Say 'No' to Rosetta Genomics Take-Under by Genoptix

The first wave of efforts to commercialize microRNAs, the close molecular cousin to RNAi, either for diagnostic or therapeutic purposes is about to fizzle out.  With Regulus Therapeutics getting a last chance to prove its worth with clinical data on its Alport's microRNA therapeutic program pending, today's post symbolizes the end of commercial efforts to establish microRNAs as a broadly applied diagnostic platform.  

Rosetta Genomics Surrenders Despite Promising Products

Last month, the Board of Rosetta Genomics, the main torch-bearer of microRNA diagnostics for close to two decades, announced that it was recommending a take-under by Genoptix.  Genoptix is a larger molecular diagnostics player for which Novartis had paid $470M in 2011 and then was acquired by Ampersand last year.  Under the proposed terms as detailed in this proxy statement, the Board has been recommending shareholders to accept what constituted at the time of the announcement a new all-time low price of between $0.6-0.7 per share, that is  ~1/2000, 1/100, or 1/10 of its value 10, 5, and 1 year ago, respectively. 

Please somebody call the Guiness Books of Records.  

Unsurprisingly, instead of admitting their commercial and financial ineptitude, this surrender is blamed on a financial market that would provide no more support microcap molecular diagnostic companies.

Well, if the company had executed properly, it wouldn’t be a microcap company, would it?  And last time I checked, complex molecular black-box diagnostics was the way the industry was going, although I admit that the Wild West culture of this industry with hardly any market entry barriers has been harmful to the industry and burned many an investor. 

There have been at least two products by Rosetta that I thought had real commercial potential.  The first one was a test to determine the tissue origin of a cancer to better inform treatment (RosettaGX Cancer Origin).  Given the trend towards drug regimen that are increasingly aimed at the molecular changes that have occurred during oncogenesis regardless of tissue origin and immuno-oncology approaches that couldn't care any less, the medical relevance of this test might be waning.  This can happen, but doesn’t subtract from the value of quantifying microRNAs for diagnostic purposes per se.

The other test, RosettaGX Reveal, got me (and apparently Genoptix) excited enough to invest in Rosetta, in my case amounting to a ~3% stake of the company (which curiously I had no problem acquiring in a heart-beat since my bids were hit with volume).  

RosettaGX Reveal is intended to prevent the many unnecessary, and medically harmful thyroid gland surgeries performed today on nodules of uncertain cancer potential based on cytology.  The test appears to be conservatively at least as good as the currently leading test by Veracyte in this ~$350M molecular test market (of which 2/3 remain to be tapped) in terms of making a solid recommendation against performing a surgery without missing the malignant ones.  Importantly, Reveal has the advantage of not requiring fresh tissue and can thus be performed on the same cytology sample that the original indeterminate diagnosis had been made.  This is due to the remarkable stability of microRNAs, in contrast to the longer and thus more fragile mRNAs.

The test has shown solid growth since start of commercialization in early 2016, now running at roughly $1M in quarterly sales with lots more room to grow by increasing reimbursement rates (yes, the test is frequently performed without the company getting paid), tapping the 2/3 untapped market, and converting users of competing tests.

Unacceptable Terms to Holders of Ordinary Shares

The reason why I will not vote my 3% of shares in favor of the merger at the upcoming Meeting of Shareholders (note: the 3% should weigh heavier since related parties in the transaction are apparently barred from voting) is that the proposed $0.6-0.7 per share is at a 25% discount from when merger discussions began, at a time when shares were already tumbling daily to new all-time lows.

While letting shareholders feel the pain, convertible debt holders get $2.5M of the $10M pie, obviously worthless warrants get attributed $1.2M, the two key executives get a combined $0.5M good-bye present (in addition to the windfall from the warrants that they will likely be beneficiaries thereof and insurance benefits), and to add insult to injury the transaction cost of the take-under is estimated at $3.3M, about as much as ordinary shareholders would get!

So unless Genoptix sweetens its offer to at least $13.3M, meaning a decent premium and doubling of the consideration to shareholders, I would rather go down with this ship and let this Lipdub clip by Rosetta on Youtube be their lasting memory:

Rosetta Genomics Obtains First Medicare Coverage of a MicroRNA Dx

It all looked like it would be the first commercial success story of small silencing RNAs when Rosetta Genomics launched a series of microRNA tests in late 2008, among them mirView Mets for the identification of the tissue origin of Cancers of Unknown Primary (CUP).  This PCR-based test took advantage of two critical properties of microRNAs for cancer diagnostics: 1) stability (unlike messenger RNAs used e.g. in the comparable PCR-based Oncotype Dx test by Genomic Health, microRNAs are relatively stable); 2) surprisingly informative on cancer biology.

[Correction May 17, 2012: While the first-generation miRview Mets test was qRT-PCR-based, the Medicare-covered second-generation miRview Mets2 involves the parallel detection of 64 microRNAs on a micro-array.]

Less than four years after the launch, however, the test (actually that of the improved version miRview Mets 2) was hardly selling (less than $100k/quarter) and Rosetta Genomics, which only yesterday had a market cap of ~2M with important chunks of debt maturing next week and in early 2013, was fast approaching bankruptcy, this time for real it seemed. Matters were made worse after falling out with former US distribution partner Prometheus Labs.

However,  the CUP Dx market should have been an attractive half-a-billion-dollar opportunity with approximately 150-200,000 cancer patients in the US alone that may benefit from such tests according to Rosetta Genomics and its closest competitor, Pathway Diagnostics.  By determining the tissue origin of metastatic cancers and of primary tumors that are highly dedifferentiated and where this is not possible by other means (such as classical histological examination), the tests would aid in the diagnosis of the cancers, thus informing treatment decisions.  According to a recent cost-effectiveness study by Pathway Diagnostics, that company’s Affmetrix gene expression array-based CUP test has real positive impacts, including improved quality-adjusted life expectancies enabled by better treatment decisions based on the improved diagnoses (caveat: this study used historical controls).   

Just like Rosetta Genomics today, Pathway’s Tissue of Origin (TOO) received Medicarecoverage last summer.  The reason why Rosetta Genomics shares (ticker: ROSG) popped today by a cool 200% (!) is that coverage by major healthcare providers is critical for the adoption of today’s molecular diagnostics as these often come at price tags on the order of $3500 a test (e.g. the price of TOO according to a presentation by Affymetrix).   

The importance of Medicare coverage (other major insurance companies usually follow Medicare’s lead) is also illustrated by the OncotypeDx test which can probably be considered the most successful of that type of expression-based molecular diagnostics in the space: launched in early 2004, it sold a mere $400,000 a quarter the year thereafter.  When it, however, received Medicare coverage in early 2006, sales exploded 10-fold.  Today, Genomic Health is selling around $200M worth of that test annually and sports a market capitalization of a billion US dollars- >100x that of Rosetta Genomics despite today's pop.  Numbers for Pathway Dx are more difficult to come by as it is privately held (it completed a $30M financing in 2010 though).

Today’s news is a huge step towards similar commercial success, at least in the sense that it makes an immediate bankruptcy of Rosetta Genomics quite unlikely. The remaining employees, however, have their work cut out for them: get a foot in the door with oncologists, possibly by winning over KOLs and other activities such as cost-effectiveness studies, gently growing the sales organization from the currently only four oncology specialists to compete with Pathway and take a decent piece of the market.  

For the sake of long-suffering shareholders, the company may also consider avoiding excessive dilution partly by effectively shutting down the commercialization of their other microRNA diagnostics which by comparison look much less attractive commercially.  At the same time, they should strive to monetize their relatively strong IP position in microRNA Rx and Dx, foremost the recently issued European patent for the promising miR34a replacement cancer therapy to which microRNA Therapeutics company Mirna Therapeutics would probably require access.

For more numbers on the miRviewMets2 test performance, clinical use along with immunohistochemistry, and competitive profile with regard to the mRNA-based Pathwork and bioTheranostic CUP tests, the Meiri et al. paper just published in The Oncologist is a must-read.

Update (May 17, 2012): Shortly after the close of the markets, Rosetta announced the issuance of $2.2M worth of stock (no options, it seems) at a 30% discount, increasing the share count by about 50% (about 2 million shares will be outstanding after the secondary).  The pain from the dilution will be mitigated by the fact that this should take care of the $750k+interest payment due to their friends at Prometheus by May 22nd, thus allowing the company to stay in business.  Also worth noting are the overhang stemming from ~200k shares that will likely be converted from existing debt at a share price of ~$1.4, representing another approx. 10% dilution at significant discount.  


And finally, here's a youtube video giving you an introduction to Rosetta's scientists:

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.

RNAi Therapeutics Portfolio Review (June 2010)

It has been awhile since I last updated the RNAi Therapeutics Portfolio. The Portfolio was originally conceived to reflect the value the market places on RNAi Therapeutics. Following some criticism, however, that this is at the risk of being too much of an academic exercise, I have started earlier this year to make it more performance oriented, albeit at the cost of dropping some pure-play RNAi Therapeutics companies that are an important part of the ecosystem.

Since the last portfolio review there have been two notable movers in the portfolio: Tekmira which has more than doubled as the story of the company having become a key enabler of RNAi Therapeutics is finally seeping out into the broader market, catalyzed not insignificantly by the widely reported Ebola monkey treatment success, and on the other end of the spectrum Silence Therapeutics which has since halved in share price as it is struggling to build a new shareholder base with historical shareholders apparently leaving the company in droves following its merger with Intradigm at the beginning of this year.

The way Tekmira has created shareholder value is through intense focus on its core area of expertise: liposomal delivery of siRNAs. This is in contrast to companies like Alnylam, mdRNA, RXi, and Silence Therapeutics that have tried in the past to be the one-stop shop for RNAi Therapeutics by offering a variety of delivery modalities and therapeutic areas. Of course, some of the differences of business development strategies are to be expected as the various companies build from different patent positions and know-how. The point, however, that has become apparent is that, unless you are dealing with a patent portfolio of the caliber of Alnylam (and there are some qualifications to that), IP alone is not enough to attract meaningful partnership funding. Instead, for the majority of companies in the space it is at least as important to be able to convince potential partners, and increasingly also the investing public, that you have a reasonable strategy to actually develop commercially viable drugs.

Although it has taken one or two years longer than I had expected, Tekmira has arrived at this point. With Big Pharma starting to think about building their own RNAi Therapeutics pipeline and Novartis coming to a critical $100M Alnylam adoption license go/no-go decision later this year with no obvious access to advanced delivery technology, I would think that there is a good chance that the future of Tekmira Pharmaceuticals will be decided over the next year or so. With its highly efficient financial structure (part of the focus theme) and increased visibility/upcoming Nasdaq listing, both an acquisition or stand-alone structure should position the company well to continue and build shareholder value.

Judging by the share price performance following the Intradigm merger, Silence Therapeutics on the other hand seems to be wandering in no-man’s land. There is some evidence though that Silence could emulate Tekmira’s model in being a desirable enabler of RNAi Therapeutics. This view is based on the apparent utility of the Atuplex delivery system for knocking down genes in the vascular and possibly also lymphatic endothelia, including in monkeys, with implications for important therapeutic areas such as cancer and vascular disease. In addition, Silence has credibility in siRNA chemistry (some decent early science that has held up over the years) plus in target discovery and validation, its focus pre-RNAi.

While I have hopes that with the apparent strength of its scientific team, Silence could re-emerge as a leading RNAi Therapeutics enabler, especially should Tekmira have been spoken for, a few things would need to occur to earn my full confidence. First, the lipoplex-endothelial data ought to be replicated by a thrid party, ideally in a peer-reviewed format. Second, Silence’s claim to have solid delivery options besides Atuplex, for example peptide-based and lung delivery, needs to be substantiated with data. Otherwise, the stock market cannot place any real value on those technology that presumably consume precious resources. This is another way of saying that it is possible that Silence’s research spending is not as efficient as it could be. Its recent re-organization may well address some of that and extend the cash-runway beyond a year from now. Third, Silence needs to communicate a coherent RNAi trigger strategy. Silence in my opinion has become the victim of its own early success in developing the Atu-siRNA chemistry that has led them to vigorously hold on to it and may have prevented further innovation in siRNA chemistry and related fresh IP, but ended up with IP that has only a narrow scope and is at the risk of becoming out-dated in the foreseeable future. And lastly, Silence needs to build a new investor base. Many of the historical investors seem to have left the company with the old management, and while one of the selling-points of the merger was in increasing its exposure to the US, without a US listing it does not appear that this outflow can be compensated with investments from the US. With a market cap of less than US$30M and about a year of cash, nevertheless an interesting value.

As the company with the dominant RNAi trigger IP, Alnylam’s business model is necessarily different from that of Tekmira. It is in Alnylam’s interest to stimulate the wide adoption of RNAi as a therapeutic modality which is the reason why the company has this relatively high burn rate which needs to be supported by equally lush licensing and collaboration revenues. While 2 years ago, $100M for Alnylam would have almost been yawned at, my expectation is that should Novartis pay that amount to Alnylam for the adoption license for which the decision is coming up soon, it would provide Alnylam with some nice cash worth at least another year and reawaken investor interest in the space…$100M is nothing to be laughed at. Equally important potential catalysts for both Alnylam and Tekmira will be the first clinical results for the ApoB and TTR candidates using 2^nd generation SNALP technology (likely early and late 2011 events, respectively). While there is every reason to believe that we should see decent knockdown with these formulations, nothing beats actual clinical data. With Novartis, data from the ApoB and TTR programs, first RNAi Therapeutics pipeline activities by Big Pharma, and clarity on the IP front (‘Tuschl Tussle’) all coming up, the 2-year-long and painful wait for Alnylam investors may finally be coming to an end.

In the DNA-directed RNAi space of the sector, Benitec still remains the only significant effort. Following a period of reorganization, including cleaning up its IP relationship with CSIRO and getting the fundamental Graham patent re-instated in a number of important constituencies (except, of course, in the US), the company has started to expand its pipeline efforts with recently forged relationships for lung cancer (University of New South Wales) and Hepatitis B viral infection (China-based Biomics). On top of that, additional data from its triple RNA therapeutic HIV candidate that has already entered the clinic can be expected. Underlining the transformational period for the company, Peter French, a trained scientist with significant experience in technology management, has yesterday been appointed as the new CEO. A probably important upcoming milestone will be an oral hearing at the USPTO in the re-exam of the fundamental Graham patent at the beginning of August. While IP is critical, it would also be nice to see the company conduct more of its own research in-house. In my opinion, a lot of ddRNAi Therapeutics value is just waiting to be uncovered, especially with gene therapy showing more and more promise in the clinic.

One of the companies in the small RNA biotech arena that has impressed scientifically, but failed to sustain investor interest is Rosetta Genomics. This is somewhat surprising since diagnostics is currently valued as a low-cost, low-risk, relatively large reward area in biotech, quite attractive for many in this economy, and Rosetta Genomics is a, if not the company in what should eventually be one of the molecular pillars in diagnostic: small RNAs. Rosetta Genomics may still suffer from the perception that its business strategy has never lived up to its scientific potential, and personally some of that distrust is deserved stemming from the atrocious recent financing. There is evidence, however, that this is changing such as expressed interest in finally developing companion and response diagnostics. Revenue from its first three microRNA diagnostic products may also mean less frequent financings and new types of investors.

[Important update: Rosetta released 1st quarter financial results in late May which I had missed as I was traveling then. Having now listened to the conference call and read the report and recent filings with the SEC, I was shocked to find out that Rosetta is in a serious legal dispute with its US partner for its first microRNA diagnostics products, Prometheus laboratories- possibly explaining the extremely anemic 1st quarter sales numbers. Potentially most damaging could be the following claim: '. In response, Prometheus has issued notices to Rosetta denying the allegations of breach and alleging that Rosetta made material misrepresentations in the Stock Purchase Agreement, dated April 10, 2009, between Rosetta and Prometheus and demanding rescission of the securities purchased by Prometheus under the Stock Purchase Agreement'. This is strong stuff, indeed, and I felt insulted by the CEO's casual remark that this issue had long been public knowledge. The company should know that not every retail investor is subscribing to SEC filing alerts and given the importance of this particular event, a timely press release would have been warranted.]

I am currently neutral on the last component in the Portfolio, ISIS Pharmaceuticals. This company has understood to sustain investor interest now for decades by staying on the cutting-edge of RNA Therapeutics research as it is still waiting for its first commercially significant drug approval. While over the years this has not made investors rich, there are much worse examples, and maybe one of these days they will hit the jackpot (the question, of course, is whether their proof-of-concept, then out-licensing strategy allows them to enjoy a jackpot at all...). The reason, however, why I am neutral at the moment, is that I have been slightly negatively surprised by some of the tolerability aspects of mipomersen that have surfaced without much fanfare in the literature, and I would rather wait for the two upcoming phase III study results announcements before considering adding to the position. It is always possible that the volatility triggered by these events could create interesting price points. On the other hand, the broad interest of ISIS in RNA Therapeutics combined with its very strong balance sheet gives the company considerable flexibility to capitalize on the genomics revolution.

Now to some of the companies not in the Portfolio. In the case of mdRNA, I'd still like to wait before the dust settles. The recent announcement that it has gained exclusive access to the use of UNAs (unlocked nucleic acids) for the use in diagnostics got me somewhat confused and raises concerns that mdRNA feels the need to be seen to be doing something instead of focusing on building clinical capabilities. On the other hand, unlike Silence Therapeutics which has been held back by its history, mdRNA is not shy to explore all opportunities that may exist in RNA-related therapeutics and diagnostics and then to opportunistically jump on a band-waggon as it passes by. This reminds me somewhat of Ribozyme Pharmaceuticals when it abruptly decided about 8 years ago to abandon ribozymes and leverage their oligo therapeutics expertise for the development of RNAi Therapeutics which eventually resulted in that company, subsequently known as Sirna Therapeutics, being sold to Merck for $1.1B. Of note, some of the key people from Sirna Therapeutics are now with mdRNA adding some credibility to that strategy.

One company that I feel has just made a good strategic decision is RXi Pharmaceuticals when it announced last week that it had chosen dermatology and ocular disease as their 2 therapeutic focus areas using their self-delivering rxRNA technology (sd-rxRNA) which represents a convergence between RNAi trigger and delivery. It is the right decision because I share their view that sd-rxRNAs should be most promising for these direct RNAi approaches (see recent blog entry on sd-rxRNAs) and that commitment might hopefully catalyze their efforts in coming anywhere close to the clinic. To me, this lack of drive towards the clinic has long been a major deterrent. It is now up to the company to actually follow up on its promise and earn back the confidence of the market, even more so after a Rosetta Genomics-style recent financing.

I have decided not to make any changes to the Portfolio at this time as I feel that the real pay-day for at least one of the larger positions in the portfolio may come within the next 12 months or so.

PS: Please read and understand the financial disclaimer at the bottom of this page.

Rosetta Genomics Business Strategy Back on Track

Following the recent hiring of Kenneth Berlin as CEO, Rosetta Genomics is re-focusing their microRNA diagnostics efforts to leverage their extensive bioinformatic know-how and associated IP in the field. Having emerged as the leader in microRNA diagnostics churning out 3 microRNA tests in short order, initiatives such as betting the future on an early-stage blood-based colon cancer screening test and an one in plant biology ('Rosetta Green') first left investors perplexed and eventually disappointed. According to today’s press release and conference call, however, the company has decided to revisit its proven strategy of going back to their treasure trove of bioinformatic information and select new development candidates.

What is also remarkable is that, for the first time, the company is providing guidance about market size and clarity on pricing. This is a welcome change from previous years that had investors in the dark about expected revenues. In hindsight, it would appear that this was actually was due to lack of strategic planning. It is therefore expected that with the strong commercialization background of Mr. Berlin as former worldwide General Manager for the J&J molecular cancer diagnostics outfit Veridex, this essential aspect of Rosetta Genomics' business can only get better. Predicted revenues of only 2010 $2-4M based on 1,200-2,400 samples processed from their first 3 tests, however, represent business development challenges considering current cash levels of about $10M and a predicted $900k monthly burn-rate in 2010.

Mr. Berlin will therefore largely be measured for his ability to

a) penetrate the following predicted markets (annual numbers of potential tests US/ex-US):

1) miRview Squamous: >60k/250k; 2) miRview Meso: >60k/200k; 3) miRview Mets: >60k/300k;

b) develop 5 tests for which they already have identified the microRNAs, among which were disclosed the following tests and time-line:

1) an extended miRview Mets test (H2 2010 launch); 2) a test predicting superficial bladder cancer to become invasive (late 2011 launch and 350k annual market); 3) a test further differentiating lung cancers from fine-needle aspirates (2011 1M annual market)

c) achieve all this all the while minimizing shareholder diluation

As to the last point, I am curious whether, considering the first 3 tests have obviously been partnered already, Rosetta can further monetize their IP and know-how in the microRNA therapeutics area, and find a Roche-like partner for developing companion diagnostics. Because of trends making it more and more difficult to get reimbursement for home-brew tests, it is surprising that unlike Rosetta’s competitor Asuragen (companion Dx deals with Biogen and Merck), we have heard nothing about their plans in the high-value area of molecular companion diagnostics. Ongoing post-marketing studies for their present tests, however, should partly address the reimbursement challenge in addition to convincing patients/physicians to adopt the tests.

With the proposed strategic review, Rosetta Genomics should become a company worth considering again given their strong scientific foundation. It will take some time, however, to re-build confidence in management. After all, the misguided colon cancer ambitions did not seem to have been based on scientific progress from their exploratory published data, and it would not seem fair to blame the former CEO alone for all these blunders. Rosetta Green also needs more explanation. However, I do want to credit former management for having established the scientific engine behind Rosetta and having brought to market 3 out of the 4 currently marketed microRNA Dx tests. Privately-held Asuragen should also receive credit in this regard. This could also mean that people like Victor Ambros, Gary Ruvkun, and maybe 'even' (because plant biologist) my D.Phil. examiner David Baulcombe are even stronger contenders for a Nobel Prize for their discovery of micro- and other silencing small RNAs which in turn could give companies like Rosetta Genomics a significant boost in the near- to midterm.

Run-Down of Companies in the RNAi Therapeutics Portfolio

Alnylam: As the bellwether of RNAi Therapeutics due to its IP position, maturing pipeline, strong balance sheet and a generally broad outlook on RNAi Therapeutics, a must for those (institutional) investors with significant funds to invest in the RNA Therapeutics space. Data from Alnylam’s Huntington’s Disease and RSV programs suggest that they have potential on their own, independent of how they contribute to the learning of RNAi for CNS and lung disorders in general. Surely, the hiring pattern of Big Pharma argues that the perception of RNAi as a therapeutic modality has not gone out of fashion there, immediately adding potential licensees to Alnylam’s leading RNAi trigger portfolio.

However, as it is delivery that potential licensees and investors are increasingly paying attention to and even cash-rich Big Pharma/Biotech will question whether it should spend $300M for an RNAi trigger license now that there have been a few decisions that did not go in Alnylam’s favor, I am not sure whether we will see a simple pre-packaged RNAi trigger platform deal. Rather, such IP access may be packaged with access to Alnylam’s know-how on the delivery, chemistry, and safety of RNAi Therapeutics, somewhat reminiscent of the Roche deal and the Kulmbach component. To set up such deals may take longer, but ultimately provide more value not only for the licensee, but also for Alnylam. Certainly, positive SNALP clinical data should prove as a catalyst for these negotiations and the stock.

Tekmira: If you did not know already, my favorite RNAi Therapeutics investment right now. Pioneered the, in my opinion, most advanced systemic RNAi delivery technology, SNALP, which renders the Canadian $50M market cap company fully exposed to the major value drivers in the space near- to mid-term. The well validated ability to deliver oligonucleotides to the liver with SNALP will make Tekmira not only an attractive collaborator and acquisition target in RNAi Therapeutics, but should offer it new business opportunities outside the traditional siRNA structure. This includes various forms of microRNA mimics and inhibitors, immunostimulatory oligonucleotides, and oligos for targets based on emerging non-coding RNA pathways or other knockdown mechanisms. Mir-122 inhibition with SNALP may be an interesting pharmacologic alternative to the naked LNA-anti-miR122 by Santaris now in late phase I studies. Demonstrating the utility of SNALP outside the liver, such as for solid cancers and cells of the immune system (maybe by using targeted delivery) could further increase the perceived value of this conservatively managed company. With about two years’ worth of burn in a relatively good financial position.

I should temper my enthusiasm, however, as there are no sure things in biotech and the first use of SNALP in Man may well yield some unpleasant surprises and could dramatically change the outlook for the company. Similarly, it needs to think ahead about how to access a broader investor audience outside of the Canadian market as its own pipeline is growing in size and capital demand. A good bet nevertheless.

Benitec: Faces an uphill battle with regards to their core DNA-directed RNAi patent, essentially pitting it against mighty Fire-Mello. However, as time progresses and the ’099 Graham patent not getting any younger, I’m starting to have doubts as to how important this patent will prove to be. Other patents assigned to Benitec, the HIV programs, and potentially the Biomic collaboration may prove to be of more immediate practical value to the company. What is needed, of course, is a re-capitalization of the company.

Targeted Genetics: This cat has 8 lives. I had been quite confused that after almost everything scientific and clinical was going in Targeted Genetics’ favor, the company was rapidly approaching bankruptcy. Society and the investment world are not always fair, which is a warning to those investing just according to scientific principles. Now, Genzyme has come to the rescue, but it remains to be seen how committed the company is to its RNAi pipeline. It would make sense for RNAi to be part of a company focusing on diseases of the eye (and CNS) for which AAV and lentiviral gene therapies currently have most promise (the eye as the liver of DNA-directed RNAi).

RXi Pharmaceuticals: Experienced management and scientific team, access to Tuschl I and preferential treatment by the state of Massachusetts, yet for some reason very little drive towards the clinic and financially challenged. Instead of a clinical pipeline, a pipeline of ‘interesting’ RNAi trigger and delivery approaches. I’m still not sure about what their rights to Tuschl I are that have recently been characterized as ‘limited’ in scope. This, however, and the Massachusetts/Mello connection are probably the biggest draws for the stock. Still, without being able to offer complementary practical know-how I would think Big Pharma is not too anxious to access RXi as a partner.

Silence Therapeutics: Similar to RXi Pharmaceuticals, stands to greatly benefit depending on the messiness of the Tuschl patent outcomes where Silence’s ability to operate in the 21-23nucleotide space is at stake. Also reasonably successful in battling the patent that most likely imposes most constraints on the company, namely Kreutzer-Limmer. While nobody would doubt Alnylam’s freedom-to-operate (however questions have been raised as to the degree of being able to exclude), my fundamental question about Silence Therapeutics is whether what may be a patent work-around also makes for the best scientific approach. Their underlying patent application is based on quite limited data, so I have yet to be convinced of any real generally applicable scientific advantage of the Atu-RNAi design (nevermind, at least in terms of IP, my opinion does not matter much since the European and US patent offices appear to concur with Silence). Things have been looking up recently for the company and its Atu-027 program for advanced solid cancers has started phase I dosing. This program aims at silencing the PKN3 kinase in the endothelia of solid tumors which apparently inhibits metastatic spread through reduced lymphangiogenesis. An interesting approach towards RNAi cancer therapy and has been described in a detailed company publication late last year that provided reasonable support for bona fide in vivo gene knockdown using lipoplex delivery (Aleku et al., 2008). One interesting point I found in that publication was that in cynomolgous monkeys, the circulation time of the particles was greatly extended to what they found in rodents. This can only be a good thing for the prospect of lipid-based nanoparticles.

mdRNA: Together with Targeted Genetics, another unlikely survivor from the financial crisis coming from Seattle. Two deals with Big Pharma, one on delivery (Novartis), and one on siRNA structure (Roche), early this year contained enough upfront to give the company another couple of months to get itself on sounder footing. Similar to Silence Therapeutics, their main delivery approach consists of essentially the same chemistries as contained in SNALP and apparently lends itself to targeted delivery (which, however, is not a unique property of their technology). Also, I would be cautious about claims that putting UNA-modified nucleotides in the 3’ overhang of siRNAs would liberate them from claims in Tuschl II. UNA modifications appear to be a viable option for the siRNA modification toolbox, but I would be cautious in how far they are uniquely advantageous over other chemistries at last according to an excellent, comprehensive siRNA modification screen as published by Bramsen et al. this year. In any case, the fresh, and apparently well-connected management team can be congratulated for rescuing the company, and the scientific team for their skills in being able to rapidly adopt oligonucleotide modification and liposomal delivery skills at least to the degree that Big Pharma is curious enough to look under their hood. I would like to speculate that if RXi e.g. had built such practical skills in-house, we may have seen some deals that would not have been as dilutive as recent efforts to raise capital.

Rosetta Genomics: After having apparently staked their future on a blood-based test for colorectal cancer screening, it has reported that these plans have been slightly delayed due to technical issues. The poster on the colorectal cancer-related microRNAs in blood that had been presented previously certainly showed initial proof-of-concept for blood-based microRNA diagnostics, but more robust detection methods are needed in order to make such tests a commercial reality. It is debatable whether the one-shot strategy was a wise one, instead of churning out a series of tissue-based Dx albeit with a much smaller target market. If blockbuster products like a screening test for colorectal cancer were a primary business goal, then an alternative route may be to collaborate on Rx-Dx combinations which however are much onerous to develop than home-brew Dx and may require a partner like Roche. There may be a number of regulatory and health care reform issues that could affect the future prospects of being able to sell and get reimbursements for home-brew Dx. On a positive note, according to my literature, I have stumbled across enough references by Big Pharma on the potentially unique utilities of microRNA Dx that I believe the concept has well arrived in the minds of important constituencies for Rosetta. A pick-up in sales of their first products would also be welcome by investors. Due to a number of synergies, companies like Regulus may also be a good home for Rosetta Genomics.

ISIS Pharmaceuticals: There is certainly a flood of ISIS-related antisense in various stages of clinical development, some with interesting results indicating efficacy. Mipomersen meanwhile blazes the trail for ApoB as a target for hypercholesterolemia, and assuming it will confirm phase II results, I am curious about how much of the patient audience Genzyme is able to capture. This should also have implications for the financial potential of follow-on ApoB therapeutics. ISIS also was successful in monetizing their IP for ssRNAi with almost $21M (! a high number considering the stage of ssRNAi and other deals that Alnylam has done in the past) in upfront and near-term payments from Alnylam, while still being able to develop ssRNAi Therapeutics itself. OK, you know that I have some problems with how ISIS likes to interpret RNAi as an antisense technology, so please allow me this comment: if RNAi already was a single-stranded antisense technology, how is it then possible to claim ssRNAi as a separate technology without running afoul double-patenting rules? Anyway, I acknowledge that ISIS is on a good way of becoming a sustainable, profitable oligotherapeutics company and probably should be part of a diversified RNA Therapeutics portfolio.

Oxford Biomedica: Despite disappointing cancer vaccine results causing partner Sanofi-Aventis to give up on Trovax, Oxford Biomedica must have been able to impress Sanofi-Aventis with their core leniviral delivery technology (note: Trovax is not a lentiviral technology). Sanofi-Aventis thus seems to agree that lentiviral delivery has significant potential for applications of the CNS, including the eye. However, as I hear little about Oxford Biomedica using its IP and know-how in RNAi, I will consider replacing it with companies like Genesis R&D in my next portfolio update. There is certainly a lot of DNA-directed RNAi Therapeutics technology and IP looking for a well-funded home.

[Please note that the following is a run-down of my own impressions of companies in the portfolio and links are not necessarily provided for all major assertions. Please use the comments section if you believe that there are factual inaccuracies]

Small RNAs with First Clinical Impact

Small RNAs are about to make their clinical debut. This week, Asuragen, a leading microRNA diagnostics and therapeutics company, announced that it is about to launch the first microRNA-based diagnostic test for the differentiation between chronic pancreatitis and pancreatic ductal adenocarcinoma (PDAC). PDAC is the most prevalent pancreatic cancer type and known for its late clinical presentation and poor prognosis. Because chronic pancreatitis that has a roughly comparable incidence and presents with often similar symptoms such as abdominal pain, digestive problems, and biliary obstruction resulting in mis-diagnosis rates of up to 25%, diagnostics that help to differentiate between them are invaluable for ensuring optimal treatment.

The test will be made available on May 2, 2008, from Asuragen’s own CLIA-certified test laboratory. It is a PCR-based test of apparently a single microRNA that is specific for pancreatic cancer cells and was originally identified as part of a collaboration between Asuragen and a clinical group from a hospital in Bochum, Germany [Szafranska et al. MicroRNA expression alterations are linked to tumorigenesis and non-neoplastic processes in pancreatic ductal adenocarcinoma. Oncogene 26:4442-52 (2007)].

Other tests by Asuragen, but also notably Rosetta Genomics and Exiqon in the field, are about to enter the market in the coming months. Like the present one, they are PCR-based diagnostics of one or a few microRNAs. Despite the 25% mis-diagnosis rate, it seems that the need to obtain biopsies from the pancreas is not trivial and may therefore limit the use of this particular test. Tests which may diagnose a cancer based on microRNAs isolated from blood samples, and are currently under development, should have wider applicability, although this may be at a rather late stage of cancer.

Asuragen is a private company and it has been therefore more difficult for me to follow their progress. The fact that they beat the publicly held Rosetta Genomics and Exiqon in bringing the first microRNA diagnostic to market is likely based on their heritage of having been spun-out from the RNA research reagents company Ambion (now an Applied Biosystems subsidiary), therefore giving them prime access to very relevant technologies and know-how. The fact that they operate a CLIA-certified laboratory, of course, may be another significant efficiency giving them an advantage over its competitors. Ultimately, however, it would appear that the commercial success will depend on their ability to make the test widely available through larger diagnostics distribution partners. Alternatively, microRNA diagnostics that are tied to certain drugs, such as Rosetta’s squamous versus non-squamous non-small cell lung cancer (NSCLC) Dx that ensures that Genentech’s Avastin is not used for squamous NSCLC, could benefit from the marketing reach of large therapeutics partners.

At any rate, the fact small RNAs are about to have a real clinical impact less than a decade after their widespread occurrence in biology was first recognized, is to be celebrated and indicates that their small size and stability, and their biological involvement in disease makes them a very promising class for molecular diagnostics.

RNAi Therapeutics Investment Tracker Update

Following today’s announcement by Protiva and Tekmira, I was finally able to face the reality of the plunging stock market, and updated the investment tracker. Due to the spin-out of RXi out of CytRx, I have liquidated as of today the CytRx part of the deal and reinvested the proceeds into RXi so that there are now 40.85 shares in the portfolio purchased at an adjusted share price of $12.24. Other positions were left unchanged, although progress was noted for Nastech and Rosetta Genomics.

Nastech has successfully appointed a scientific advisory board for mdRNA, collecting Nobel laureates as if they were stamps and suited for their RNAi delivery efforts. It is now critical to build on this with a successful fund-raising round and hopefully a financial separation between the nasal delivery and RNAi Therapeutics businesses. I do understand that there are overlaps, but experience has shown that exposing RNAi Therapeutics to the risk of an unrelated technology has hurt RNAi Therapeutics development efforts rather than helped it. Also, the meroduplex poster at the Keystone meeting did not make much sense to me as the whole idea is based on the premise of circumventing Alnylam’s IP no matter whether it makes sense scientifically or not. I’d rather see a company focus on delivery and license the target rights accordingly, than a company trying to re-invent the wheel and consequently making drug development for themselves even more difficult than it already is.

Rosetta Genomics has impressed me at the Keystone conference by their presence and breadth of science. The RNAi/microRNA world is watching them as they prepare the launch of their first microRNA diagnostics this year.

Day 2 and 3 of Keystone RNAi Conference

The Keystone conference kept me kind of busy, so I did not find the time to summarize what’s been happening here in the mountains up Vancouver, so here only a general impression on where the field seems to be heading and some highlights from the abstracts.

David Bartel (MIT) started off the second day of the conference. Well known for his groundbreaking work on microRNA discovery and microRNA target prediction work, he usually has two or three biological short stories to share that are well done and insightful. Same this time. One had to do with the technical challenge of assessing the genome-wide impact on protein expression by a given microRNA. While transcriptional profiling is a well-established and affordable method to measure changes in mRNA levels (RNA that gets translated into proteins), because microRNAs were initially believed to regulate gene expression largely by inhibiting translation without changing RNA levels, a lot of the real targets (according to Bartel’s own studies about 100-200 per microRNA) may have been missed by just looking at transcript levels (note: siRNAs largely regulate their genes by destroying the mRNA, so mRNA quantitation is a reasonable way of measuring target knockdown).

Like Klaus Rajewski (Berlin) who presented tonight, Bartel’s group compared the transcriptional impact of a microRNA by gene expression microarray and compared that to a less well known method of quantitatively measuring genome-wide changes in protein levels, SILAC. SILAC involves the incubation of cells in the presence of light (e.g. control) versus heavy (e.g. treatment) isotope media. When added at the time of the microRNA addition, newly synthesized proteins will incorporate these isotopes. If an mRNA for a given protein had been targeted by a microRNA less of that protein would be made. Cell lysates are then prepared and mixed (control and experiment) and the entire protein content analyzed by mass-spectrometry. Although the peptide signature of the mass-spec for a given protein is essentially unchanged, the incorporation of the heavy isotope would cause the profile to slightly shift for the sample grown in the heavy media, so both treatments can be compared with the relative intensity of the corresponding peptide signals indicative of microRNA regulation (say for a microRNA target the peak would be only 60% of control, meaning a 40% knockdown).

After showing that most of the changes can be bioinformatically accounted for by microRNA regulation, thus validating the technique, both Bartel and Rajewski essentially came to the same conclusions. One is that most regulated genes change both in mRNA and protein content, with the translational inhibition only accounting for a small part of microRNA regulation. This is important since this adds to the validity of assessing off-targeting by transcriptional profiling. The other good news is that most of the changes by microRNAs, the mechanism that largely accounts for RNAi Therapeutic off-targeting, are rather subtle, less than 2-fold in most cases, thereby lowering the side-effect risk through off-targeting.

Unlike previous RNAi Keystone conferences that placed more emphasis on basic principles and mechanisms, the first 3 days were dominated by high-throughput technologies. Even more so than SILAC, deep-sequencing of small RNAs cannot be avoided. It is now possible to obtain millions of sequence reads from a single sequencing reaction, mostly to discover new populations of small RNAs, but also with a trend towards quantitating them by counting the sequence reads.

Other presentations made use of more ancient transcript analysis method, the microarray, but that does not mean with less biological insight. Tom Gingeras from Affymetrix, e.g. looked at the complexity of RNAs found in human cells by microarray and cloning, and one of his observations was that a given gene locus, including those coding for proteins, often harbor multiple overlapping transcripts. That poses the challenge that even though a gene may have been well validated as an RNAi Therapeutic target, one has to make sure that the right mRNA(s) is targeted to avoid unpleasant surprises. This may be even more so important when screening the genome with siRNAs for gene discovery purposes.

Dinshaw Patel (New York) reported on the molecular structure of an Argonaute protein in archaebacteria. This work shows how the guide strand nucleic acid is bound and also suggests how it may recognize and bind its targets. This may add to our understanding of what makes for an efficient siRNA and offers the prospect for thermodynamically optimized siRNA designs. It may also inform us what types of siRNA modifications may be optimal. For example, many of the protein-guide strand interactions are mediated by Argonaute amino acid side-chains making contact in a non-sequence specific manner to the phosphate backbone of the guide, and one would probably want to avoid disturbing this interaction too much. The structure also suggests that there is quite some spatial flexibility in the 3’ end of the guide RNA which may explain why microRNAs normally tolerate 3’ mismatches with their target RNA. How about then siRNAs which are bulky at their 3’ ends such that the spatial flexibility was reduced to enforce target specificity? It certainly will be exciting to watch the impact of RNAi structural biology on the design of future siRNAs.

Similar improvements in efficacy and specificity may come from studying the function of Argonautes in humans (Argonautes are the effector proteins of RNAi). There are 4 human Argonaute proteins, with Ago-2 being the one that efficiently cleaves target mRNAs using siRNAs, whereas the function of Ago1, 3, and 4 is less well known. Some believe that all four Agos may get loaded with a given siRNA and this may very well affect knockdown efficiency and influence off-targeting. Joel Belasco e.g. proposed that the differential expression pattern of the 4 Agos in the various tissues may affect just that. Consistent with that, Dirk Grimm (Heidelberg) found that the Argonautes compete with each other for hairpin-derived small RNAs with the relative level of Ago2 determining knockdown efficiency. One idea therefore would be to design siRNAs that specifically get incorporated into Ago2 while avoiding the other Agos. The molecular structure of all four human Agos would certainly be invaluable in that effort.

Some of you may be wondering whether transcriptional gene silencing (TGS, adding an siRNA to change the chromatin structure so that the resident gene is silenced at the transcriptional level, that is less RNA produced rather than destroying it by RNAi once produced) occurs in mammals and whether it may have therapeutic utility. One problem this aspect of RNAi has suffered from was poor reproducibility and controversy around some of the studies. A particularly interesting talk was therefore given by Danesh Moazed from Harvard as his studies offered the possibility that these discrepancies may have been due to differences in the chromatin context of the targeted genes, and some human gene promoters may therefore be more amenable to TGS than others. I probably would not rush investing into therapeutic TGS just yet (there is no company based on TGS that I am aware of), but I would certainly not want to write it off either. Adding to the credibility of siRNA-induced TGS in humans, a poster by New England Biolabs, a well respected vendor of reliable molecular biology reagents, reported on the identification of efficient promoter-silencing dsRNAs.

The program of the next two days of the meeting will have more on RNAi Therapeutics, but there have been some abstracts readers here may find of interest (I had to miss those, so just the highlights here from the abstract book). One was a study by Alnylam and USAMRIID where they targeted the Ebola virus (Protiva had a similar publication with the US Army in 2006) using liposomally (probably SNALP) formulated siRNAs. Encouragingly, this formulation was able to protect both mice and guinea pigs from an otherwise lethal dose of virus- in an apparently target sequence-specific manner. Moreover, viral titers were reduced when RNAi was administered not only before viral challenge, but also after. Of course, I would have loved to ask about the toxicity profile of these treatments, but hopefully this will be addressed in one of the upcoming oral presentations of this meeting.

I haven’t had a chance to read the latest miR-122 inhibition study in Nature using Santaris’ LNA technology, but a poster abstract by Santaris described the long-lasting (up to 90 days) inhibition of miR-122 with the expected LDL cholesterol lowering effects, all of this at reasonable doses of around 3mg/kg. LNAs are certainly a promising microRNA-inhibition technology and an IPO should not be too far off. Not to be outdone, Regulus Therapeutics described an improvement of their original antisense chemistry for miR-122 inhibition with an apparently 8-fold increase in potency. I assume this must have been through a phenotypic read-out (e.g. cholesterol lowering) since they now find that this chemistry inhibits, but does not destroy the microRNA.

A lesser known method of inducing RNAi developed by Cequent Pharmaceuticals in Boston, hairpins expressed in E. coli (transkingdom RNAi/tkRNAi), is slowly getting ready to enter the clinic within the next year. In their initial program, they will orally administer tkRNAi bacteria targeting beta-catenin for the treatment of familial adenomatous polyposis. IND-enabling studies are under way.

Lastly, a poster from Rosetta Genomics illustrated the potential of microRNA diagnostics beyond cancer by detecting changes of microRNAs in the body fluid that reflected a disease state.

The Risk of Rushing RNAi Therapeutics into the Clinic

RNAi has always caught on very fast. It took only nine years for the Nobel Committee to recognize the importance of RNAi in medical biology and award The Prize for its discovery, and only 6 years following the discovery that siRNAs induce RNAi in mammalian cells by Tuschl to become an indispensable tool in the basic and applied studies of human gene function. Equally astounding is the fact that there are now close to 10 RNAi-based therapeutics that have entered the clinic since.

I have extensively described here before why I think RNAi has the potential to be the next great drug development engine, including the prospect of faster development timelines due to straight-forward mechanism of action and platform reproducibility. However, in the wake of Alnylam’s Q3 conference call announcing an insignificant delay in their RSV program, but a more open-ended delay in their liver programs, what I would like to do today is to point out the dangers of rushing RNAi Therapeutics into the clinic mainly borne out of the tension that exists between applying the best and safest science and satisfying investor demand for gushing clinical pipelines.

From the clinical perspective the ultimate danger is obvious: putting trial participants at risk, and disappointing patients’ expectations for a cure of their disease. From the perspective of running an early-stage biotech business that needs to raise money fairly regularly, the issues easily become more complicated. Although I admire the honesty and scientific intent that underlie statements like that by Nastech that one should not expect RNAi Therapeutics from your company until another 15 years, it certainly won’t capture the imagination of Wall Street. The easy way would be therefore to set your bar a little bit lower and signal to your potential investors that you deserve more money since you’ve been able to put so many drugs into the clinic in such a short period of time. A sophisticated biotech investor would know that these companies can be a good investment, although you do not necessarily want to stick it out until the Day of Reckoning comes.

The danger to the field of RNAi Therapeutics is therefore that as some of these rushed candidates come to a stage where they have to prove their safety and efficacy in large-scale clinical trials, a good number of them will fail, essentially because some of the Best Practices were not followed, including addressing cytokine induction issues, off-targeting profiles, RNAi delivery, and pre-clinical safety and efficacy studies that ideally include non-human primates.

Acuity Pharmaceuticals (now part of Opko Health) dazzled everybody when they came out of nowhere and can now claim to have been the first to put an RNAi candidate (for wet AMD) into the clinic. Unless they have changed the composition of their drug since study initiation, Cand5 appears to be an unmodified siRNA injected straight into the eye. This alone makes me wonder whether an optimized compound has been put into the clinic, and I have more confidence in a program run by Allergan and Sirna Therapeutics (Merck) targeting the same pathway for wet AMD, but with a modified siRNA formulation intended for slow release.

SiRNAs that induce cytokine responses may also have a number of additional biological properties, some of them even potentially beneficial for the disease at hand. Gunther Hartmann from Bonn, a scientist with a cytokine angle on oligonucleotide therapeutics, has even proposed at the recent OTS meeting to purposefully combine the immunostimulatory potential of RNAs (isRNA) with siRNA design. Cancer and infectious disease may be good areas to test this concept as isRNAs are thought to help the immune system in fighting related these diseases.

There has been similar discussion whether there would indeed be any harm if an RNAi therapeutic targeting the Hepatitis C Virus (HCV) had some concomitant interferon response. Isn’t interferon (and RNAi) nature’s first answer to viral infections and the mainstay of current HCV treatment regimens anyway? Similar arguments may also apply to RSV.

The fact that Alnylam is now focusing RSV-01 on adult populations makes me therefore wonder whether this was driven at least in part due to concern that the tender infant respiratory system may be more prone to overreact to a potentially immunogenic siRNA molecule than a lung hardened by years of air pollution. This siRNA is probably unmodified as it was this June that the first Alnylam compounds using ISIS modification patents moved into IND-enabling studies. Being unmodified from a pharmacokinetic perspective may not be that bad or even desirable in RSV, as RSV is an acute infection and long drug exposure may therefore have the potential to do more harm than good.

I should emphasise, however, that the early rodent RSV studies that form the basis of Alnylam’s RSV-01 and which have supposedly been replicated by the company, demonstrated sequence-specific antiviral activities. Furthermore, from Alnylam’s presentations one can assume that RSV-01 was carefully screened for cytokine induction in a number of human cell lines and animal models. I should add as well that the slight delay of the RSV experimental infection model studies is not the result of any of these considerations, but more simply reflects the fact that finding volunteers to be infected with a virus that gives you flu-like symptoms and requires you to be locked away from the outside world for a couple of weeks, is not that easy. However, 74 of the 88 subjects, I suppose mostly students, have already been recruited and we should hear top-line data early next year.

Alnylam’s conservative approach to drug development is further demonstrated by their delay of filing INDs for their liver programs, for hypercholesterolemia and liver cancer. While there is no doubt that with current systemic delivery capabilities it is possible to achieve potent gene knockdown in the liver, the safety and dose-response data so far would explain Alnylam’s caution into committing to a particular formulation by year-end as originally guided. Instead, I agree with their assessment that with new chemistries coming online, such as MIT’s lipidoids which formed the basis of the recent microRNA saturation data in Nature, it is wise to keep testing all of to find the formulations that offer the best therapeutic index. It would not be the first time that a drug for treating heart disease would fail in a large-scale trial because of unacceptable side-effects seen in a handful of participants. For what it’s worth and mindful of the business considerations about demonstrating human proof-of-concept of an RNAi Therapeutics with the hypercholesterolemia program, I wonder whether Alnylam should not go first with liver cancer anyway.

Needless to say, this cautious, data-driven approach not only benefits Alnylam the Science, but also Alnylam the Business. The importance of their scientific credibility through publications and conference presentations cannot be underestimated when it comes to their ability to execute on their business development goals, mainly in the form of lucrative license deals and access to enabling technologies. With a cash position of $468M, Alnylam is in a stronger position than ever to focus on the long-term success of the company and its shareholders.



Rosetta Genomics on Track to Bring the First Clinical RNAi-related Product to Market

Almost unnoticed in the microRNA diagnostics space, Rosetta Genomics reported this week that it had completed the pre-validation phase for its first microRNA diagnostic product scheduled to come into the clinic in the first half of next year. It would be exciting to see the first RNAi-related product have a direct clinical impact and, if successful, will fund Rosetta’s microRNA diagnostics and therapeutics programs with minimal shareholder dilution. The microRNA diagnostic is designed to differentiate between squamous and non-squamous lung cancer which is not always possible to tell under the microscope and an area of particular importance now that Genentech’s VEGF-targeting MAb Avastin showed life-threatening side-effects particularly in subjects with squamous cell cancer.

While RNAi Therapeutics has attracted most of the RNAi attention, microRNA-based diagnostics are set to become the first commercial success of RNAi-related products in the clinic. Their differential expression, scalability, and, equally important, potential relative stability advantages compared to protein and larger mRNA biomarkers means that microRNAs have the potential to become the biomarker platform of choice. The (near) future should tell.

Has Rosetta Found the Cornerstone to Corporate Success?

Last week’s formation of Regulus Therapeutics should give a boost to the whole field of microRNA-based therapeutics as it lends credibility to microRNAs as a new drug development and diagnostics platform. Part of this boost should come in the form of funding from larger pharmaceutical and diagnostics entities for companies with a credible and well-developed microRNA IP estate.

I would therefore like to take a closer look now at Rosetta Genomics, next to Regulus arguably the only other major pure-play microRNA-focussed company. Rosetta has pleasantly surprised me by assembling a strong IP portfolio, which it has then followed up with a series of well-designed corporate and academic partnerships. This is complemented by a growing tool-box allowing for clinically-relevant extraction, detection and measurement of microRNAs. Like other players in this field, Rosetta believes that given the emerging importance of microRNAs in gene regulation, these molecules would also be involved in human disease so that they could be both harnessed for clinical diagnostics and therapeutics.

Rosetta is an Israel-based company, founded on the discovery and patenting of human microRNAs using high-throughput computing and bio-technologies (2005 Nature Genetics study). In the wake of the Human Genome and other sequencing projects, the founders of Rosetta hypothesised that the key to human complexity was not due to an increased number of genes, but at least partly due to the emergence of primate- and even human-specific microRNAs, and their search for new microRNAs consequently accommodated that notion. This was against the mainstream of most microRNA discovery efforts then which heavily relied on the notion of biological conservation, and Rosetta would be able to detect a number of microRNAs that had been missed.

Indeed, their hypothesis was supported by their 2005 Nature Genetics paper, almost doubling the number of sequenced human microRNAs at that time (adding 89 microRNAs), a number of them not conserved beyond primates. Based on partly theoretical considerations, predictions as to the total number of microRNAs were also revised upwards from initial estimates in the field of around 250 to well over 800. These efforts have resulted in patent applications exceeding 500,000 pages, probably using the same computing power used for predicting microRNAs.

I should add, however, that most of these non-conserved microRNAs were restricted to 2 clusters in the genome and should therefore be of less diagnostic value as would be expected for an equal number of more randomly distributed microRNAs. Furthermore, most of the previously cloned microRNA, particularly those by Thomas Tuschl, licensed exclusively for therapeutics use to the parent companies of Regulus, Alnylam and ISIS, should be amongst the biologically most important microRNAs simply based on their higher expression levels (the reason why they were detected by cloning in the first place).

At that point, I thought just another publication based on bioinformatics that was showing that the complexity of microRNAs may be higher than initially thought. Also, their theoretical approach and computer-driven technologies made me wonder whether this would ever develop into a meaningful hands-on biotechnology operation.

Rosetta took a number of steps to change this perception. First, it has gained access, at least for diagnostic use, to the large majority of human microRNAs through licensing agreements, most importantly with the Max-Planck Institutes and Rockefeller. Next, similar to what Alnylam has done, they have come out with a number of high-quality, peer-reviewed publications, ranging from microRNA detection technologies to the functional elucidation of certain disease-associated microRNAs. Partly, this was done through academic collaborations which allows them to stay product focussed and capitalise on opportunities should they arise from discoveries in microRNA research. Other collaborations with corporate and clinical partners have given them access to relevant technologies such as one with ISIS for the therapeutic targeting of microRNAs using antisense technology, and clinical specimens from hospitals which will be used to test their diagnostics.

How they were able to orchestrate this transformation is not clear to me and quite impressive, but looking at the line-up of illustrious early investors and SAB (scientific advisory board), populated with Nobel Laureates and the likes of Robert Langer (also on Alnylam’s SAB), suggests that they have enough influence to get the attention of key audiences. The expansion of their activities in the US should further nurture current and future partnerships and attract new investors.

These investors may be attracted by Rosetta’s first issuances of microRNA patents and its strategy to use early revenues from their more mature microRNA diagnostics efforts to fund the potentially more lucrative area of microRNA-based therapeutics on quite attractive financial terms. It is their aggressive goal to have 3 microRNA diagnostics products on the markets by the end of next year, with their most advanced program being for the classification of Cancer of Unknown Primary (CUP) where the goal is to identify the original tissue from which a cancer has spread. A recent presentation at the AACR cancer meeting suggests that this can be achieved with 85% accuracy by profiling 19 microRNAs. Their initial therapeutic pipeline, meanwhile, focuses, similar to Regulus, on diseases of the liver, such as liver cancer and HCV infection. This is done in collaboration with ISIS Pharmaceuticals, and it will be interesting to see how the recent formation of Regulus will affect this relationship.

After a difficult IPO and little attention from Wall Street, the time is ripe for Rosetta and Regulus to lead the charge in translating the important biology of microRNAs into medical use.