RNAi Therapeutics and mRNA Vaccines for COVID19

This is a time where the biotech industry has to mobilize resources to mitigate the impact of pandemic SARS-CoV-2. 

Nucleic acid-based therapeutics are prime candidates in this battle because of the speed with which drug candidates can be designed and their specificity.  This blog provides an overview of efforts in this area with an emphasis on my two favorite (and IMO most promising) nucleic acid approaches: RNAi Therapeutics and mRNA vaccines.

RNAi Therapeutics

RNAi Therapeutics (and by extension the competing antisense, ASO approach), knocking down genes for therapy, can be used in two ways to address the current pandemic.

First, the RNAi triggers could target the virus itself in an existing infection.  The hope would be that by doing so the damage, mainly lung inflammation leading to respiratory distress, can be mitigated sufficiently for the patient’s immune system to gain time and strength to successfully overcome the infection.  The question then would be how early would be early enough.

The second approach would be to target a host factor critical for viral replication.  The cellular entry receptor ACE2 is the most promising candidate target gene here.  This strategy seems particularly promising for prophylactically protecting those at high-risk of an infection, e.g. medical personnel, as protection may last for a month or so based on the very long durations of efficacy seen in human studies targeting genes in the liver and early studies in the lungs of sheep.

Application in a prophylactic setting would probably have the added delivery advantage in that the lung would be less congested and thus more accessible.  Also, delivery may not have to reach so deep into the lung as it would need to during later stages.   

Delivery

Theory is one thing, but getting the RNAi triggers to where they are needed in the body is and has always been the main challenge for RNAi Therapeutics.  Unlike targeting genes in the liver which is now well-established, RNAi in the lung is a re-emerging area of RNAi development.

Given that COVID19 is a respiratory illness where the virus intrudes the body via the respiratory epithelium, a local, inhaled delivery approach should be adequate and also happens to be the most promising route for RNAi Therapeutics in addressing pulmonary disease.

In the early days of RNAi Therapeutics development, the world was facing the SARS outbreak. Seemingly attesting to the promise of speed and specificity against emerging pathogens, Sirnaomics (based in both the US and China) soon published a high-profile paper on the efficacy of RNAi in a monkey model of SARS coronavirus.  

In hindsight and with the benefit of 15 more years of RNAi Therapeutics development up-and-downs, however, these results were probably based on innate immunostimulatory artefacts given the use of unmodified Tuschl-type RNAi triggers and a nasal instillation route of administration making employing sugar water as a carrier.

Today, however, RNAi Therapeutics is much more advanced and an approach that utilizes aerosolized highly modified and thus stabilized RNAi triggers seems most appropriate. 

Arrowhead Pharmaceuticals has emerged as the front-runner in lung RNAi and is close to filing for clinical study approval for addressing cystic fibrosis.  Their approach combines the two most promising elements of today’s RNAi Therapeutics.  In addition to RNAi trigger stabilization, Arrowhead is adding targeting ligands to their agents, in this case small moieties targeting integrin on lung epithelial cells.

While Arrowhead has not announced their entry into the COVID19 race, Sirnaomics and Alnylam Pharmaceuticals (along with partnered Vir Biotechnology) have.  While it is unclear what particular approach Sirnaomics is using 15 years after their SARS work, Alnylam will be using highly modified RNAi triggers.  Whether targeting ligands will be utilized or not is unknown to me (update: the press release refers to 'conjugates of siRNA' so a targeting ligand is likely). 

Of note, Alnylam had suffered an anti-viral innate immunostimulatory fiasco with their first commercial RNAi development program around the same time that Sirnamoics was working on SARS.  That program was for the respiratory syncytial virus (RSV) and Alnylam should be able to capitalize on the the lung RNAi development experience back then.

Other RNAi-related companies with experience in inhaled lung delivery are miRNA Therapeutics company Miragen (miRNAs are structurally quite similar to RNAi triggers), Genevant/Arbutus (descendants of Tekmira which became famous for their Ebola efforts), and Arcturus Therapeutics.

mRNA vaccines

Arcturus Therapeutics and Genevant are now focused on developing messenger RNA (mRNA) therapeutics and vaccines, including for lung disease cystic fibrosis.  The most known name in this area is Moderna Therapeutics which has a high-profile, government-sponsored vaccine effort against SARS-CoV-2.  Ultimately, it is vaccines that will allow the world to fully recover from the COVID19 scare while therapeutics should be used in a much more focused manner.

The delivery challenge for vaccines is also lessened by the fact that it is a gain-of-function approach and that the immune system itself is expert at spotting foreign, in this case viral antigen expression.  The challenge here is that this is has to be achieved in the right immunological context so that a fruitful immune response is formed.  

The fact that Moderna were the first to ship mRNA for imminent trials shows how easy it is for mRNA to go from viral sequence to product candidate and drug material production.  While I used to poke fun at Moderna for building factories and installing robots without having much science behind it to fill the production halls, for emerging biothreats like SARS-CoV-2 this has proven to be prescient.

CureVac, an mRNA competitor of Moderna, has also announced their entree into COVID19.  While they may lag behind Moderna in terms of robotics and manufacturing capacity, they should be more expert in vaccine development (‘a little innate immune stimulation by the mRNA agent itself may go a long way’).

The most intriguing and differentiated entrant in the mRNA vaccine area to me, however, is Arcturus Therapeutics (disclosure: no stock position, but considering taking one) to me.  This is because they are using a self-replicating RNA ('STARR') that they claim to require ~40-fold less RNA to be intramuscularly injected. Formulation into an LNP 'LUNAR' particle may further lower the required dose.  Given that vaccinating the world will in the end also be a manufacturing challenge, being able to start with 40-times or thereabouts less material is a serious practical advantage.

COVID19 shall pass and therapeutics and vaccines will play an important role here.  Even more important, however, is that everybody does their part in minimizing and slowing the spread of the virus ('flatten the curve', #SocialDistancing), particularly to protect those most at risk without having to resort to draconian measures.

RNAi Therapeutics Stocks (Part 2)

Having covered the most developed RNAi companies (Alnylam, Arrowhead, Dicerna) yesterday, this blog entry will discuss RNAi plays that are somewhat less established, but nevertheless could represent interesting investment opportunities.

Silence Therapeutics (SLN.L)

This London-listed company is roughly 2 years behind Arrowhead Pharmaceuticals and Dicerna.  Similar to those, Silence has set its sights on exploiting targets in liver hepatocytes using GalNAc conjugate technology.  Its first program targeting TMPRSS6 for iron overload disorders should enter the clinic in the first half of 2019.

The strength of Silence is partly its RNAi trigger IP position which, if the claims stand, should read on Alnylam’s 3-4 drug candidates that could come on the market over the next 2-3 years.  In my opinion, it would take a generous interpretation of what constitutes a ‘pattern’ for LNP-enabled Patisiran to fall under Silence IP, but it is much less of a stretch for the more stabilized GalNAc-enabled Givosiran, Fitusiran, and Inclisiran molecules in late-stage development.

Part of the potential upside could  therefore come from a settlement of the IP litigation that Silence has filed against Alnylam as it could hamper the commercialization of Alnylam's RNAi drug, especially as it ramps up for the launch of Patisiran. 

The reason why such revenues would be meaningful to the company is that Silence is run extremely well in financial terms such that these funds would neatly feed into Silence's operations as it is about to expand clinically all the while minimizing shareholder dilution. 

This, however, could also be viewed as a necessity since it is much more difficult for a London-based company to raise the kind of biotech ‘risk capital’ that allows companies like Alnylam in the US to really press down the gas pedal to pursue a grand vision without killing shareholders.   

Silence Therapeutics is an investment for those that value the pursuit shareholder return instead of mere market cap growth (=management bragging rights).  While I support this strategy, I am still largely on the sidelines as the company needs to address the anemic trading volume which makes it very costly to trade in and out.

RXi Pharmaceuticals (RXII)

Who doesn’t dream of striking it rich overnight?  If so, RXII is the type of stock that in the right biotech environment could be your daily biotech double in the not-so-distant future.

After all, which other biotech with a market cap of ~$15M can boast about 3 clinical data read-outs before year-end and one additional in early 2018?

1) Q4 2017: phase II results dermal scarring (RXI-109)

2) Q4 2017: phase II results warts (samcyprone, non-RNAi)

3) Q4 2017: UV-induced hyperpigmentation results, consumer testing (RXI-231)

4) Q1 2018: phase I/II results retinal scarring (RXI-109)  

It is possible that the first 3 data read-outs could show that the agents are active and well tolerated, but where there will be a discussion about the commercial adoption of these agents in the real world.  Therefore, the real fireworks may occur following the results from the retinal scarring phase I/II trial in early 2018.  Here, the self-delivering RNAi trigger technology is tested for the first time in the eye where for reasons of technical feasibility (more equal biodistribution throughout eye than in the skin) and clinical application I see the most potential for this technology.

Downside risk comes from management that is pitifully ignorant about the workings of the financial markets and shareholder value creation.  If RXi fails to ignite investor interest in the wake of any of these 4 shots on goal, we could well see a continuation of the financial death spiral that has seen RXII lose 98-99% of its value in the last 3-4 years!!!

I own approximately 3% of the outstanding shares of RXII and will try to add on any weakness ahead of data release.

Arcturus Therapeutics (ARCT)

In sharp contrast to RXi, I view management of Arcturus as far more savvy when it comes to the financial markets and building a biotech company of decent size.

Arcturus, which has recently gone public via a reverse merger, has its roots in RNAi technology, largely by copying liposomal delivery technology from Tekmira (now Arbutus) and then licensing related RNAi IP from Marina Biotech.  In light of the Patisiran APOLLO results, you could view the platform as fundamentally de-risked.

In fact, its lead program was an RNAi program to address TTR amyloidosis.   Since then, however, Arcturus has largely re-tooled itself as an mRNA Therapeutics company using LNP delivery technology.  Although its pipeline is not as prolific as that of much-better known Moderna, it appears impressive for a company with a market cap of still less than $100M just as its partnering activities.

Therefore, Arcturus is a bet on a management that can take average science to build a significant biotech as it talks the language of Wall Street and Pharma deal makers.  It was one of my early biotech investment mistakes to undervalue big-mouthed management relative to science. The best science can always be acquired once you have lowered your cost of capital by growing market cap.

I have a starter long position in ARCT as I wait for it to be discovered by larger hedge fund manager.

The final instalment of this series will cover oligonucleotide therapeutics companies Ionis Pharmaceuticals, Wave Life Sciences, Regulus Therapeutics, and Sarepta.

Why Marina Biotech Deserves a Chance

Oligonucleotide Therapeutics is hot.  Outside of immune-oncology which is breaking new ground in cancer, Oligonucleotide Therapeutics is where the real innovation in drug development happens today. In fact, Oligonucleotide Therapeutics already has become the third major drug discovery engine and I posit that at the development stage it has already surpassed monoclonal antibodies.

   

This is also reflected by the valuations of the two best known proponents in the field, Alnylam and ISIS Pharmaceuticals which are both worth around $8 billion, a valuation that given its purchasing power that comes along with it positions them to become major pharmaceutical companies.

It is then long after the behemoths and mid-tier companies like Arrowhead Research and Regulus Therapeutics which struggle for similar recognition with market caps in the 0.5 to 1 billion dollar range, that Marina Biotech comes in with an anemic, fully diluted market cap of ~30M.

Vicious circle

A 300x valuation difference to the leaders will put off most investors from conducting more in-depth research.  Surely, a $30M valuation shows that its technology does not work.

  

This detrimental circular logic extends into business development where Marina Biotech has essentially given away valuable pieces of its technology stable for pennies.  Licenses to CRN technology to Novartis for a mere $1M or UNA technology to Arcturus for a few hundred thousand dollars are sad examples of this.

Of course, at the time the deal were done, Marina Biotech was in dire straits financially and this was exploited in cold blood by its partners.

OK, that’s business, nothing personal, and good on Novartis and Arcturus for their bargains.

Overall, Marina Biotech is probably one of the two most prolific deal makers in the industry along with ISIS Pharmaceuticals, reflecting its broad assets in Oligonucleotide Therapeutics.

UNA-CRN Antisense Oligos, it’s as simple as that

This, however, is also a distraction for management and I am afraid that the CEO, Michael French, keeps looking under the wrong lamp posts for capital.

In his opinion, Marina Biotech should be the one-shot shop for Big Pharma looking for solutions against certain disease targets where the best mechanism of action is not apparent. 

Myotonic dystrophy type I, a muscle wasting disease caused by a toxic nuclear RNA, is probably a good example of this, and this is also Marina’s lead development project if we ignore for a moment its legacy program in familial adenomatous polyposis (FAP) now in phase I clinical development.

I, however, struggle to come up with many more examples of this, and if I were a Big Pharma, I would just evaluate the different strategies in-house and, if necessary, then gain access to that one most promising mechanism of action.

This blogger, on the other hand, believes that the public markets should be Mr French’s audience.  Times have changed and the public markets have become a much more attractive source of capital for supporting platform companies like Marina Biotech. Big Pharma, on the other, likes to talk about innovation, but ends up acquiring only specific development candidates close to the finish line.  And if it engages in innovation, it usually fails as a result of their organizational rigidity and leaders better suited to run fast-food companies than technology companies.

Imagine how the simple message that Marina Biotech has a chemistry strategy that can do what ISIS Pharmaceuticals has achieved would resonate with investors?  

I am referring here to the potential of combining UNA with CRN (similar to 2.5 cET by ISIS Pharm or LNA by Santaris/Roche) chemistry which just as proposed for usiRNAi triggers  could evade some fundamental IP in the field by virtue of UNAs not being your typical modified base, an idea that has gained wide support in RNAi Therapeutics (à Tekmira, Arrowhead Research, Arcturus).

It should also be noted that only Marina Biotech has the ability to combine both UNAs and CRNs. Despite their licenses, neither Arcturus nor Novartis can do that.

What I also like about the UNA-CRN antisense focus is that such a simple molecule is ideal for a small company like Marina Biotech which does not have much research to speak of.  The antisense concept is so simple that even a blogger would be able to translate it into the clinic from the comfort of his home.

Marina Biotech, of course, is no ISIS Pharmaceuticals, and I should state that my ‘never-touch portfolio’ which I established last summer almost exclusively consists of ISIS Pharmaceuticals which, at the time, accounted for more than half of my stock holding.

Marina’s Outlook

Depending on risk tolerance (an investment in Marina Biotech is still a survival play), however, Marina Biotech has its rightful place in the investment space which explains this blog entry in the first place.  If Michael French could only get himself to commit to a simple CRN-UNA ASO strategy and show some data from its Myotonic Dystrophy program, Marina’s severe undervaluation relative to peers would instantly become obvious.

It’s OK, however, to analyze clinical data from its FAP program as long as it does not cannibalize investments in the ASO platform.  It may also be an excuse to enter the GI ASO space which, following a $700M+ license from Nogra Pharma to Celgene, has come into high demand among Big Pharma.  Although I do not think GI-ASO is technically a robust opportunity as the liver and CNS, if Big Pharma likes to part with $$$, why not cater to them?

Following the filing of an S-1 securities registration statement and in light of Marina’s financial position (cash runway until mid-2015), it is obvious that Marina Biotech will raise capital in the near future.  It will be telling on what terms this will be done and who will participate.  While you will read in most biotech investment textbooks not to invest in those times, remember that in 2013 somewhat similar circumstances set up Arrowhead Research for a more than 10x return in less than a year.

Marina Biotech to Stage Comeback

Arcturus Therapeutics Acquires usiRNA Technology from Marina

Today, Marina Biotech announced that it is assigning, i.e. is selling usiRNA technology to San Diego RNAi Therapeutics start-up Arcturus Therapeutics.   In addition, the company detailed recent progress in its patent estate encompassing various RNAi trigger- and delivery-related technologies.  Based on these accomplishments, and after extending the maturity date of a critical loan to 2014, it now wants to resurrect itself as a real biotech company by raising capital and relocating to, you guessed it, Cambridge, Mass.  

The usiRNA modification arguably allows you to circumvent the Tuschl siRNA structure and related patent estate by Alnylam and is claimed to even improve upon the Tuschls by allowing for greater specificity.   In addition to Arcturus and Marina, Tekmira, and likely Arrowhead Research (through Roche), have access to such RNAi triggers.

Financial details of the transaction were not disclosed.  Through the assignment of the patents, Arcturus stands to collect the milestone and royalty streams from Marina’s existing licensees.  This includes Tekmira which in its quarterly filing disclosed this week that it would have to pay $3,250,000 in milestones plus single-digit royalties for the technology.  Although these numbers pale in comparison to what Alnylam has asked for RNAi trigger licenses in the past, this suggests that the undisclosed financials and likely upfront payment by Arcturus should have been substantial for a company like Marina…at least enough to continue to pay its patent prosecution and other bills. 

How Arcturus paid for it is unclear to me given that its first significant capital raise involved merely $1.3M.   

For Arcturus the deal seems to make a lot of sense.  If the usiRNA workaround theory holds up, you would be very hard pressed to find such inexpensive RNAi trigger IP (because from a distressed seller) allowing you to broadly go after your targets of choice.  Obviously, this is to complement the liposomal delivery technology on which it was founded.  With the right financial support and scientific talent, Arcturus will be an interesting story to follow.

Nitto Denko Brings RNAi Therapeutics to Clinic as New Star Rises on RNA(i) Therapeutics Firmament

There is more evidence from the San Diego biotech scene that investment is flocking back to RNAi Therapeutics, from all sorts of sources.  Following successful public offerings by the likes of Arrowhead Research and Alnylam and multi-million dollar VC rounds in two smaller RNAi Therapeutics companies earlier this year, the investment this time is coming from a large diversified company and private investors.

Nitto Denko Tackles Fibrosis

With the initiation of clinical development for an RNAi Therapeutics in fibrosis, not Merck, not Novartis or Takeda, but Japanese materials manufacturer Nitto Denko has become the largest company yet to enter an RNAi Therapeutics into the clinic which originated from internal R&D.  The newest addition to the RNAi Therapeutics pipeline is based on research from Prof. Niitsu’s laboratory at Sapporo Medical University and involves a vitamin A-targeted liposome for gene knockdown of a collagen-specific chaperone (Hsp47) in fibrogenic cells.  Subsequent to the seminal Nature Biotech publication on gene knockdown in hepatic stellate cells for not just the stabilization, but even the reversal of liver fibrosis (Sato et al. 2008), a more recent publication applying the same formulation in pancreatic fibrosis indicates that Nitto Denko is considering ND-L02-s0201 for fibroses beyond the liver.  

Of note, the RNAi trigger design came from Quark Pharmaceuticals (Tuschl workarounds with lots of non-canonical modifications) and Nitto Denko itself has become the world’s largest clinical supplier of oligonucleotides following its 2011 acquisition of Avecia.

Fibrosis is becoming a hot area in Oligonucleotide Therapeutics with a number of companies (RXi Pharmaceuticals, Excaliard/Pfizer, Sirnaomics, BMT etc) chasing fibroses in the skin, eye, liver, and beyond.  As fibrosis is a complication, often the most debilitating consequence of  many diseases involving inflammation (think fatal diseases such as idiopathic pulmonary fibrosis), and little progress has been made in reversing it, the expanded target space available to oligonucleotide therapeutics could bring unique opportunities at changing the way we think about the disease.

RNAi Start-up Arcturus Therapeutics Raises $1.3M in Private Investor Round

Coincidental with the Nitto Denko trial initiation, San Diego-based Arcturus Therapeutics announced that it has raised $1.3M in a private investor round.  Arcturus Therapeutics, curiously founded by former Nitto Denko employees, is said to be developing a liver-targeted RNAi Therapeutics for an unnamed rare/orphan disease indication.  It appears that the value of Arcturus is based on a nanoparticle delivery technology.  Although the nature of the formulation is yet to be disclosed, my impression is that it is a liposomal one given the background of the company founders and the liver indication.

It is very good seeing examples like that where the RNAi Therapeutics appetite is reaching down to the grass-roots levels, unfathomable even just 1 ½ years ago.  While I once worried that the RNAi Therapeutics dry spell (2008-2011) could prove disastrous to innovation in the industry, some seeds were able to survive.  I look forward to following the progress of these technologies and companies as they grow.