Tectonic Shifts in RNAi Therapeutics

As consolidation in RNAi Therapeutics in the Old Economies continues, the balance of power is rapidly shifting towards the resource-rich and growing economies of the Far East where national RNAi champions are set to make their mark on the international RNAi Therapeutics scene.

After some notable mergers between private and public RNAi companies (Intradigm-Silence, Cequent-Marina Biotech), and the decision by some, albeit not all, Big Pharma companies to turn their backs on RNAi Therapeutics development in-house, a contraction of the publicly traded pure-play RNAi companies seems inevitable. Arrowhead Research (ARWR), despite its name, has long stopped internal RNAi research and its technology is getting stale by the day, the captains of RXi Pharmaceuticals (RXII) have decided on a course that is entirely incompatible with it continuing to be an RNAi platform company, Marina Biotech (MRNA) despite its good intentions signaling to the world almost daily that it is in distress and has not found anything worth focusing on, and the executives of Rosetta Genomics (ROSG) personally making sales calls as the company continues to bleed money.

Some of these companies do have interesting technologies worth funding in my opinion. RXi’s sd-rxRNAs are well differentiated and complementary to the established RNAi trigger structures, Rosetta had established a prolific microRNA diagnostics machine, and Marina Biotech built a very able and what seems to be enthusiastic RNAi Therapeutics team, but probably invested too aggressively hoping for an early turnaround in RNAi sentiment that would lift all boats. There may be a rationale for conserving some of that value by a) spinning out (RXi) and/or merging technologies that are synergistic (ROSG); and b) selling themselves for a small premium for its practical RNAi research expertise (MRNA).

The pure-play survivors may be the following: Alnylam, Tekmira, Silence Therapeutics, and Benitec. Alnylam is obvious, because of their cash and an aura that makes investors and pharmaceuticals partners pay a premium for their assets (I expect the VSP and Atu027 deals to reflect this). Tekmira as the delivery experts and also benefitting from diversification tendencies in the resource-driven Canadian economy, an investor base, however, that Tekmira needs to tap more aggressively. Silence Therapeutics with its recent progress in delivery, some valuable RNAi trigger IP, and supported by an investor base that has widened in the wake of its merger with Intradigm to cover the US, UK, and Germany. And finally Benitec which has positively surprised me by its recent recapitalization which puts it again into the category of drug developers and not just an IP play. Certainly, the re-issuances of a fundamental ddRNAi trigger patent have helped, but I don’t think this recapitalization would have been possible without resource-hungry China buoying the Australian economy.

Alnylam: RNAi trigger IP, brand and industry connectivity.

Tekmira: problem solvers, delivery powerhouse.

Silence: RNAi experience, broad investor base.

Benitec: ddRNAi powerhouse, Australian economy and proximity to China.

Benitec probably best symbolizes the shift in RNAi Therapeutics towards the countries with most economic growth. While its commercial focus may still be with the traditional markets for innovative medicines (US, Europe, Japan), its research activity, once in the US, has shifted to the East as illustrated by its collaboration with Biomics on HBV. This collaboration both taps into the geographic proximity with China as well as the growing scientific expertise that can be paid for with the strong Aussie dollar.

Don’t be surprised if the leading RNAi Therapeutics candidate for scarless wound healing will be developed in China (Sirnaomics), and not by RXi in the US, or if the first RNAi agent with human use will be marketed in the Far East and not the US or Europe just as it happened in gene therapy. Some of it may be explained by less stringent standards of patient protection in these countries, but it would be a mistake of complacency to use this as the only explanation.

Whether it will be Biomics, Sirnaomics, BMT, or others remains to be seen, but the flow of investment dollars firmly points towards a global shift in RNAi Therapeutics development and commercialization. Smart minds and outstanding technologies are one part of the equation, financial backers with deep pockets the other.