands for*.
PS: I would guess that today’s results will have triggered milestone payments from the Novartis and Roche collaborations.
[* Update May 2, 2008: It is becoming clear now that GEMINI stands for the intention of the study to both show a) proof-of-concept for RNAi efficacy in man, and b) further evaluate the safety and efficacy of ALN-RSV01 for the RSV antiviral development program.]
In this experimental infection trial, an siRNA delivered to the nasal epithelium is tested for activity against a non-pathogenic strain of RSV. The trial has two main purposes: firstly, to provide the first demonstration of RNAi activity in man (human proof-of-concept; HPOC); and secondly, to inform the design of late-stage phase II trials in naturally infected adults slated for the first half of this year, although in that trial delivery will be to the lung by nebulizer (see 13Dec07 Blog: Breaking News: “Alnylam Reports on the Safety of Inhaled RSV-01”).
The question then arises why did they not present any hard data? It is possible that, as often the case in biotech, initial press releases and top-line data are exploited for PR purposes while the warts-and-all data turn out to be less than impressive. However, given their usually well executed PR strategy with which they have earned themselves considerable credibility, I doubt that they would start playing around with the meaning of “statistically significant”.
One possibility is that they are still crunching numbers as to viral titers by PCR and plaque assay as well as symptom scores in the different groups, to then comprehensively present the whole data set at the International Symposium on Respiratory Viral Infections meeting next month in Singapore. Some meetings also do not like it when data are presented beforehand in press releases. In any case, I hope the company makes the full data set available on their website once they are presented. I am particularly curious as to whether they allow insights into the mechanism of action of this drug.
Another maybe more intriguing possibility for the strange lack of any concrete numbers may have to do with the rather equally unusual post-hoc christening of the trial as GEMINI. Assuming that they would not want a failed trial to be well remembered by giving it a name, one that could be maliciously interpreted as to mean “ambiguous”, the naming of an early stage trial AFTER the results are announced may have a deeper meaning. If the results hold up, GEMINI could be used in the future to refer to HPOC as another momentous de-risking event in the history of RNAi Therapeutics. Equally tantalizing is the possibility that the full data presentation of GEMINI may coincide with the announcement of a co-development partner. Although the initial adult market for ALN-RSV01 may be limited, this program should attract considerable interest as it will give the partner a pioneering role in RNAi Therapeutics, potentially associated with first dips for future respiratory disease programs.
So stay tuned on GEMINI as we are likely to hear it being referred to quite more often in the future. January 23, 2008, may have been another important milestone in the development of RNAi Therapeutics. In the meantime, the prize goes to he/she who can figure out first what the acronym GEMINI stands for*.
PS: I would guess that today’s results will have triggered milestone payments from the Novartis and Roche collaborations.
[* Update May 2, 2008: It is becoming clear now that GEMINI stands for the intention of the study to both show a) proof-of-concept for RNAi efficacy in man, and b) further evaluate the safety and efficacy of ALN-RSV01 for the RSV antiviral development program.]
Wednesday, January 23, 2008
Will Market Turmoil Accelerate Consolidation of Core RNAi Therapeutics Companies?
I know that I am vulnerable to accusations that I take a very pro-Alnylam view. But you have to admit that history thus far has supported this view and that I have been pointing out some of the dangers Alnylam faces as well. With that out of the way, another shameless pro-Alnylam posting:
One striking observation from the recent volatile trading is that while the bellwether of RNAi Therapeutics, Alnylam, almost seemed oblivious to the economic troubles around it, smaller second-tier players such as Silence Therapeutics, CytRx, and Nastech were being severely punished by the markets. Part of this may be explained by the solid financial position of Alnylam which may not have to return to the capital markets for years, while the likelihood increases that Nastech and CytRx have no choice but to exercise their shelves and dilute shareholder equity at a time when share prices are sinking ever more.
Shareholders of Nastech and CytRx may have both hoped that a successful spin-out of their RNAi units MDRNA and RXi, respectively, would avoid a secondary offering at the most inopportune times. But as the spin-outs take time to materialize and bad partnering and clinical news keep coming in, this appears less likely by the day. The latest developments (today):
- Nastech “announced” in an SEC filing that Novo Nordisk would be joining Merck and P&G in walking away from a co-development program relating to Nastech’s nasal delivery program. This was followed by a $50M shelf registration, quite sizeable for a company with a $72M market cap.
- CytRx suffered a clinical halt by the FDA for their lead small molecule phase II ALS program.
In both cases, the problem for RNAi Therapeutics investors has been their exposure to the non-RNAi parts of the parent companies which, unlike Sirna Therapeutics’ financially successful total makeover before, chose to nurture RNAi divisions within a non pure-play environment. Additionally, both developments were preceded by re-shuffling of their financial management structures and significant share price declines.
The situation at Silence Therapeutics, where share prices have fallen by more than half in a matter of two month, is slightly different, but also emphasizes that second-tier companies have a hard time attracting interest as their IP position is under scrutiny. In this case, progress in the US patent application for their AtuRNAi design or a validating Big Pharma partnership is needed.
I would not be surprised that Alnylam’s strong IP position plays a critical role in all these delays as it should make any potential partner or investor think twice about investing. It will now be interesting whether current market conditions accelerate the consolidation of the core RNAi Therapeutics space. My real concern, however, is how will a recession affect funding of scientific research, particularly for RNAi delivery and safety.
Alnylam should also be careful that their cash pile is not melted away by hyperinflation, as policy makers have come to the conclusion that the best way to save the economy is to print more money and please the Big Banks on Wall Street by slashing interest rates. Never mind that it was overspending encouraged by low interest rates that got us into the mess in the first place.
One striking observation from the recent volatile trading is that while the bellwether of RNAi Therapeutics, Alnylam, almost seemed oblivious to the economic troubles around it, smaller second-tier players such as Silence Therapeutics, CytRx, and Nastech were being severely punished by the markets. Part of this may be explained by the solid financial position of Alnylam which may not have to return to the capital markets for years, while the likelihood increases that Nastech and CytRx have no choice but to exercise their shelves and dilute shareholder equity at a time when share prices are sinking ever more.
Shareholders of Nastech and CytRx may have both hoped that a successful spin-out of their RNAi units MDRNA and RXi, respectively, would avoid a secondary offering at the most inopportune times. But as the spin-outs take time to materialize and bad partnering and clinical news keep coming in, this appears less likely by the day. The latest developments (today):
- Nastech “announced” in an SEC filing that Novo Nordisk would be joining Merck and P&G in walking away from a co-development program relating to Nastech’s nasal delivery program. This was followed by a $50M shelf registration, quite sizeable for a company with a $72M market cap.
- CytRx suffered a clinical halt by the FDA for their lead small molecule phase II ALS program.
In both cases, the problem for RNAi Therapeutics investors has been their exposure to the non-RNAi parts of the parent companies which, unlike Sirna Therapeutics’ financially successful total makeover before, chose to nurture RNAi divisions within a non pure-play environment. Additionally, both developments were preceded by re-shuffling of their financial management structures and significant share price declines.
The situation at Silence Therapeutics, where share prices have fallen by more than half in a matter of two month, is slightly different, but also emphasizes that second-tier companies have a hard time attracting interest as their IP position is under scrutiny. In this case, progress in the US patent application for their AtuRNAi design or a validating Big Pharma partnership is needed.
I would not be surprised that Alnylam’s strong IP position plays a critical role in all these delays as it should make any potential partner or investor think twice about investing. It will now be interesting whether current market conditions accelerate the consolidation of the core RNAi Therapeutics space. My real concern, however, is how will a recession affect funding of scientific research, particularly for RNAi delivery and safety.
Alnylam should also be careful that their cash pile is not melted away by hyperinflation, as policy makers have come to the conclusion that the best way to save the economy is to print more money and please the Big Banks on Wall Street by slashing interest rates. Never mind that it was overspending encouraged by low interest rates that got us into the mess in the first place.
Monday, January 21, 2008
RNAi Clinical Trial Started for Genetic Skin Disorder Pachyonychia Congenita
This week saw the initiation of a clinical trial investigating the use of siRNAs for the treatment of Pachyonychia Congenita (PC). The study is sponsored by the PC Project, a public charity devoted to serving the needs of the ~500 people worldwide affected by this rare genetic disorder, and led by Sancy Leachman from the University of Utah. The siRNA itself, TD101, is the fruit of a collaboration between the International PC Project and the Californian RNAi-focused start-up TransDerm with ties to the shRNA-company SomaGenics.
PC is one of the dominant-negative epithelial fragility disorders caused by the mutation of a keratin gene. There are over 20 keratin genes in the human genome, with two different types forming heterodimers in the assembly of the keratin intermediate filaments which are important for the structural integrity of epithelia such as of the skin. A mutation in one of the dimerization partners may disrupt the organization of the filaments, which in the case of PC results in thickening of nails and skin of the palms and soles. Apart from the obvious cosmetic consequences of the disease, pain due to stress on the palms and soles is a major symptom of the disease for which no specific treatments exist.
Previous studies suggest that a 50% reduction in the mutant protein should get rid of the molecular aggregates caused by the filament assembly defect, and even the total loss of the mutant keratin should be well tolerated due to the expression of compensatory keratins. RNA- and DNA-based treatments offer the best opportunity for a specific treatment as they can address keratins directly and should be able to distinguish between mutant and wild-type genes. After considering a number of technologies, the PC Project has chosen RNAi due to its potential specificity, relative straight-forward mechanism of action which should accelerate drug development.
This is supported by two related publications from the consortia (Hickerson et al. (2007): Single-Nucleotide-Specific siRNA Targeting in a Dominant-Negative Skin Model; Smith et al. (2008): Development of Therapeutic siRNAs for Pachyonychia Congenita) which demonstrate the ability of siRNAs to specifically down-regulate the mutant keratin with an almost complete reversal of the aggregation phenotype. This is shown in both in vitro tissue culture and in vivo mouse footpad models involving the use of keratin-reporter genes.
While these studies provide proof-of-concept of RNAi for the treatment of PC, the in vivo studies were limited to the knockdown of reporter genes co-transfected with the siRNAs, rather than targeting endogenous genes in the skin epithelium. It is difficult to judge from such studies the overall delivery efficiency since cells that take up the reporter gene are likely to take up the siRNA as well, even when most of the remaining cells have not taken up any of the siRNA. (note: similar reservations apply to the recently initiated phase I RNAi studies for HBV by Nucleonics which are also heavily based on co-transfection experiments.)
The mouse models involved intradermally injected, unmodified siRNAs in a simple PBS buffer. While TransDerm is working on a topical lipid-based “gene crème”, it appears that at least for the phase Ib studies the siRNAs, targeting one of the more common mutations in PC, will be intradermally delivered by needle injection. One concern here is whether the area that such a delivery method can reach is sufficient to alleviate the symptoms of PC. Another is that using unmodified siRNAs in PBS over stabilized formulations will unnecessarily sacrifice some of the efficacy as well as necessitate more frequent treatment. Clearly, there is room for improvement, but the phase Ib studies should provide precious clinical data and inform future treatment strategies.
In addition to more sophisticated delivery methods and formulations, such strategies could also involve DNA-directed RNAi where autologous skin transplants and/or stem cells of the skin are stably corrected ex vivo, e.g. by lentiviral transduction of shRNAs, and then reapplied to the patient. This may be preferable to repeat needle injections.
TransDerm hopes that providing proof-of-concept for an RNAi Therapeutic of such a rare skin disorder with little commercial potential will be a stepping-stone for addressing much larger patient populations. This illustrates once more the value of proof-of-concept studies in general for RNAi since the ability of deliver one RNAi treatment could be rapidly expanded to delivering many more RNAi Therapeutics for the same tissue.
It will be interesting to see whether TransDerm, which by the way has opted for a classical Tuschl siRNA rather than a synthetic shRNA like SomaGenics is using, will be successful not only in the clinic, but also in their corporate strategy. In the absence of any RNAi core IP, the development of RNAi delivery technologies for the skin is probably their best shot in creating shareholder value.
PS: I wonder what happened to Sirna Therapeutics’ dermatology program which in their first development program aimed for siRNA-mediated permanent hair removal. The prospect of RNAi dermatology products is certainly exciting, especially if it were possible to develop convenient delivery methods such as topical cremes.
PC is one of the dominant-negative epithelial fragility disorders caused by the mutation of a keratin gene. There are over 20 keratin genes in the human genome, with two different types forming heterodimers in the assembly of the keratin intermediate filaments which are important for the structural integrity of epithelia such as of the skin. A mutation in one of the dimerization partners may disrupt the organization of the filaments, which in the case of PC results in thickening of nails and skin of the palms and soles. Apart from the obvious cosmetic consequences of the disease, pain due to stress on the palms and soles is a major symptom of the disease for which no specific treatments exist.
Previous studies suggest that a 50% reduction in the mutant protein should get rid of the molecular aggregates caused by the filament assembly defect, and even the total loss of the mutant keratin should be well tolerated due to the expression of compensatory keratins. RNA- and DNA-based treatments offer the best opportunity for a specific treatment as they can address keratins directly and should be able to distinguish between mutant and wild-type genes. After considering a number of technologies, the PC Project has chosen RNAi due to its potential specificity, relative straight-forward mechanism of action which should accelerate drug development.
This is supported by two related publications from the consortia (Hickerson et al. (2007): Single-Nucleotide-Specific siRNA Targeting in a Dominant-Negative Skin Model; Smith et al. (2008): Development of Therapeutic siRNAs for Pachyonychia Congenita) which demonstrate the ability of siRNAs to specifically down-regulate the mutant keratin with an almost complete reversal of the aggregation phenotype. This is shown in both in vitro tissue culture and in vivo mouse footpad models involving the use of keratin-reporter genes.
While these studies provide proof-of-concept of RNAi for the treatment of PC, the in vivo studies were limited to the knockdown of reporter genes co-transfected with the siRNAs, rather than targeting endogenous genes in the skin epithelium. It is difficult to judge from such studies the overall delivery efficiency since cells that take up the reporter gene are likely to take up the siRNA as well, even when most of the remaining cells have not taken up any of the siRNA. (note: similar reservations apply to the recently initiated phase I RNAi studies for HBV by Nucleonics which are also heavily based on co-transfection experiments.)
The mouse models involved intradermally injected, unmodified siRNAs in a simple PBS buffer. While TransDerm is working on a topical lipid-based “gene crème”, it appears that at least for the phase Ib studies the siRNAs, targeting one of the more common mutations in PC, will be intradermally delivered by needle injection. One concern here is whether the area that such a delivery method can reach is sufficient to alleviate the symptoms of PC. Another is that using unmodified siRNAs in PBS over stabilized formulations will unnecessarily sacrifice some of the efficacy as well as necessitate more frequent treatment. Clearly, there is room for improvement, but the phase Ib studies should provide precious clinical data and inform future treatment strategies.
In addition to more sophisticated delivery methods and formulations, such strategies could also involve DNA-directed RNAi where autologous skin transplants and/or stem cells of the skin are stably corrected ex vivo, e.g. by lentiviral transduction of shRNAs, and then reapplied to the patient. This may be preferable to repeat needle injections.
TransDerm hopes that providing proof-of-concept for an RNAi Therapeutic of such a rare skin disorder with little commercial potential will be a stepping-stone for addressing much larger patient populations. This illustrates once more the value of proof-of-concept studies in general for RNAi since the ability of deliver one RNAi treatment could be rapidly expanded to delivering many more RNAi Therapeutics for the same tissue.
It will be interesting to see whether TransDerm, which by the way has opted for a classical Tuschl siRNA rather than a synthetic shRNA like SomaGenics is using, will be successful not only in the clinic, but also in their corporate strategy. In the absence of any RNAi core IP, the development of RNAi delivery technologies for the skin is probably their best shot in creating shareholder value.
PS: I wonder what happened to Sirna Therapeutics’ dermatology program which in their first development program aimed for siRNA-mediated permanent hair removal. The prospect of RNAi dermatology products is certainly exciting, especially if it were possible to develop convenient delivery methods such as topical cremes.
Monday, January 14, 2008
Portfolio Review: RNA Therapeutics Deals Help Sector amid Recession Fears
It seems the markets decided to wait for the New Year for the cracks from the credit crunch to finally start spreading throughout the economy. Not surprisingly, stocks have taken a plunge amid eye-popping write-offs by the major investment and commercial banks. Fortunately, however, the RNAi Therapeutics sector was largely unharmed, partly supported by a strong pharma sector considered a safe harbor in economically difficult times, but largely because of the two remarkable deals involving RNA-based drugs.
One was for ISIS’ mipomersen for the treatment of hypercholesterolemia, which although an antisense and not an RNAi compound further highlighted interest in RNA-based therapeutics in general; the other was for Tacere’s AAV-shRNA TT-033 gene therapy for HCV and represented the first licensing of an DNA-directed RNAi Therapeutics program by Big Pharma (Pfizer). This happened the same week that I attended a presentation by a VP responsible for RNA therapeutic drug development for a major pharmaceutical company, who admitted that the pharmaceutical industry was a failing business model which may only be saved by technologies such as RNAi (stressing especially the potential cost and time savings). Clearly, RNAi Therapeutics is and will continue to be a hot commodity in 2008 and beyond.
Interestingly, while earlier RNA therapeutics deals tended to lift the entire sector, two companies that particularly live on partnering hopes failed to participate in the rally: Silence Therapeutics (-11.4%) and Nastech Pharmaceuticals (-4.5%). It seems that the lift in Alnylam’s share price (+8.8%) indicates that investors are starting to focus on the proven players with solid balance sheets at a time when biotechs may find it difficult to raise funds in the capital markets.
Portfolio Transactions:
Sells:
Benitec: I will take profits from Benitec by selling 1/3 after it exploded on the Tacere deal (Benitec retains significant stakes in TT-033 after it spun out Tacere). This will also avoid Benitec becoming too large a position. Moreover, the exclusive license award to the fundamental Fire-Mello patents to Oxford Biomedica this week for lentivirally-delivered expressed RNAi further may be interpreted as a negative development for Benitec’s IP position on DNA-directed RNAi, including its phase I program for HIV which makes use lentiviral RNAi technology. Still, Pfizer has now repeatedly shown interest in Benitec’s RNAi technology, and one has to wonder whether more deals are in store.
Nastech: The company announced this week, without giving an explanation, that Philip Ranker resigned as CFO. My motivation for including Nastech in the portfolio was based on hopes for a successful spin-out of RNAi Therapeutics subsidiary MDRNA. A delay in the mdRNA spin-out, however, may force Nastech to seek the capital markets for a secondary, thereby risking massive dilution at current price levels. Seeing the CFO go at this juncture forces me to reduce my position from 8.8% to 5% of my portfolio.
Buys:
Oxford Biomedica: Four years ago, Oxford Biomedica first piqued my interest when they presented impressive data on targeting SOD1 for the treatment of a form of amyotrophic lateral sclerosis (ALS; subsequently published in Nature Medicine in 2005: Ralph et al. Nature Medicine 11:429). Finishing up my D.Phil. in Oxford I even enquired whether they were looking for scientists working on RNAi gene therapy, but was told that they were pursuing this more as a tool, not a therapy. Clearly, with the new license, the Alnylam of lentiviral gene therapy technology is now officially part of the RNAi Therapeutics community. A broad clinical pipeline, a solid financial position following a high-profile deal last year with Sanofi-Aventis for the phase II/III cancer immunotherapy Trovax, their track record of scientific accomplishments and an unparalleled IP estate in lentivirus technology are worth 6% of my model portfolio.
ISIS Pharmaceuticals: The remaining cash from the sales of Nastech and Benitec will be invested in ISIS since I believe that the markets have not fairly valued the Genzyme transaction. In the long-run, it will not only help validate ISIS’ antisense chemistry in investors’ eyes, but also finally gives ISIS the financial strength to realize the full potential of their technology.
One was for ISIS’ mipomersen for the treatment of hypercholesterolemia, which although an antisense and not an RNAi compound further highlighted interest in RNA-based therapeutics in general; the other was for Tacere’s AAV-shRNA TT-033 gene therapy for HCV and represented the first licensing of an DNA-directed RNAi Therapeutics program by Big Pharma (Pfizer). This happened the same week that I attended a presentation by a VP responsible for RNA therapeutic drug development for a major pharmaceutical company, who admitted that the pharmaceutical industry was a failing business model which may only be saved by technologies such as RNAi (stressing especially the potential cost and time savings). Clearly, RNAi Therapeutics is and will continue to be a hot commodity in 2008 and beyond.
Interestingly, while earlier RNA therapeutics deals tended to lift the entire sector, two companies that particularly live on partnering hopes failed to participate in the rally: Silence Therapeutics (-11.4%) and Nastech Pharmaceuticals (-4.5%). It seems that the lift in Alnylam’s share price (+8.8%) indicates that investors are starting to focus on the proven players with solid balance sheets at a time when biotechs may find it difficult to raise funds in the capital markets.
Portfolio Transactions:
Sells:
Benitec: I will take profits from Benitec by selling 1/3 after it exploded on the Tacere deal (Benitec retains significant stakes in TT-033 after it spun out Tacere). This will also avoid Benitec becoming too large a position. Moreover, the exclusive license award to the fundamental Fire-Mello patents to Oxford Biomedica this week for lentivirally-delivered expressed RNAi further may be interpreted as a negative development for Benitec’s IP position on DNA-directed RNAi, including its phase I program for HIV which makes use lentiviral RNAi technology. Still, Pfizer has now repeatedly shown interest in Benitec’s RNAi technology, and one has to wonder whether more deals are in store.
Nastech: The company announced this week, without giving an explanation, that Philip Ranker resigned as CFO. My motivation for including Nastech in the portfolio was based on hopes for a successful spin-out of RNAi Therapeutics subsidiary MDRNA. A delay in the mdRNA spin-out, however, may force Nastech to seek the capital markets for a secondary, thereby risking massive dilution at current price levels. Seeing the CFO go at this juncture forces me to reduce my position from 8.8% to 5% of my portfolio.
Buys:
Oxford Biomedica: Four years ago, Oxford Biomedica first piqued my interest when they presented impressive data on targeting SOD1 for the treatment of a form of amyotrophic lateral sclerosis (ALS; subsequently published in Nature Medicine in 2005: Ralph et al. Nature Medicine 11:429). Finishing up my D.Phil. in Oxford I even enquired whether they were looking for scientists working on RNAi gene therapy, but was told that they were pursuing this more as a tool, not a therapy. Clearly, with the new license, the Alnylam of lentiviral gene therapy technology is now officially part of the RNAi Therapeutics community. A broad clinical pipeline, a solid financial position following a high-profile deal last year with Sanofi-Aventis for the phase II/III cancer immunotherapy Trovax, their track record of scientific accomplishments and an unparalleled IP estate in lentivirus technology are worth 6% of my model portfolio.
ISIS Pharmaceuticals: The remaining cash from the sales of Nastech and Benitec will be invested in ISIS since I believe that the markets have not fairly valued the Genzyme transaction. In the long-run, it will not only help validate ISIS’ antisense chemistry in investors’ eyes, but also finally gives ISIS the financial strength to realize the full potential of their technology.
Tuesday, January 8, 2008
More to Come? Benitec Halted on the Australian Exchange
In what cannot be described as anything short of an amazing day for the Business of RNA(i) Therapeutics, Benitec has just announced their request to halt trading of their shares: http://www.asx.com.au/asxpdf/20080108/pdf/316tqqh1t4xm4g.pdf
This comes on the back of an Stock Exchange enquiry about irregular trading associated with rumours last week that Pfizer was interested in Tacere (as it turns out, rumours are true sometimes). As the Tacere news was already out before today's trading session, it will be interesting to see whether the trading halt request is linked to and possibly an extension of the Pfizer deal.
Update: Benitec confirmed Tacere-Pfizer news and is currently up by more than 100%. An interesting interview last year with Benitec CEO MacLeman about the possibility of Pfizer coming back to take a therapeutic DNA-directed RNAi license from Benitec in the wake of taking a research license can be found on the following website (listen carefully):
http://www.brr.com.au/event/17735
This comes on the back of an Stock Exchange enquiry about irregular trading associated with rumours last week that Pfizer was interested in Tacere (as it turns out, rumours are true sometimes). As the Tacere news was already out before today's trading session, it will be interesting to see whether the trading halt request is linked to and possibly an extension of the Pfizer deal.
Update: Benitec confirmed Tacere-Pfizer news and is currently up by more than 100%. An interesting interview last year with Benitec CEO MacLeman about the possibility of Pfizer coming back to take a therapeutic DNA-directed RNAi license from Benitec in the wake of taking a research license can be found on the following website (listen carefully):
http://www.brr.com.au/event/17735
Monday, January 7, 2008
More Breaking News: ISIS and Genzyme in Heart Attack Biotech Deal
Dwarfing Tacere’s Pfizer collaboration announced earlier today, ISIS disclosed after the close of the markets Genzyme to be their long-expected partner for mipomersen, an antisense compound targeting ApoB100 for lowering bad cholesterol. Mipomersen is currently in phase III clinical development for the small, but high-risk group of people with familial hypercholesterolemia. Similar studies are planned to apply mipomersen for the statin-refractory general population. Pre-clinical data so far have shown the drug to be safe and surprisingly well tolerated.
The blockbuster deal, including a $175M upfront license payment plus $150M at a 103% premium to today’s closing price and more significant milestone and profit-sharing opportunities downstream, is another validation of how highly innovative RNA-targeting therapies are being valued. Genzyme appears to be the ideal partner for ISIS in that it has demonstrated an amazing ability to target relatively small patient populations for genetic disorders, such as familial hypercholesterolemia, yet be extraordinarily profitable. ISIS on the other hand is opting for an IP licensing model whereby it develops a series of antisense compounds to certain value inflection points to then partner them, in addition to receiving significant royalties on licensed IP from a wide range of RNA technology companies, including Alnylam. More antisense drugs for liver indications are in development, including a phase I HCV drug licensed by Merck [note corrigendum below].
Today’s announcement will focus the attention to the entire field of RNA-based therapeutics, including RNAi. The markets are likely to react very positively to the news, and Alnylam’s plans of two more significant platform licensing deals will sound a lot more real with this new development.
PS: It seems odd that today's announcement was preceded by a dramatic, over 15% drop in ISIS shares at the opening of the session. It is likely that "shorts" familiar with the matter pushed the stock down to create panic selling to create volume for covering their positions. Unfortunately, this may have achieved its purpose and some honest investors will have been stopped out by this action.
Corrigendum (15 January, 2008): A reader correctly noted that the Merck HCV drug mentioned in this blog is a nucleoside polymerase inhibitor, not an antisense compound which I assumed based on its origin in a Merck-ISIS collaboration. This, however, further illustrates ISIS' considerable leverage in nucleotide-based drug development.
The blockbuster deal, including a $175M upfront license payment plus $150M at a 103% premium to today’s closing price and more significant milestone and profit-sharing opportunities downstream, is another validation of how highly innovative RNA-targeting therapies are being valued. Genzyme appears to be the ideal partner for ISIS in that it has demonstrated an amazing ability to target relatively small patient populations for genetic disorders, such as familial hypercholesterolemia, yet be extraordinarily profitable. ISIS on the other hand is opting for an IP licensing model whereby it develops a series of antisense compounds to certain value inflection points to then partner them, in addition to receiving significant royalties on licensed IP from a wide range of RNA technology companies, including Alnylam. More antisense drugs for liver indications are in development, including a phase I HCV drug licensed by Merck [note corrigendum below].
Today’s announcement will focus the attention to the entire field of RNA-based therapeutics, including RNAi. The markets are likely to react very positively to the news, and Alnylam’s plans of two more significant platform licensing deals will sound a lot more real with this new development.
PS: It seems odd that today's announcement was preceded by a dramatic, over 15% drop in ISIS shares at the opening of the session. It is likely that "shorts" familiar with the matter pushed the stock down to create panic selling to create volume for covering their positions. Unfortunately, this may have achieved its purpose and some honest investors will have been stopped out by this action.
Corrigendum (15 January, 2008): A reader correctly noted that the Merck HCV drug mentioned in this blog is a nucleoside polymerase inhibitor, not an antisense compound which I assumed based on its origin in a Merck-ISIS collaboration. This, however, further illustrates ISIS' considerable leverage in nucleotide-based drug development.
Breaking News: Pfizer Licenses DNA-directed RNAi Program for HCV from Tacere Therapeutics
Representing the first major DNA-directed RNAi licensing deal to date by Big Pharma, Tacere Therapeutics announced today licensing of its late preclinical-stage AAV-RNAi HCV program, TT-033, to Pfizer. Detailed terms were not disclosed, but Tacere will be eligible for up to $145 in development milestones, plus royalties on sales of drugs. Pfizer will assume all development work and cost.
TT-033 consists of an adeno-associated viral vector (AAV) expressing small hairpin RNAs (shRNAs) that are expressed from the viral vector. The shRNAs are processed by the RNAi machinery to yield small interfering RNAs that target the HCV RNA. This vector is devoid of any viral protein-encoding gene and has proven extremely efficient in transducing liver cells in mice and in many cases effecting almost complete gene knockdown. Tacere acquired the rights to TT-033 from Benitec when Benitec, due to funding problem, downsized and left the US in 2006. Benitec retains a stake in both Tacere and TT-033.
With today’s announcement, Pfizer is continuing is strategy of small, but deliberate RNAi technology deals. Tacere is a Bay Area company and close to Pfizer’s new Bioinnovation Center in South San Francisco. Last year, Pfizer made clear that it wants to become a major player in RNAi Therapeutics as part of its biotechnology initiative. It will now be interesting to watch whether Pfizer will take a broad technology license from Alnylam to protect all of its ongoing RNAi projects (Alnylam announced today that it is confident to close at least 2 major Roche-type technology licensing deals in the not-to-distant future).
The deal is a validation of AAV technology for gene therapy. AAV has shown great promise in addressing the RNAi delivery challenge for a number of organs, including the liver, brain, and eye. Benitec, Tacere, and Targeted Genetics currently have significant interests in AAV-mediated RNAi.
TT-033 consists of an adeno-associated viral vector (AAV) expressing small hairpin RNAs (shRNAs) that are expressed from the viral vector. The shRNAs are processed by the RNAi machinery to yield small interfering RNAs that target the HCV RNA. This vector is devoid of any viral protein-encoding gene and has proven extremely efficient in transducing liver cells in mice and in many cases effecting almost complete gene knockdown. Tacere acquired the rights to TT-033 from Benitec when Benitec, due to funding problem, downsized and left the US in 2006. Benitec retains a stake in both Tacere and TT-033.
With today’s announcement, Pfizer is continuing is strategy of small, but deliberate RNAi technology deals. Tacere is a Bay Area company and close to Pfizer’s new Bioinnovation Center in South San Francisco. Last year, Pfizer made clear that it wants to become a major player in RNAi Therapeutics as part of its biotechnology initiative. It will now be interesting to watch whether Pfizer will take a broad technology license from Alnylam to protect all of its ongoing RNAi projects (Alnylam announced today that it is confident to close at least 2 major Roche-type technology licensing deals in the not-to-distant future).
The deal is a validation of AAV technology for gene therapy. AAV has shown great promise in addressing the RNAi delivery challenge for a number of organs, including the liver, brain, and eye. Benitec, Tacere, and Targeted Genetics currently have significant interests in AAV-mediated RNAi.
RNAi Therapeutics Model Portfolio
Before the biotech investment year kicks off tomorrow with the JP Morgan Healthcare Conference in San Francisco, I would like to initiate an RNAi Therapeutics model portfolio that should track the fortunes of publicly listed companies with significant stakes in RNAi Therapeutics and microRNA-related applications (excluding large pharmaceuticals). My subjective valuation of companies is the main determinant for their accorded weightings in the portfolio. Consequently, they do not necessarily reflect their relative technology/IP strengths. The selections, of course, are my opinion only and not meant as investment advice. Investments in the RNAi Therapeutics field are highly speculative and not suited for most investors. With that out of the way, some rules to keep me honest:
1) Initial balance: $10,000.
2) Initial purchases are made based on last Friday’s closing prices (January 4, 2008).
3) Currency fluctuations are not taken into account.
4) Sales/Purchases based on closing prices and are posted on the blog the same day.
5) Updated portfolio balance will be displayed at the beginning of each month.
Some comments on my selections:
Alnylam: The proven leader in RNAi Therapeutics. Human proof-of-concept data, new collaboration deals (including for Regulus), ability to file for new INDs, and the upcoming Novartis adoption license decision as potential value drivers. Main concerns: human proof-of-concept taken for granted by market and priced in and delays of systemic delivery programs.
Tekmira: Most speculative position in my portfolio. Timely advancement of SNALP-enabled RNAi development programs into the clinic should be well received and trigger a significant bounce in the stock. Strong Alnylam relationship with R&D essentially paid for by Alnylam. Main concerns: making SNALPs safe enough for clinic may take more time than anticipated, and protracted Protiva litigation.
ISIS Pharmaceuticals: Partnering of mipomersen (ApoB100 antisense) could be eye-opener for how much Big Pharma is willing to pay for novel RNA-based therapeutics. Growing revenue stream from IP (esp. from Alnylam, but also other companies based on RNA technology), diagnostics, and licensing out antisense programs. Should also benefit from Regulus deal. Main concern: Safety of mipomersen.
Benitec: Main DNA-directed RNAi player. Potentially lucrative, lean IP licensing model with some strategic investments in clinical programs. Main concerns: weak balance sheet and currently shaky patent estate; perception of DNA-directed RNAi versus siRNA-mediated RNAi.
Rosetta Genomics: Main publicly traded microRNA diagnostics player with potentially large, valuable microRNA target IP estate set to commercialize first microRNA diagnostics products and looking for partnering opportunity. Main concerns: issue of patenting microRNA sequences and pre-mature focus on microRNA therapeutics.
Nastech: Punished stock should recover if they can capitalize RNAi spin-out MDRNA on favourable terms. Strategy of patenting the steps of RNAi around the classical Tuschl siRNA design could attract partnering interest from Big Pharma. Main concerns: poor negotiation position with credibility problem and weak balance sheet; unvalidated IP.
Silence Therapeutics: So far productive RNAi Therapeutics engine and deal flow. Depending on the eventual scope of Kreutzer-Limmer I and ability to get their own patent applications granted, a takeover candidate by Big Pharma.
CytRx: Tuschl I play. Main concerns: delay of Tuschl I, getting their RNAi therapeutics R&D into gear and spinning out RXi.
Targeted Genetics: DNA-directed RNAi play with Sirna/Merck relationship. Leading AAV gene therapy company that should benefit from the fact that AAV is very promising for RNAi delivery to the liver, eye, and brain, with near-term clinical opportunities. Main concerns: perception of DNA-directed RNAi versus siRNA-mediated RNAi.
1) Initial balance: $10,000.
2) Initial purchases are made based on last Friday’s closing prices (January 4, 2008).
3) Currency fluctuations are not taken into account.
4) Sales/Purchases based on closing prices and are posted on the blog the same day.
5) Updated portfolio balance will be displayed at the beginning of each month.
Some comments on my selections:
Alnylam: The proven leader in RNAi Therapeutics. Human proof-of-concept data, new collaboration deals (including for Regulus), ability to file for new INDs, and the upcoming Novartis adoption license decision as potential value drivers. Main concerns: human proof-of-concept taken for granted by market and priced in and delays of systemic delivery programs.
Tekmira: Most speculative position in my portfolio. Timely advancement of SNALP-enabled RNAi development programs into the clinic should be well received and trigger a significant bounce in the stock. Strong Alnylam relationship with R&D essentially paid for by Alnylam. Main concerns: making SNALPs safe enough for clinic may take more time than anticipated, and protracted Protiva litigation.
ISIS Pharmaceuticals: Partnering of mipomersen (ApoB100 antisense) could be eye-opener for how much Big Pharma is willing to pay for novel RNA-based therapeutics. Growing revenue stream from IP (esp. from Alnylam, but also other companies based on RNA technology), diagnostics, and licensing out antisense programs. Should also benefit from Regulus deal. Main concern: Safety of mipomersen.
Benitec: Main DNA-directed RNAi player. Potentially lucrative, lean IP licensing model with some strategic investments in clinical programs. Main concerns: weak balance sheet and currently shaky patent estate; perception of DNA-directed RNAi versus siRNA-mediated RNAi.
Rosetta Genomics: Main publicly traded microRNA diagnostics player with potentially large, valuable microRNA target IP estate set to commercialize first microRNA diagnostics products and looking for partnering opportunity. Main concerns: issue of patenting microRNA sequences and pre-mature focus on microRNA therapeutics.
Nastech: Punished stock should recover if they can capitalize RNAi spin-out MDRNA on favourable terms. Strategy of patenting the steps of RNAi around the classical Tuschl siRNA design could attract partnering interest from Big Pharma. Main concerns: poor negotiation position with credibility problem and weak balance sheet; unvalidated IP.
Silence Therapeutics: So far productive RNAi Therapeutics engine and deal flow. Depending on the eventual scope of Kreutzer-Limmer I and ability to get their own patent applications granted, a takeover candidate by Big Pharma.
CytRx: Tuschl I play. Main concerns: delay of Tuschl I, getting their RNAi therapeutics R&D into gear and spinning out RXi.
Targeted Genetics: DNA-directed RNAi play with Sirna/Merck relationship. Leading AAV gene therapy company that should benefit from the fact that AAV is very promising for RNAi delivery to the liver, eye, and brain, with near-term clinical opportunities. Main concerns: perception of DNA-directed RNAi versus siRNA-mediated RNAi.
Friday, January 4, 2008
Did Alnylam Patent News Send CytRx Shares Down 14%?
It should not come as a surprise that Alnylam today announced that the previously allowed Tuschl II covering siRNAs was granted in Europe. The fact, however, that another year has passed and Tuschl II keeps on sailing through the worldwide patent offices while the Tuschl I patent application is being delayed, further cements the impression that it is Tuschl II that is the key patent for siRNAs, not the related Tuschl I.
Tuschl I, co-exclusive to CytRx, Sirna/Merck, and Alnylam, is thought to have been a major motivation for Merck to buy Sirna in late 2006. Like Tuschl II, it covers gene silencing in mammalian cells, but interestingly the classical siRNA features, 19-21 base-pair double-stranded RNAs with 3’ overhangs, are claimed only in Tuschl II, whereas Tuschl I generally claims ~21-23 nucleotide silencing RNAs and their precursors, thus somewhat landing it in between antisense and RNAi.
Needless to say, the perceived value and potential of CytRx, or its RNAi spin-out RXi for that matter, as a Sirna-like takeover candidate by Big Pharma much depends on the fate of Tuschl I. So today’s 14% fall in CytRx shares on expanded volume, while those of Alnylam gained 2%, may be directly linked to today's patent announcement. Further delays in the registration of RXi as a publicly listed company and the recent shelf offering should have contributed to the sinking feeling CytRx shareholders must have felt today.
It then looks like 2008 could also be a defining year in terms of who owns the IP in RNAi, as the number of core RNAi Therapeutics companies is about to peak and funding gets directed to those with strong IP positions as investors become more discerning in their RNAi investment decisions. CytRx, Nastech, Benitec, and Silence Therapeutics will be under particular pressure to prove themselves as they return to the markets for funding.
Tuschl I patent application:
http://www.wipo.int/pctdb/en/wo.jsp?wo=2001075164&IA=WO2001075164&DISPLAY=STATUS
Tuschl II patent:
http://www.wipo.int/pctdb/en/wo.jsp?WO=2002%2F044321&IA=WO2002%2F044321&DISPLAY=STATUS
Tuschl I, co-exclusive to CytRx, Sirna/Merck, and Alnylam, is thought to have been a major motivation for Merck to buy Sirna in late 2006. Like Tuschl II, it covers gene silencing in mammalian cells, but interestingly the classical siRNA features, 19-21 base-pair double-stranded RNAs with 3’ overhangs, are claimed only in Tuschl II, whereas Tuschl I generally claims ~21-23 nucleotide silencing RNAs and their precursors, thus somewhat landing it in between antisense and RNAi.
Needless to say, the perceived value and potential of CytRx, or its RNAi spin-out RXi for that matter, as a Sirna-like takeover candidate by Big Pharma much depends on the fate of Tuschl I. So today’s 14% fall in CytRx shares on expanded volume, while those of Alnylam gained 2%, may be directly linked to today's patent announcement. Further delays in the registration of RXi as a publicly listed company and the recent shelf offering should have contributed to the sinking feeling CytRx shareholders must have felt today.
It then looks like 2008 could also be a defining year in terms of who owns the IP in RNAi, as the number of core RNAi Therapeutics companies is about to peak and funding gets directed to those with strong IP positions as investors become more discerning in their RNAi investment decisions. CytRx, Nastech, Benitec, and Silence Therapeutics will be under particular pressure to prove themselves as they return to the markets for funding.
Tuschl I patent application:
http://www.wipo.int/pctdb/en/wo.jsp?wo=2001075164&IA=WO2001075164&DISPLAY=STATUS
Tuschl II patent:
http://www.wipo.int/pctdb/en/wo.jsp?WO=2002%2F044321&IA=WO2002%2F044321&DISPLAY=STATUS