(Very) Broad Zamore End-Stability Patent Issued in Europe

Last week, Silence Therapeutics announced that the European Patent Office has granted a patent from the Zamore RNAi trigger design IP estate (EP 1633890 B1). This follows the issuance of related patents over the summer in the US. This IP is assigned to the University of Massachusetts and exclusively licensed to Silence Therapeutics.

What is newsworthy in this latest patent issuance is that very broad claims were allowed which would almost require a company with RNAi Therapeutics platform ambitions to take a license. As I have discussed here before, Zamore made the highly influential finding that it is both the absolute and relative base-pairing strength (relative to the base-pairing strength on the other end of an siRNA duplex) at the 5’ end of the guide strand that determines its RNAi effector complex (RISC) incorporation as well as discourages passenger strand incorporation. Accordingly, the rules have implications for both efficacy and specificity of RNAi gene silencing. It has to be assumed that the end-stability rule figures in one form or another into the siRNA design algorithms used by companies as part of the siRNA screening process, and it should also be an important guiding principle in optimizing an initial candidate siRNA.

A strong patent, of course, does not necessarily follow such fundamental biological insights. In this instance, it could well turn out to be the case. The US claims cover methods focussed on the reduction of off-targeting effect, including first assessing the off-targeting of a first siRNA, and then changing it according to the end-stability rules. As the recent Merck paper illustrates, companies in the field undertake such modification-RISC incorporation studies. Since a given siRNA structure can theoretically be arrived at via a number of different routes, such methods papers are more difficult to enforce. In addition, the direct value of the US claims may somewhat affected as they emphasized the reduction of off-targeting aspect of the design rules rather than the enhanced efficacy aspect which might be considered the more attractive feature of the invention.

What is therefore different in the European patent issuance is that not only does it emphasize the efficacy aspect, but it also importantly includes very broad composition of matter claims relating to the structure of an siRNA. It should be very straight forward to enforce these.

The breadth of the claims is striking: siRNAs with small features already that lessen the base pairing at the 5’ end of a guide RNA are covered in these claims. This can be a mismatched base pair, relatively widely employed for example at the very 5’ end of the guide RNA, or a single nucleotide modification. One of the methods claims even covers siRNAs solely characterized by having fewer G:C base-pairs at the guide strand 5’ end compared to the 3’ end. I would expect many if not most siRNAs to fall into that bucket.

In a phone conversation last night with Phil Haworth, the CEO of Silence Therapeutics said that Silence Therapeutics are naturally excited of having been granted these broad claims. When asked, he added that similar efficacy and composition of matter claims derived from the original Zamore patent application are also being considered in the US (note: due to a restriction requirement, the off-target reduction elements of the invention were initially pursued in the US and the efficacy aspects put on the back-burner). I also agree with him that given the strength of the claims and because this is a European patent prosecution, competing RNAi Therapeutics companies can be expected to challenge the validity of the patent. This should also be a good indicator whether Alnylam really meant what it said when it stated that it saw nothing of value in the Zamore siRNA design IP estate.

Given the importance of the siRNA end-stability rules and broad-ening claims, will we therefore see Silence Therapeutics soon swim in cash? Here, Phil Haworth was a bit more cautious and said that Silence’s RNAi trigger IP estate would be just one element in the discussions they are having right now with pharmaceutical companies.

As you will be aware, Silence Therapeutics has been ‘approached’ by a company a few weeks ago, an approach that could lead to an offer, and Dr. Haworth confirmed that these discussions were still ongoing. Without going into any more details, he also said that they are conducting a number of platform partnership talks in parallel and that the ‘approach’ and platform conversations would be separate discussions.

Phil Haworth did not disagree when I speculated on the potential strategic value of the Zamore end-stability IP to particularly Merck, given the one billion dollar+ Merck spent on Sirna Therapeutics for access to the 3’ overhang IP which it now stands to lose (see coverage on the 'RNAi Litigation Blog'). He emphasized, however, that the company does not spent much time speculating internally what other companies might be scheming and instead focus their limited resources on building strong science and IP. In the end, the value of the Zamore siRNA design rules will be closely tied to advancements in the delivery of RNAi triggers and in that regard they are pleased with the continued dose escalation of Silence’s first clinical candidate Atu-027 (6^th of planned 11 dose cohorts ongoing).

2 Short Stories: An siRNA Delivery Paper by Merck, Pharmaceutical Interest in Silence’s Gene Target

The most enjoyable part in following RNAi Therapeutics is to look at the rich stream of scientific data and determine the absolute maturity and competitive position of the technologies and companies involved, as well as getting a glimpse at relationship dynamics. I therefore thought to share today two examples of this that I picked up recently. One is a paper by Sirna Therapeutics/Merck shedding some light on their approach towards RNAi pharmacology and RNAi trigger design. The other is some intriguing evidence that Silence Therapeutics’ most important gene target, PKN3, is gaining traction in the pharmaceutical space.

Studying the pharmacology of siRNA delivery

Pei and colleagues from Merck published in RNA a nice paper on better understanding the pharmacology of siRNA delivery [Pei et al. (2010). Quantitative evaluation of siRNA delivery in vivo]. Unlike small molecules or even antibodies, the pharmacology of RNAi Therapeutics is more complex as simply measuring the raw tissue abundance of an RNAi trigger is a poor indicator of successful RNAi delivery. This is because functionally inactive siRNAs may vastly outnumber the active siRNAs loaded into the mammalian Argonaute 2 protein (Ago2), the nuclease responsible for seeking out and destroying complementary target messenger RNAs.

Not surprisingly, the Merck researchers employed the LNP/SNALP delivery technology in rodents and monkeys as their system of choice. After intravenous delivery of these LNPs, siRNA abundance was determined by quantitative PCR both at the tissue (mainly liver) and Ago2 level.

For the LNP aficionados among you, the 1mg/kg ED50 lipid nanoparticle used in this study still involved the CLinDMA lipid that was shown previously by Merck to be associated with immunostimulation (Abrams et al. 2010), something that Tekmira has interpreted as being the result of the strong positive charge of such LNPs.

Although playing too many number games carries the risk of missing biology sometimes, a number of quite interesting findings were made. One is that the vast amount of siRNA in the liver (>99%) is lost in the first 24 hours upon which a slower tissue elimination phase sets in that is apparently dominated by the turnover of guide strand incorporated in Argonaute.

It is generally thought that the longevity of gene silencing often seen in vivo, often on the order of 1-2 months following a single administration, is due to the stability of this complex. Despite that, there was still an approximately 3-5 fold decrease in the abundance of such complexes over a week. Not too fast, but fast enough to make it worthwhile studying in more detail whether the stability of these complexes is limited by Argonaute protein half-life or by a selective removal of the guide strand. If the latter, siRNA structure-chemistry may be able to increase silencing duration still. Such studies should also shed light on what pharmacological advantages siRNA depots might have which could be of particular interest to ocular and oncology applications.

Merck employed Zamore rule in siRNA design

The paper also allowed for some interesting insights into the siRNA trigger design process employed by Sirna/Merck. Supporting the importance of the Zamore end-stability patent recently issued in the US and exclusively licensed to Silence Therapeutics (Intradigm) from UMass [note: this corrects an earlier version that improperly stated the IP had been assigned to Silence], the authors first determined the relative Ago2 incorporation efficiencies of guide and passenger strands and then studied how this was changed following chemical modification of the same sequence. As a reminder, achieving a high ratio of guide to passenger strand in RiSC is widely considered to be beneficial both for reducing passenger strand-mediated off-targeting as well as enhancing siRNA efficacy.

Indeed, the authors find that chemical modification changed (in this case enhanced) guide strand incorporation over passenger strand incorporation. However, the authors argued that this was not due to the application of the Zamore rules, but due to having added inverted caps to the ends of the passenger strand. I agree that since the 5’-modification of the guide strand plays a major role in Argonaute loading, these caps, as also employed e.g. by mdRNA, should have a considerable effect on loading the passenger strand. However, since the modified siRNA with which the comparison to the unmodified siRNA was undertaken contained additional modifications besides the caps, it is not possible to argue that it was only the caps that had the effect on differential loading. In fact, the differential strand loading efficacies of 2 modified siRNAs, distinguished only by the nature and position of backbone modifications, differed by a factor of 2, clearly indicating that siRNA modifications besides the cap have a major influence on differential strand loading.

Wyeth/Pfizer shows interest in PKN3 in cancer

I had always considered it the wrong strategy for Silence, even more so before their merger with Intradigm, to focus so much of the company’s resources on a single drug target: PKN3. One reason is that Silence claims to be an RNAi platform company, and resources would have been better spent on building on their early pioneering position in siRNA design which then seemed to be at the risk of getting stuck in an early 2000’s 'dead-end'.

Even more worrisome is that Silence was essentially the only group really working on the PKN3 gene, and at that early stage it is always a very real possibility that it might turn out to be a useless artifact of no commercial value. However, the scientists stuck to their guns and it now seems that additional data confirms PKN3 to be an interesting oncology target in the angiogenesis field with the rest of the pharmaceutical world slowly paying attention.

Curiously, it is research by Wyeth, now part of Pfizer (!), that confirms that PKN3 plays a role in endothelial biology and that it is upregulated in a number of cancers. Even more intriguing is the fact that one of the co-discoverers of PKN3 as a cancer drug target (Anke K.-G.) is also named as an inventor in a PKN3-related patent application by Pfizer published this year (WO 2010/105128 A2). This patent application is about methods of using PKN3-containing protein complexes for cancer diagnostic purposes, e.g. determining patients with high PKN3 levels which would be candidates for a PKN3-targeting drug just like Silence’s Atu-027 (this candidate has been reviewed here with Tobias Wolfram). A nice validation of Silence’s own results and demonstrating just how close Pfizer’s PKN3 science seems to be to that of Silence is that a number of experiments described in the patent application were based on the same rodent cancer models previously employed by Silence showing that PKN3 silencing leads to an inhibition of tumor growth in mice.

With the PKN3 gene patented by Silence as a cancer drug target, it would make sense for Pfizer to gain access to Silence’s IP and maybe even take on the clinical development of Atu-027 itself for which Pfizer could use their methods as a response biomarker. Maybe Silence’s belief in PKN3 will be financially rewarded after all, and it might also explain why Alnylam seems to be so keen in weakening Silence’s PKN3 patent estate. Until now, I had come to believe that the only purpose of fighting that patent estate was to frustrate Silence by engaging them in yet another patent skirmish. It is interesting to speculate that the strength of PKN3 science and IP could critically inform whether Pfizer will partner with Silence or Alnylam.

Tuschl Litigation Decidedly Shifting into Max Planck-Alnylam’s Favor

As often in life, involve money, and you will soon see who your true friends are. This rule also seems to apply to the fate of the Tuschl patent applications which more and more seem to go in Max Planck/Alnylam’s favor, and against the interests of UMass and Sirna Therapeutics/Merck, according to the latest coverage on the Tuschl Litigation Blog.

It has always been a mystery to me why Whitehead and the MIT would want to side with UMass in the first place, since as parties to the Therapeutic Use agreements between Max Planck, MIT, and Whitehead, Whitehead and MIT had nothing to gain, actually much more to lose, from UMass’ decision to go it alone and license the therapeutic rights to their part in the Tuschl invention to Sirna Therapeutics (now Merck) and to some degree also RXi Pharmaceuticals. Even more so given that Zamore's assignment of his interest in Tuschl-I to UMass is questionable in the first place.

It has equally been a mystery to me why Wolf Greenfield & Sacks, the patent law firm engaged by Whitehead to prosecute the Tuschl-I patent application on the behalf of Whitehead, Max Planck, MIT and UMass would seek to gain the benefit of inventive subject matter that obviously belonged to Max Planck only.

It is therefore no surprise then that MIT, Wolf Greenfield & Sacks, and finally The Whitehead have all decided after all that the legal exposure from the Tuschl Litigation does not make it worth to them any more to continue to support UMass' insistence on ownership over the use of 3’ overhangs in RNAi triggers and the discovery of efficient RNAi gene silencing in mammalian cells using short double-stranded RNAs by claiming the benefit of the '325 priority application filed by Max Planck in Europe.

Unless Zamore’s testimony will shock the field of RNAi, the testimonies of the 2 more impartial inventors named in Tuschl-I, namely Sharp and Bartel, make it clear that the 3’ overhang work was the accomplishment of Tuschl after he set up his lab at the Max Planck. This is also consistent with my view of RNAi history that is not only based on the publication history and authors on key papers, but has also been critically influenced by how the RNAi field in general has always felt about who was to be acknowledged for that body of work: Tuschl. Science is such a gossipy endeavor after all that I would have expected to have heard rumors if Tuschl wasn't the inventor of the 3’ overhung siRNA.

So now it seems like UMass is the last man standing, and unable to move forward with the Tuschl I patent application. The fact that UMass has not surrendered yet let’s me speculate that not only do they stand to lose future benefits under the Tuschl patents, but that they feel considerable pressure from Sirna Therapeutics-Merck. Understandably, given that the $1.1B value Merck placed on Sirna Therapeutics much depended on perceived access to the mammalian and 3’ overhang data. Should UMass never have been allowed to license IP which erroneously cross-referenced the patent application of another party? Or might the pressure be one day on former Sirna Therapeutics, many of who have left Sirna after the acquisition, should Merck believe that they have been misled?

A less conspirational explanation for this mess, of course, would be honest human mistakes, such as misunderstanding the rules for citing priority documents or scientists signing off on legal declarations that they do not have the time to read, much less fully understand. But with billions of dollars at stake, what started as honest mistakes may quickly become interpreted as, and actually also have led to ‘malpractice’ and ‘deceptive behavior’. Money.

RNAi Delivery to Vascular Endothelium Increasingly Validated

Less than a month after Napoleone Ferrara from Genentech was recognized with a 2010 Lasker Prize for identifying VEGF as the central actor in blood vessel formation, a prize widely regarded as the stepping stone towards the Nobel Prize in Physiology or Medicine, a press release by Alnylam seems to suggest that RNAi delivery to the vascular endothelium is appropriately reaching critical mass. Before that, the most important body of work in this area probably came from Silence Therapeutics, which, despite its apparent quality, got me a bit worried given what I perceived as a certain lack of enthusiasm in the commercial RNAi Therapeutics space and, more importantly, third party scientific validation.

It is particularly exciting that the silencing of endothelial gene markers following a single dose persisted for two months. Since the duration of silencing is critically dependent on the cell type, for example its proliferation rate, this bodes very well for all delivery technologies targeting the vascular endothelium.

Alnylam mentions that the new LNPs (liposomal nanoparticles) that work for endothelial siRNA delivery stem from their collaboration with the MIT which as we know has involved positively charged ‘lipidoids’. Seen in light of the data by Silence (cationic lipid-siRNA)/Intradigm (RGD-targeted PEI polymers), the picture that is emerging is that LNPs that comprise positively charged lipids have a natural propensity of being taken up by vascular endothelial cells. Although I haven’t seen the details yet, it is to be expected that a number of parameters beyond positive charge, such as the method of formulating the particles, e.g. SNALP-like siRNA encapsulation versus Atuplex-like lipoplex formation, determine the efficiency of the functional uptake of these particles.

Beyond Alnylam and Silence Therapeutics, which with Atu-027 already has an endothelial cell-targeting RNAi Therapeutics in the clinic, Tekmira should also have considerable expertise in this area. Similar to optimizing LNP delivery to the liver, leadership in endothelial RNAi will depend on first empirically determining the structure-function relationships of these particles and then the biological pathway by which the uptake occurs. To my knowledge, it is still unclear whether receptor-mediated uptake, non-specific macropinocytosis ('cell drinking'), or the limited capacity of endothelial cells for phagocytosis is involved. This will also be important to understand as more targeted technologies will be developed.

One trade-off that current technologies might suffer from is that their positive charge at physiological pH may cause them to be slightly more toxic compared to negatively or neutrally charged formulations. This may also tie in with Phil Haworth’s comments in my last interview with him that Silence Therapeutics will initially focus on acute indications with high unmet needs. But again, everything is toxic at sufficiently high concentrations and it is encouraging that Atu-027 is still in its dose-escalating phase according to the last clinical update by the company.

Progress also reported for systemic RNAi delivery to immune cells

Following up on their declared pursuit of vaccine opportunities, Alnylam also highlighted progress in the systemic delivery of siRNAs to immune cells. Previously, LNPs comprising lipids derived from the KC2 series of next-generation ionizable lipids had been described to silence the immune cell marker CD45 with an ED50 of approximately 1mg/kg following intravenous administration (see RNAi delivery roundtable). The new report suggests some improvement over those formulations, stating that a 95% knockdown of CD45 was achieved, with an ED50 of as little as 0.2mg/kg. It will be very interesting to see the scientific details and discussions on these experiments (note: this last paragraph was corrected from an earlier version that mistakenly stated that the 95% knockdown was achieved with 0.2mg/kg).

Uptake of RNAi triggers by immune cells per se is not entirely new. It is a case of turning lemons into lemonades, as the non-specific uptake of nanoparticles by phagocytic cells has been long lamented. However, these cells play a central role in at least as many important diseases as endothelial cells do- so why not harness the efficient uptake of particulates in those cells for therapeutic purposes? Sure, being taken up and being functionally released into the cytoplasm are 2 separate issues, but Tekmira’s Ebola work has shown already that LNPs can trigger gene silencing in macrophages. Again, it will be important to delineate the functional uptake pathways and to employ chemistry to increase the efficiency with which LNPs can harness them.

Once thought of as liver-only formulations, LNPs are showing more and more their considerable versatility. I remember well a talk given by Tekmira’s CSO Ian MacLachlan at Stanford two years ago when he demonstrated that by even only slightly changing the formulation parameters, strikingly different patterns of biodistribution can be achieved. Now it ‘only’ takes one of the LNP/SNALP programs in the clinic to show some efficacy, and the pharmaceutical industry to change its approach towards drug target selection, for the liposome to finally shed its image as the unloved, but necessary stepchild of the industry.

RNAi Therapeutics Still Challenged with Re-Educating Pharmaceutical Industry

Judging from the body language of RNAi Therapeutics companies, it seems that they are still fighting a wide-spread perception, also in Big Pharma, that systemic siRNA delivery is limited to targeting genes in the liver and that as a result the current commercial opportunities are relatively small. To quote from Alnylam’s press release yesterday, on research presented at the 8^th International M. Judah Folkman Conference ‘The new research demonstrated effective silencing of target genes in distinct cell types and tissues beyond the liver with systemic delivery of RNAi therapeutics’ [emphasis mine]

To me this is frustrating as it should be obvious to any modern biologist that a strategy of selecting drug candidates starting with the characteristics of delivery systems that already show much promise for clinical development should yield a rich pipeline. Just think about 'only' the liver and how it affects a range of diseases in therapeutic areas ranging from metabolic, to cardiovascular, and even neurological diseases.

Or take systemic delivery to endothelial cells as another example. First pioneered in the commercial realm by Silence Therapeutics with their positively charged siRNA-lipoplexes (see Atu027 clinical candidate for solid cancers) which, as Alnylam rightly points out, has implications for diseases such as ‘atherosclerosis, diabetes, inflammation, and cancer’. Consequently, companies like Silence Therapeutics and Tekmira have made it a high priority to demonstrate the wider applicability of their delivery technologies.

This to me indicates that the established pharmaceutical industry may be even slower in adjusting their thinking than I originally imagined. One can only hope for both RNAi Therapeutics and Big Pharma that the transition from therapeutic franchise-driven to technology-driven drug development will be realized sooner rather than later. To put it bluntly, the franchise-driven strategy worked in an era where sales and profits were more a function of the number visits paid by large salesforces to primary care physicians and the number of drugs in a given franchise the salesperson was able to pitch in a single visit, rather driven by the data underlying an approved drug.

But with small molecule generics eroding Big Pharma's profit base, this has more and more become a losing proposition, and the focus has rightly shifted to advanced and highly targeted technology platforms having hopefully larger impacts on the diseases they address and akso being less easy to copy. Because such therapeutics can command high prices, this allows for a model in which only small, well trained and educated salesforces are needed to address very specialized markets.

A company that I consider to be torn between the franchise vs technology strategy is BiogenIdec. This is a company that much values their franchise in multiple sclerosis, and is rightly also proud of its capabilities in protein engineering. As a result of trying to marry both worlds, they seem to be paying the price of having to in-license drug candidates for the MS franchise which limits their profit growth. Proteins/antibodies alone seem to miss important opportunities in MS. However, considering all types of technologies for a given franchise appears to be too tall an order for a mid-sized company. And when that company has an opportunity in protein therapeutics, but outside its core franchises, no matter how exciting financially, it is faced with a real communication challenge (see BiogenIdec’s recent hemophilia roundtable).

It is my thesis that the use of the new platform technologies demands a re-thinking of what ought to be driving the selection of development candidates. It is for example clear that candidates based on RNAi Therapeutics depend heavily on having extensive RNAi expertise. Knowing the capabilities of the technologies, especially the tissues and cell types that they can address and pharmacology involved, one may then go out and consult with disease specialists in the various areas to discuss specific treatment strategies.

A model that is more likely to work for large companies is therefore to establish those Centers of Technology Excellence and have them interact with the more disease-oriented people in the rest of the company. Hardly a new concept and it is certainly also happening to some degree in the RNAi Therapeutics space, examples here being Roche Kulmbach, Merck Sirna Therapeutics, and Pfizer Coley/RTC. Nevertheless, despite these encouraging signs, even in those cases I’m still not sure whether the dynamics within those companies are conducive to RNAi technology-driven drug development.

Opko Health and its RNAi Therapeutics candidate (for wet AMD) is probably a good example of where an RNAi Therapeutics drug development project was run largely by disease specialists. Since I could never understand how a group without much of a track record in RNAi could possibly come up with the first RNAi Therapeutics candidates, it did not come as a surprise to me that that candidate eventually failed. I am also worried that when Pfizer and Novartis decided to license certain RNAi Therapeutics candidates from Quark, these were decisions largely made by the particular disease focus groups in those companies instead of being integral to those companies’ RNAi Therapeutics efforts.

Ironically, this situation can be partly attributed to the fact that RNAi has to a certain degree allowed for the democratization of drug development by facilitating translational research: I could teach any semi-bright 12-year-old in a day design an RNAi molecule that will knock down a gene. This, however, does not mean that it will make for a suitable development candidate.

So yes, it is worth reminding Big Pharma and investors that systemically delivered RNAi Therapeutics are on the horizon, not only for gene targets in the liver, but also beyond. The mere fact, however, that it is still necessary to emphasize this constantly tells me that a slow-moving pharmaceutical industry leaves a lot of RNAi Therapeutics value unlocked. Liver, cancer, endothelial cells, phagoctytic cells, sites of inflammation, the retina, neuronal cells…put a dozen RNAi scientists, another dozen geneticists and two dozen experts in the pathophysiology of important diseases in a room for a week, and you may end up with more interesting development projects based on currently available RNAi technologies than you have the manpower to pursue.

After this more general critique of the pharmaceutical industry, I will try and shed some light about the particular advances highlighted in the Alnylam press release in my next blog entry.

RXi Pharmaceuticals Still Confident About Outstanding 2010 Goals

A week or so ago, I had the opportunity to talk by phone to the CEO and CSO of RXi Pharmaceuticals, Noah Beerman and Anastasia Khvorova respectively, about the company's scientific and business development strategy. Overall, they were quite upbeat about the prospect of turning around the perception of a company aimlessly wandering around in early technology development and increase shareholder value by finally moving their technology into the clinic and raise the promised non-dilutive capital. Specifically, they did not flinch when asked about their belief whether they were still on track to achieve their outstanding 2010 goals: the selection of their first development candidate (anti-scarring) for which an IND would be expected in 2011, and establishing their first major partnership.

Painfully aware that RXi has a history of promising lucrative partnerships, not one of which has yet to come to fruition, I specifically wanted to confirm that the stated partnership goal is yet to be reached and is not accounted for by the recent string of deals where RXi evaluates whether its self-delivering siRNAs ('sd-rxRNA') have utility in conjunction with technologies provided by partners small and large. While definitely the right approach to explore the wider potential of sd-rxRNAs (note that they have 6-12 month milestone goals), these deals lack the traditional upfront monies and royalties/milestones which would make a world of a difference in limiting shareholder dilution until the company’s own product candidates will allow it to raise capital on the risk-averse financial markets on favourable terms. And yes, Noah Beerman left no doubt that the company has no intention of letting the technology development deals serve as a substitute for that partnership goal.

Yet the exact nature of such a deal was left an open question. It seems that the company is still debating internally about issues such as whether such a deal ought to involve its strategic areas or its core focus areas in ocular and dermal disease. I can understand if a potential partner wanted to benefit from the company’s technology for ocular disease in particular, but that RXi might feel that it should get a better valuation for that at a later point. On the other hand, with self-delivering rxRNAs having potential for direct and localized RNAi applications beyond their core focus areas, such as in certain cancers (e.g. cervical, bladder, breast, maybe liver), respiratory disease, and disorders of the CNS, there could be demand for the technology in non-focus areas, too. This would be mutually beneficial, since these investments would help develop sd-rxRNAs in areas, many of which very attractive financially, for which RXi with its 32 employees and less than $10M in cash realistically wouldn’t have the resources to pursue on its own and the potential value of which would eventually have to be written down. Accordingly, it seemed that CNS and oncology could indeed be high-traffic areas for partnership discussions.

Do I believe that RXi’s sd-rxRNAs have the potential to form the basis for a decent Big Pharma deal (what follows in the next two paragraphs are my speculations only, not management’s guidance)? Based on conference presentations and the company’s patent application for the technology, I do believe that it has such value simply because unformulated siRNAs should eventually occupy a niche in RNAi Therapeutics and RXi can be considered a, if not the emerging leader in this area. Alnylam (of cholesterol-siRNA conjugate fame), naturally, and Dharmacon (Accell siRNAs) can probably be considered the two closest competitors. While Alnylam seemed to have the early lead in the area (2004 Nature and 2007 Nature biotech papers), it is not clear to me what their current stage of the technology is. It seems like the comparative data slightly favors sd-rxRNAs, but in order to command favourable economics, one has to assume that RXi has now amassed, through sheer focus and some siRNA chemistry genius of Dr Khvorova, such a toolbox of diverse chemistries and know-how in designing potent sd-rxRNAs such that candidates with IC50 potencies in the low nanomolar range can be found routinely in passive tissue culture uptake studies, instead of the 500nM-10uM potencies commonly observed with first-generation lipophilic-siRNA conjugates. In this regard, I am concerned that the patent applications that provide RNAi trigger screening examples for a number of genes, do not support that. However, RXi may have chosen, for trade secret purposes, not to provide the best mode in the patent application, but modes of applications sufficiently advanced to get patents issued.

If the technology has indeed advanced over what is publicly available and a deal were to involve the core area of ocular disease, I could imagine a drug discovery deal in which RXi gives away a handful of targets in return for ~$20M in upfront plus the usual milestones and royalties. If CNS or oncology, a deal involving a similar number of drug candidates with a $10M upfront plus an equity investment at a premium would appear reasonable.

As we concluded the talk, I had to ask about how to interpret parent company CytRx' aggressive selling of RXi stock, very disconcerting indeed given the already depressed share price (RXII) at which some of these purchases happened, a financial position by CytRx that does not appear too distressed and the fact that the CEO of CytRx, Mr. Steven Kriegsman, sits on RXi’s Board of Directors. It was apparent that this must be a question that RXi is often asked, and while Noah Beerman did not want to speak on behalf of CytRx, he told me to listen to Mr. Kriegsman’s own words on the RXi stock issue. So I did. What Mr. Kriegsman said in conference presentations (paraphrasing now) is that isn’t it nice to be able to use RXi as a piggy bank, but isn’t it also nice at the same time to be still the largest owner of RXII shares (~17% of outstanding) in case that RXII goes up for a change. Since RXi has strictly served CytRx as a piggy bank thus far, RXi shareholders will hope that the rest of the comments were not but some empty words.