Last night, Tekmira startled the RNA Therapeutics world by announcing
that they would combine with OnCore Biopharma in a merger-of-equals to create the HBV drug development
powerhouse. With eight investigational
HBV assets in the pipeline, this model follows the HCV space where combination
therapies and companies with a single-minded focus on HCV were able to create
tremendous shareholder and patient value.
Most often cited here is Pharmasset which gave Gilead HCV
wonderdrug Sovaldi for an at the time (2011) unprecedented $11B. Of note, OnCore Biopharma was founded by
ex-Pharmasset people, including the inventor of Sovaldi.
This also makes it clear that despite paying lip service
to the combined Tekmira to continue to value their other liposomal RNA Therapeutics assets ex TKM-HBV1/2, it is a good guess that the RNA Therapeutics platform will not have a
long life in the merged company. This is also because with $100M in cash, the company will have to look for ways to raise capital, some of it in a non-dilutive manner.
Combination and speed
Before the merger, OnCore had already started sweeping up a
number of HBV-related assets intended to tackle chronic HBV infections at
multiple stages: 1) replication and gene expression; 2) promoting, by stimulating and de-repressing, an immune response
against the virus; and 3) even removing cccDNA, thus aiming not only at an
already extremely valuable ‘functional cure’, but complete cure.
It is likely that only a
multi-pronged approach will be able to achieve that. The two RNAi candidates by Tekmira which have
just entered the clinic are expected to form the cornerstone of that since they target ALL the
viral genes. Moreover, in the
challenging chimeric mouse model, TKM-HBV1/2 had an unexpected impact
on cccDNA abundance.
The fact that TKM-HBV is administered intravenously is
acceptable for this disease as long as a (functional) cure is achieved after a
finite treatment period which, of course, is the goal. By contrast, the other assets contributed by OnCore are largely,
if not all oral, including agents designed to inhibit immunosuppressant HBsAg secretion.
Unlike TKM-HBV, these are at the pre-clinical stage, at
least regarding their use for chronic HBV (the TLR9
agonist has already been tested in humans for non-HBV applications). It
is expected that many of them will enter the clinic this or next year.
Regarding clinical development, the initial goal is to
establish the safety of these agents individually before combining members from
the three different classes pairwise and in triplicate in
phase II.
The fact that all modalities are now under one roof will also
greatly accelerate development timelines as, again in analogy to the HCV
experience, it would otherwise have made necessary protracted partnering
negotiations, sometimes with direct competitors.
Merger a good deal for Tekmira shareholders
Although I bemoan the loss of Tekmira as an RNA Therapeutics
platform company, creating the strongest drug developer in the hot HBV space is
the more attractive alternative also given the importance of TKM-HBV to Tekmira
even before the merger.
Accordingly, it is more likely that this setup will yield Pharmasset-type returns (say 10x in 3 years), e.g. following an acquisition after showing >40% cure rates in phase IIb, compared to a more balanced RNA Therapeutics platform play which has faced
considerable competition from increasingly potent and more convenient technologies.
Congrats to Tekmira management and Directors. The seeming investor relations breakdown recently has now been explained. Well played!
