ALN-VSP02 Was a Good Start, but Directs Focus Towards Improved Formulations

Alnylam recently published detailed phase I results from its RNAi Therapeutic candidate to treat liver cancer, ALN-VSP02.   Although results from this study had already been reported, the new paper by Tabernero and colleagues provides an insightful warts-and-all view of Tekmira's SNALP generation 1.0 (short-circulating DLinDMA particles) in a solid cancer.  The results show that while ALN-VSP02 did achieve a number of important goals, including evidence of tumor response and RNAi activity, it will be necessary to turn to the newer SNALP formulations for more robust efficacy and improved safety.

New Insights on ALN-VSP02 Activity

Previously, Alnylam provided clear evidence of RNAi activity using the 5' RACE assay.  It is now clear, however, that this was only based on 3 positive biopsies out of 15 investigated in this regard, and only for the VEGF, but not the KSP target gene.  Consistent with this less than robust RNAi activity, there was no convincing evidence of target gene knockdown and no spindle abnormalities as would have been expected from KSP knockdown.

New Insights on ALN-VSP02 Safety  

The present paper also provides valuable insights into the safety of a SNALP 1.0.  As was reported before, infusion reactions were seen in a minority of patients and this was readily addressed in practical terms by slowing the rate of infusion.  Interestingly, the infusion reactions appear to be related to complement activation, not cytokine activation.

Some cytokines were also upregulated (rarely TNF-alpha, however), especially above 0.4mg/kg, despite the use of modified siRNAs.  The evidence thus increasingly points towards the DLinDMA lipid itself to be the culprit.

Finally, ALN-VSP02 caused considerable spleen toxicity, especially with prolonged dosing.  In the one complete responder in the study, 90% of the spleen was reduced after receiving 50 doses of ALN-VSP02.  This is consistent with the preclinical monkey data.  Somewhat reassuringly for SNALP 1.0, this effect might be due to on-target efficacy, as the same lipid formulation with a luciferase siRNA did not have this effect in monkeys (note: the spleen is not an essential organ in humans, and I’d much rather have my spleen removed than cancer).

SNALP-based Cancer RNAi Therapeutics in the Future

Based on the above limitations, it is important that future SNALP-based cancer RNAi Therapeutics include the following improvements, essentially all of which have been achieved over the last 6-7 years since ALN-VSP02 had been selected as a development candidate: firstly, a more potent and less immunogenic lipid is required (there should be multiple to choose from now); secondly, the SNALP particles should be less than the 80-100nm with ALN-VSP02 and include more stable PEG-lipids for improved, i.e. prolonged circulation times to better take advantage of the EPR effect of solid tumors (TKM-PLK1 includes such stable PEG-lipids); and finally, as spleen safety might also be affected by lipid accumulation along the endosomal-lysosomal pathway, enhanced lipid biodegradability may be desirable.

ALN-VSP02 has been put on hold by Alnylam for development in the Western markets.  Last year, however, Alnylam licensed development and commercialization rights to Ascletis for the Greater China market where liver cancer (hepatocellular carcinoma, HCC) is prevalent.  The next clinical study by Ascletis is expected to involve more HCC patients who, unfortunately, have been almost entirely missing in the phase I study of ALN-VSP02.  Despite the challenges that ALN-VSP02 will face in HCC, innovative RNAi Therapeutics have an important role to play in the future treatment of HCC, a disease that is proving again and again hard to manage by more conventional approaches as Celsion’s disappointing results (radiofrequency ablation with liposomal doxorubicin) today showed. 

First Antisense Oligo Approved for Gene Knockdown in Liver

In a milestone for antisense oligonucleotide technology, Kynamro (aka mipomersen) yesterday received US regulatory approval for the treatment of homozygous familial hypercholesterolemia (hoFH).  It is the first regulatory approval for a systemically delivered oligonucleotide-based drug addressing a target in the liver, following two locally applied oligonucleotide drugs (aptamer Macugen and antisense oligo Vitravene) that have been approved for ocular diseases.  Considering that next month a TLR oligo-enhanced HepB vaccine by Dynavax could join the ranks of oligonucleotides licensed for medical use, oligo drug technology is rapidly shedding its image as an oddball technology and going mainstream.

Commercial Prospects

The hope, of course, is that Kynamro will also be the first commercially meaningful oligonucleotide considering lackluster sales histories by Macugen and Vitravene.  Favoring such success is the strong pricing power with drugs for orphan indications such as hoFH which is estimated to affect 3000 patients in the US and Europe each.  Small molecule drug Juxtapid by Aegerion for example received approval for the same indication last month and will price at $250.000 per annum.  With 1000 patients on the drug, this would mean sales of $250M already. And with the fudgible definition of symptomatic, instead of strictly genetically defined homoFH and the aggressive ‘friending’ of orphan drug salesforces with disease groups, I expect quite a bit of ‘label creep’ (Aegerion's CEO has indicated that he expects hoFH patients to somewhat respond to PCSK9 inhibitors which I can only explain if the patient population he considers homoFH includes quite a few non-hoFH when defined genetically).

With an expected price for Kynamro of $100k per annum, I optimistically project around $100M in annual sales assuming marketing partner Genzyme can get 1000 patients on drug in the US. With a ~35% profit share, a 50% profit margin and 50% attrition, ISIS Pharmaceuticals would pocket around $10M in annual profit share from this approval in a few years.

Update 30Jan13: It appears that according to a WSJ article (to which I cannot get access), Kynamro will be priced at $176k per year.  This, of course, would significantly improve ISIS profit share assuming same patient numbers treated (possibly 70% profit margin, slightly higher royalty rate in addition to higher sales --> $20-25M p.a.).

   

RNAi versus Antisense for gene knockdown in the liver

To maintain such sales numbers, however, the salesforce will have to fight hard to keep patients on the drug.  During the extension of the phase III study in homoFH, over half of patients  discontinued due to safety and tolerability issues, injection site reactions and liver safety (prompting a Black Box warning) being the main culprits. Having said that, the label for Juxtapid does not look any better, in fact a bit worse with all the intestinal side effects and drug-drug interactions, offset, however, by the increased potency in LDL-c lowering.

As some of the side effects are not target-specific (e.g. the injection site reactions and flu-like symptoms and also some of the liver enzyme elevations which are not fully accounted for by the liver fat elevations), the modest tolerability of and safety concerns with Kynamro (including vasculitis as well as liver and skin cancers especially when considering the preclinical data) raises the question whether systemically delivered phosphorothioate-based antisense technology has much of a future for gene knockdown in the liver also in light of increasing competition from RNAi delivery technologies.  You will not be surprised that I subscribe to the view that among Tekmira’s SNALP and the subcutaneous alternatives by Arrowhead (DPC) and Alnylam (GalNAc), RNAi will become the preferred technology for gene knockdown in the liver.

Whether RNAi or antisense, oligonucleotide therapeutics are here to stay. 

Alnylam Sets Record With $125M Secondary Offering

The $125M stock offering just announced by Alnylam may well be the largest secondary offering in the history of RNAi Therapeutics.  Adding the two VC fundraisings by Gradalis and Solstice earlier this month, it brings the total investment in RNAi Therapeutics by private investors to $167M this January alone!  Compare this to the wide perception a little more than a year ago that RNAi Therapeutics was destined to die and the approx. $21, 57, 40, and 122M raised in 2009-2012 respectively (uptick obviously in 2012).

Thanks to the SNALP-enabled clinical trial results over the last year and the orphan drug tsunami to which RNAi technology, as a genetic one, lends itself particularly well, a few companies have dug their way out to take a deep breath of fresh capital.  

[Update January 16, 2013: Apparently due to strong investor demand, Alnylam announced on Jan15 that it sold 8 million shares at $20.13. Overalottment option of up to 1.2M also fully exercised. Net amount raised: $173M]

Business As Usual?

First of all, Alnylam did the right thing to raise capital when the share price is strong and investor confidence high.  The clinical results have surprised most to the upside, and who knows, the next results may be interpreted as not so exciting, the economy may throw a wrench in the works, etc.  And following the settlement with Tekmira which cost Alnylam $65M immediately and $10M in likely, near-term milestones plus the legal fees, its cash reserves have dwindled faster than the company may have liked ($225M year-end cash).

So as a company rapidly expanding its clinical pipeline to take advantage of the proven ability to knock down genes in the liver, the $125M will most likely be used to satisfy its large, recurring appetite for capital.  Even orphan drug development can get expensive when you adopt quite a few of them.  Thus, the $125M plus/minus to be raised will be good for a year’s worth of operating expenses.  Accordingly, Alnylam did its last offering a year ago.

Keeping a nice cash cushion is one of the smarter things that Alnylam has always done and stands in contrast to other companies’ hand-to-mouth existence, ultimately sustaining painful dilutions and making themselves vulnerable in the marketplace in general (I spare you giving you a rundown of the names).

A Shopping Spree?

Of course, the more fun thing would be to watch Alnylam go on a shopping spree.  While this may seem unwise assuming no other revenue to compensate for operating cash burn, Alnylam has been hitting on all cylinders in 2012 when it came to monetizing IP and marketing rights.  With ALN-PCS02 and ROW rights for Alnylam’s other 5x15^TM programs, you would think that the track record will be maintained in 2013.

While some RNAi assets have gone up in value, most notably the valuations of Tekmira (~$70M market cap, $50M of which in cash) and Silence Therapeutics, with an ~$150M market cap (about $5M of which in cash), there is still quite a bit to be bought with even much less than $125M.

While it is still blowing my mind that Alnylam did not buy Tekmira 5 years ago, Tekmira, for various reasons, will not be on Alnylam’s shopping list if there was one. 

Considering that Alnylam is fully focused on the liver and has recently repeatedly stated that it considers RNAi delivery beyond the liver to be years away from clinical development, according to this logic there really only remains Arrowhead’s DPC technology which has sufficient maturity to fulfill Alnylam’s pipeline needs.  Indeed, the situation between the two companies is somewhat reminiscent to the one between Alnylam and Tekmira about 7 years ago:

Alnylam (GalNAc-siRNA) and Arrowhead (DPCs) compete with each other for subcutaneous delivery of RNAi triggers to the liver, yet Alnylam is looking under Arrowhead’s hood via its collaboration signed a year ago (SNALP-lipidoid analogy). 

If DPC proved to be safe and well tolerated, it would put Alnylam in a vulnerable position e.g. if Arrowhead, also in collaboration with a larger partner or following an acquisition, were to develop competing, best-in-class RNAi Therapeutics.  Does Merck ring a bell?  The situation may be amplified, if GalNAc-siRNAs were to struggle with potency as is the case for ALN-TTRsc with its projected 2.5mg/kg that will just squeeze into the magic 1ml injection volume.   Finally, gaining access to a more potent subQ technology may pay for itself in this case by increasing the value of the assets Alnylam is seeking to partner, including PCSK9.

Will they ever learn?

VC Investment in RNAi Therapeutics Platform Technology Symbolizes Turning Point

The news this week that a young Southern Californian start-up has raised $18M in VC funding may not seem that much of an event in the greater scheme of things.  Considering, however, that it concerns an RNAi Therapeutics platform technology, the investment by VenBio and Aeris in Solstice Biologics deserves our full attention.  In fact, it suggests that the RNAissance (Take 2) has finally worked its way through the biotech investment food chain.

Investment suggests Big Pharma appetite for RNAi Therapeutics

After Roche announced that I would leave the field a little more than two years ago, RNAi Therapeutics platform plays were shunned by the VC community as untouchable outcasts.  More so than the knock it gave on the confidence about the technology, the Roche exit, and following that related moves by other Big Pharmas, was interpreted as if Big Pharma demand for the RNAi Therapeutics platform was gone forever.   

As Big Pharma interest is critical to platform plays because it provides them with critical access to capital through technology licensing and perhaps even an exit, the perceived lack thereof dried out VC funding for RNAi Therapeutics.   

Looking at the people behind VenBio, one would have to think that they did their due diligence on this important matter such as by talking to Big Pharma about RNAi Theraspeutics directly. Corey Goodman for example is a well known, well-connected drug hunter and biotech entrepreneur who in 2007, as the President of Pfizer’s Biotherapeutics and Bioinnovation Center, talked about his and Pfizer’s interest in RNAi Therapeutics.   

And yes, the renewed confidence may not come all that surprising given the clinical results that the field has produced over the last year, but it's very encouraging to see it come from VCs.

Technology behind Solstice

Unsurprisingly, the investment at issue is aimed at developing RNAi delivery technology, currently the main driver of platform value.  The idea here is to add to the RNAi trigger chemistries that reversibly mask their negative charge so as to facilitate cell entry.  Once in the cytosol of cells, enzymes chew off the masking chemistries to reveal the RNAi trigger.

The idea is not entirely new.  In the antisense field, morpholinos take a similar approach to traversing the cell membranes in a neutral/slightly positive charge state.  In RNAi Therapeutics, Merck according to their partnering website is actively soliciting for such technology solutions.  If I may say so, the idea has even crossed my mind and probably means that everybody else had similar ideas even before that.

I would therefore have to believe that either the charm of or the particular solution by the inventor Steve Dowdy (who also happens to be the scientific founder of just-bankrupt Dicer dsRBD RNAi delivery company TaversaTherapeutics) has particular promise in the eyes of the investors.  I’ve only had time to skim through the patent applications, esp. WO 2010/141471, so I do not want to speculate too much about the prospect of the technology by Solstice (shameless advertisement: I can always be had for due diligence, of course).

Take the survey on the top right-hand side: Which Big Pharma company will make the first significant RNAi Therapeutics move in 2013? Merck, Novartis, Takeda, Pfizer, or Company X?

What to Expect from RNAi Therapeutics in 2013

2012 was the most exciting year in the ~12-year history of RNAi Therapeutics- both from a scientific and financial perspective.  Left for dead by most, unambiguous gene knockdown results in Man have allowed the technology to regain much-needed respectability.  With the start of 2013, the industry is looking to build on these successes with additional clinical trial results, interesting new therapeutic candidates and product-specific and platform-related deals, particularly in the area of delivery.  With appetite for innovation increasing in a low interest rate economy and with the orphan drug tsunami, 2013 could be a quite rewarding year for the discerning investor.

Clinical results to look out for

Clinical results in 2013 that will continue to shape perceptions of the technology include phase II study results for ALN-TTR02 in TTR-FAP by Alnylam, phase I results from its GalNAc conjugate version ALN-TTRsc, and phase I results from a number of other programs, foremost from oncology drug candidate TKM-PLK1 by Tekmira, ALN-AT3 for hemophilia by Alnylam, and finally RXI-109 for dermal scarring by RXi Pharmaceuticals.  

For ALN-TTR02, it will be important to confirm the impressive knockdown results from the phase I study, but over longer periods of time and with still acceptable safety.  ALN-TTRsc will be an important proof-of-concept for the subcutaneous delivery of RNAi Therapeutics and should provide a good idea of what to expect for ALN-AT3 which is based on the same GalNAc siRNA conjugate technology.  The success or lack thereof of Alnylam’s GalNAc technology will also affect the perception of Arrowhead’s DPC technology as either a competing or necessary subQ alternative to GalNAcs.

Tekmira’s TKM-PLK1 has not gotten much credit so far.  This, however, could change with the presentation of the full phase I results, possibly at this year’s ASCO.  I consider PLK1 as the single most attractive target for cancer RNAi and I am bullish that the molecular analyses will show molecular, if not clinical efficacy at this early stage.  And while TKM-PLK1 could overcome the safety-efficacy hurdle for some indications, the importance of PLK1 as a target demands that Tekmira will continuously work on improved follow-on versions.

Finally, RXi’s second phase into RNAi for skin applications.  I also consider dermal scarring as an interesting differentiated, because cosmeceutical RNAi product opportunity.  

Cool pipeline additions

As detailed in my last blog entry, there are two exciting infectious disease drug candidates for which clinical development will ramp up in 2013: Arrowhead’s ARC520 aiming to achieve for HBV what has recently been achieved in HCV (dramatically increased cure rates and less suffering from the side effects of interferons), and Calimmune’s ddRNAi-based HIV drug candidate aiming to keep the virus out of immune cells.

It looks like we will have to wait for clinical efficacy results from these programs for a while (2014-2015), either due to the nature of the cell competition approach involved in the HIV program or because of the use of healthy volunteers.  I believe the latter is what Arrowhead has guided for ARC520, but from an investor perspective this would be highly unforunate as this would delay the demonstration of gene knockdown with the DPC platform.  And from a medical perspective, I am struggling to see what the value or necessity of a volunteer trial would be.  

Deals and Big Pharma

In addition to clinical trial results, RNAi Therapeutics investors will be getting up each morning to check the internet for whether a deal has been announced.  Alnylam’s ALN-PCSK9 is the most imminent partnering candidate and will be an indicator of the mere differentiation value of RNAi Therapeutics.  While clinically more advanced monoclonal antibody-based programs for the industry’s most desired target, PCSK9, exist, should monoclonal antibody stumble as a class, RNAi Therapeutics and ALN-PCS could suddenly have the market for itself.  Considering the multi-billion $$$ potential of PCSK9, a gamble worth taking for a Big Pharma in my opinion.

Similarly to ALN-PCS in the hypercholesterolemia market, the size and complexity of the clinical program that would be required to turn ARC520 into a major HBV drug well exceeds Arrowhead capacities, and this could mean that we will see an early licensing deal around that asset, too.  While proof-of-concept clinical knockdown data would greatly increase the partnering value of ARC520, from a financial perspective (--> di-lu-tion!) early partnering may be prudent if no alternative non-dilutive capital alternative presented itself.

As delivery is gating for all of the above RNAi Therapeutics product opportunities, delivery naturally should be the subject of a few more platform-type relationships.  Tekmira’s SNALP technology for addressing diseases of the liver, lung, and cancer tops the list for a meaningful partnership (>$10M upfront), and also Arrowhead’s DPCs for liver-targeted gene knockdown ought to see some interest.  

Delivery-related deals should also reveal which Big Pharma company is still committed to the RNAi Therapeutics platform.  For the efforts at Takeda, Merck, and Novartis (the three most significant ones in terms of investment to-date), it could be a make-or-break year.  I cannot imagine that these groups are allowed to exist in their current forms for much longer before they get anything into the clinic.  For this, they probably need to swallow their own pride and accept that expert outside help is necessary for their delivery needs (rather than attempting home-brew versions).  Given the recent clinical and late preclinical results for SNALPs and DPCs, chances that they will finally do something have certainly increased.

A Happy New Year everybody.