Hepcidin Agents Set to Improve Polycythemia Vera Care

Protagonist Therapeutics earlier this month reported positive results from its phase III VERIFY study of hepcidin mimetic rusfertide for the treatment of polycythemia vera (PV).  This marks an important milestone in bettering the care of PV patients as it showed a reduction in the need for phlebotomies that, importantly, was further accompanied by a measurable increase in quality of life. Notably, this did not come at the cost of a greater risk of developing cancer and other side effects such as fatigue that current standard of care agents suffer from.

Subsequent to the release of the VERIFY results, Ionis Pharmaceuticals licensed global rights to sapablursen to Japanese Ono Pharmaceuticals for $280M in upfront.  

Mechanism of action

Similar to synthetic peptide rusfertide, the RNaseH antisense sapablursen aims to increase hepcidin pathway activity by facilitating its  release from the liver.  This can be achieved by knocking down its negative regulator TMPRSS6.  As a master regulator of global iron uptake, storage, and dynamics in the body, hepcidin suppresses the overproduction of red blood cells (erythrocytosis) by restricting iron supply to the bone marrow.  It is the overabundance of red blood cells in circulation and subsequent viscosity that leads to an increased risk of thromboembolic events.  Night sweats, abdominal discomfort, and bone pain are some of the other consequences people with PV suffer from.

The expected life expectancy from diagnosis, typically around the age of 60, is about 20 years.  In about 10-15% of cases, PV progresses to myelofibrosis which carries a poorer prognosis.

Current standard of care

The first-line treatment for PV is ‘blood thinning’ aspirin in addition to bloodletting (phlebotomy) in a procedure that is essentially the same as when you donate blood.  The goal here is to get the fraction that red blood cell occupy in the blood to below 45%.  This is considered to reduce the risk of thromboembolism by 4 fold compared to having a hematocrit value of 45-50%.  The main side effects from phlebotomies is fatigue and general iron deficiency.

When phlebotomy is not enough, or when you are above 60, cytoreductive therapy is indicated.  The typical reason for red blood cell overproliferation in PV is an acquired mutation in the JAK2 gene (V617F)  in hematopoietic cells leading to increased cytokine signaling.  Blood cell lineages other than the erythropoetic one may also be affected.  Second-line agents (used in combination with bloodletting) aim to inhibit subsequent cellular proliferation.

Unfortunately, second-line agents are generally blunt instruments that carry a lot of safety and tolerability baggage.  

First off is hyroxyurea which is, hold on, a DNA synthesis and repair inhibitor and, unsurprisingly is recognized to cause cancer, especially non-melanoma skin cancer.  Add to this the nausea and immune dysfunctions to mention only a few of the other side effects.  I get it: small molecule and cheap, but give me a safer, alternative medicine (and since we are at it, HU is a reminder of all the widely described carcinogenic small molecule drugs and we are agonizing about genome editing agents with mutation rates well below natural sunlight). 

Next is interferon.  Anybody following the hepatitis B virus treatment field knows that this is a very poorly tolerated agent leading  to depression and flu-like symptoms causing patients to frequently stop taking the medication.

Ruxolitinib, a JAK2 inhibitor, is certainly an advance in the cytoreductive approach in PV as it targets the root cause: JAK2 activity.  This, however, also means an increase in the risk of infections (due to suppression of immune cell lineages) and, once again, non-melanoma skin cancer.  Approved for myelofibrosis already, it will be important to see whether its use in PV can also inhibit the progression to myelofibrosis.

Role of hepcidin agents

Due to the safety and tolerability issues noted above, the hepcidin pathway agents should be well positioned to grab a major share of the second-line treatment market.  In addition to not showing an increased rusfertide-related cancer risk or other major safety issues, VERIFY demonstrated that patients actually felt better on the drug.

In some patients, weekly subQ injections eliminated the need for phlebotomies altogether as more than 76.9% on the drug did not qualify for it during weeks 20-32 compared to  32.9% on placebo.  72.8% did not undergo a phlebotomy for the entirety of the primary observation period of the study (week 0-32) compared to only 21.9% on placebo.  

Importantly, the ~300 study participants could be on cytoreductive background therapy.  This may also explain that the mean number of phlebotomies during weeks 0 to 32 for those on placebo was just 1.8, i.e. in line with a regular blood donor.  Adding rusfertide reduced this to 0.5.  

 

PK/PD comparison of hepcidin agents

In addition to the difference of mimicking hepcidin versus inhibiting an inhibitor of hepcidin, another important differentiator is the PK/PD profile of the two approaches differ.  Since peptides typically do not last long in circulation, rusfertide needs to be given weekly with more than 10x differences in peak-to-trough levels.  By contrast, both the Ionis antisense (sapablursen) and Silence Therapeutics SLN124 (divesiran) RNAi TMPRSS6 knockdown agents lead to sustained 3-5 fold increases in endogenous hepcidin depending on dose and dose frequency.

In a study in PV patients, SLN124 led to a more than 10x reduction in phlebotomy frequency compared to the run-in period, although this difference may be more moderate in a placebo-controlled study similar to the Protagonist experience.  In any case, my base case is that efficacy in terms of phlebotomy frequency will turn out to be similar between the two approaches with the more sustained, physiological increase in endogenous hepcidin possibly paying dividends over the longer term.  The reduced drug administration frequency (monthly subQ likely for sapablursen, q6w currently for SLN124) would also favor the oligonucleotide options.

Ionis has been more secretive about the performance of IONS-TMPRSS6 in PV.  They did, however, disclose in an investor presentation that during the partnering process, Ono Pharmaceuticals and other competing companies got to see those data. Based on comparable hepcidin elevations in human volunteer studies, I would expect phlebotomy and other efficacy endpoints to be roughly on par with what Silence Therapeutics has seen, although the 9mg/kg cohort with SLN124 could set a new benchmark if confirmed in a larger study.

Additional Market considerations

There is considerable interest in developing next-generation PV therapeutics.  This is also illustrated by recent deal activity in the space.  In January 2024, Takeda Pharmaceuticals paid $300M upfront to Protagonist for 50:50 US co-development and co-commercialization rights and exclusive ex-US rights following the successful completion of phase II studies.  At the time, rusfertide peak sales were projected to be in the $1-2B range.

This week, another Japanese pharmaceutical company, Ono, obtained full rights to sapablursen from Ionis for $280M in upfront following full enrolment of a PV phase II study, a deal that was likely informed by the rusfertide results.  Though enhanced milestone payments compared to the Protagonist-Takeda deal may somewhat compensate for the lower upfront consideration, the deal indicates that the estimates for the market potential for the hepcidin entrants either have come down or that this market is now expected to be divided up between more players than initially envisioned.

Clearly, the US, with a patient population of 100-150,000, will be the major source of expected profits.  Similar to the hereditary angioedema (HAE) space, similar efficacy, but much better safety, tolerability, and convenience of the new HAE therapeutics have grown that into a multi-billion dollar market despite the availability of cheap alternatives like androgens and a small patient pool of at most 10,000.  

Androgens, however, are still widely used outside the US, even in wealthy countries like Singapore, and unlike HAE, PV is largely diagnosed in older people.  This means that reducing the number of annual phlebotomies by 2 will unlikely justify a $200,000 price tag.  To justify that, hepcidin pathway agents need to have robust phlebotomy-lowering activity in the absence of any other current second-line agents (remains to be seen in the full VERIFY dataset) in addition to demonstrating improved measures of well-being as was demonstrated in VERIFY.  

Disclosure: SLN124 is the core asset of Silence Therapeutics of which I currently own shares.

Reconsidering RNA Editing for Alpha-1-Antitrypsin Disease

Alpha-1-antitrypsin (AAT) is the lead program in the RNA Editing pipeline with Wave Life Sciences recently licensing its candidate to GSK.  It is safe to assume that a number of other companies are working on similarly developing RNA Editing drugs in the AAT area as well.  Developments in the competitive environment using other platforms such as gene knockdown (RNAi, ASO) and genome editing are therefore of high interest.

Arrowhead Pharmaceuticals SEQUOIA data

This week, Arrowhead Pharmaceuticals and partner Takeda revealed that its RNAi candidate for alpha-1-antitrypsin-related liver disease worked as intended in the SEQUOIA phase II study and over time should translate into a measurable benefit in terms of developing severe liver disease.

After 52 weeks of treatment, mutant Z-AAT was knocked down by a solid -94%.  This in turn led to a 2/3 decrease in the more inert aggregated form of alpha-1-antitrypsin.  It is the aggregated AAT that is thought to cause cellular stress, followed by a cycle of apoptosis and hepatocyte regeneration, ultimately leading to inflammation and fibrosis, if not liver failure in ~20% of subjects homozygous for the Z-allele of alpha-1-antitrypin.  

Indeed, ARO-AAT/TAK-999 achieved a striking benefit of reducing portal inflammation (see above graph) which should be highly predictive of a benefit on liver fibrosis progression.  Although a high 50% of trial subjects on ARO-AAT experienced a reduction in fibrosis, this was not statistically significant due to small patient numbers.  A larger and longer (2-4 years) registrational study is therefore planned to confirm the benefit and gain regulatory approval.

RNAi unsurpassed in reducing Z-AAT, but RNA Editing may be more elegant

If the degree of reducing the insulting Z-AAT was all that mattered, RNAi would be difficult to beat. ADAR RNA Editing and genome editing for example would have to overcome the limitation that target sequences are limited to a very specific area around the mutation whereas RNAi has the entire mRNA to play with.

But looking more closely, the name of the game is actually inhibiting aggregation.  It is now that I increasingly appreciate the elegance and power of the RNA Editing approach   which fundamentally rests on the genetic observation that heterozygous carriers of alpha-1-antitrypsin disease have a much reduced risk of developing related liver disease, if an increased risk at all.  These people carry one 'Z' allele and one normal ‘M’ allele. 

I had not paid much attention to this, thinking that mechanistically this is simply due to a concentration effect of 50% less Z-AAT polymerizing less well and having a protective genotype that manifests after decades of life does not necessarily mean that converting a patient already suffering from liver disease to such a genotype will necessarily translate to the fastest possible treatment benefit.  RNAi with its highly potent Z-AAT reduction may be faster.

It is now that it dawns on me that there is likely more to the MZ genotype benefit.  Looking at the Wave Life Sciences mouse preclinical data on its RNA Editing candidate, it always irritated me that whereas the mRNA editing efficiency was ~50%, the increase in circulating AAT was 7x.  Since only ~15% of Z-AAT normally gets out of the liver, this basically means that the 50% of M-AAT allows essentially ALL of the AAT, including Z-AAT to get out of the liver.  This is consistent with the ratio of M-AAT/Z-AAT in circulation reflecting the 50% mRNA editing efficiency in hepatocytes.

It therefore appears that the M-AAT (and potentially non-wildtype variants generated by RNA Editing) functions to poison the Z-AAT aggregation chain reaction, keeps Z-AAT in solution and fit for secretion into circulation.  What is more, unlike RNAi, this has the additional benefit of also addressing the lung manifestations due to insufficient levels of circulating AAT and for which alpha-1-antitrypsin disease is better known.  RNAi by contrast may have to rely on other developments in improving the management of alpha-1 lung disease as it reduces circulating AAT even further.

In light of the above, as a shareholder I am now changing my mind and support ProQR with its industry-leading IP and know-how to enter the exciting alpha-1 race to generate a best-in-class RNA Editing drug.  We should soon find out when ProQR will reveal its line-up of initial pipeline candidates.

Wave Rides Coattails of Ionis, Strikes CNS Deal with Takeda

Today, Wave announced the licensing of their (stereopure) antisense technology to Japanese Big Pharma Takeda for their application in the central nervous system (CNS).  In return for $110M in upfront cash, a $60M equity investment and other biobuck goodies, Takeda receives an option to co-develop/commercialize ASO candidates for the treatment of Huntington’s Disease (HD), Amyotrophic Lateral Sclerosis (ALS), and type III Spinocerebellar Ataxia (SCA3).  Takeda also receives opt-in right to additional preclinical programs.

This deal has clearly been driven by the outstanding data gathered by rival Ionis and its corporate partner Biogen in applying phosphorothioate antisense chemistry for diseases of the CNS.  This not only includes the remarkable efficacy and commercial success seen with splice-skipping oligo Spinraza for spinal muscular atrophy (SMA), but also preclinical knockdown and biodistribution data from many other CNS programs. 

Also of note, Ionis and Roche disclosed last December statistically significant knockdown of huntingtin in people with HD, the same indication as Wave’s lead neurology program which has entered clinical development.  Important additional color for the Ionis HD candidate, especially relating to the actual depth of target knockdown is to be presented  at the upcoming CHDI conference at the end of this month.

To wit, the efficacy of exon skipper Spinraza relied on gain-of-function where minor (say 20%) target engagement may already translate into significant clinical benefit.  Most other programs, however, aim at inhibiting a disease-causing molecule from being made.  Here, you may want more like something of the order of 50%+ target engagement. 

Another wrinkle is that the target cells in the CNS will differ from indication to indication whilst antisense efficacy is not homogeneous throughout the CNS, so the SMA and HD program data will not have de-risked all the indications.   

Nevertheless, it is crystal clear that phoshorothioate oligos hold tremendous value for the many diseases of the CNS of high unmet medical need for which the industry is more and more relying on gene-targeted approaches after years of failures with small molecules.  And kudos to Wave for retaining substantial commercial value to the licensed programs.  

So thank you, Ionis, for making it exceptionally easy for them!

A Sign That Big Pharma Could Recognize the Low-Hanging RNAi Therapeutics Fruits

It was with much amusement and head-shaking disbelief that I read the Li et al. paper oncancer RNAi Therapeutics  development from Abbott.   The amusement stemmed from the fact that in the paper, the authors had come to the obvious conclusion: current technologies should allow you to develop real-world therapeutics based on the RNAi platform if only you judiciously combine the delivery platform with the right target and indication.  Duh…

As such, Abbott is representative of the various Big Pharma companies that guttered in-house RNAi Therapeutics development as they chose to only see the challenges instead of realizing the obvious opportunities.  Even those still in the game like Merck have long liked to go around and teach everyone how super-diligent, but super-slow their RNAi Therapeutics game strategy was. 

As RNAi Therapeutics have created market values at lightning speed (Alnylam now at a market cap of $3.5 billion), not based on just hype, but based on paths well-trodden by orphan drug companies, I expect more and more Big Pharmas to re-think their strategies.  Maybe even listen to this blogger who has always advocated a pipeline strategy that is based on where your delivery technologies can go to, instead of the traditional cart-before-the-ox-I-want-the-next-blockbuster-pill wishful thinking by people who may have risen to the corporate tops in companies like Coca Cola.
  

C’mon scientists from Merck, Novartis, and Takeda.  Inside yourself is an innovator that finally wants to see how your technology performs in humans.  Instead of just focusing on what could go wrong, don’t you also have an obligation to address diseases of high unmet medical need? And if not you, then who is going to transform your organization into a dynamic science-driven one that you can identify with as a scientist?  On a more practical level, I cannot see how many of you will be with your present employer in 2-3 years if you don’t have the goods to show.  Look at what happened to your peers from AstraZeneca whose last job it was to look for partnership in the more innovative pure-play RNA Therapeutics space before they were given the boot. 

The Time for the U(nusual)siRNA Strategy Has Come

As Tekmira and Arrowhead Research will unveil their next RNAi Therapeutics development candidates later this year, an interesting question will be whether these will involve one of their RNAi trigger options that some consider to be unencumbered by fundamental IP related to traditional designs (esp. the Baulcombe and Tuschl II IP).  These decisions could have important strategic consequences for the competitive landscape, from targets and indications to Big Pharma involvement.   

Support for freedom-to-operate claim

One of these designs is the usiRNA from Marina Biotech.  These comprise at least one ‘unlocked’ nucleic acid monomer (UNA) in the double-stranded RNA molecule.  While I have reservations about the scientifically tenuous claim (see here why) that UNAs are not to be grouped with most of the other nucleotide modifications for RNAi use because they lack an intact ribose group, usiRNAs were held to be sufficiently non-obvious and of specific utility that the USPTO issued fairly broad claims in 2012.  Moreover, Marina Biotech once commissioned an external IP lawfirm perform a freedom-to-operate analysis on usiRNA, and (surprise, surprise) came to the conclusion that, indeed, usiRNAs have FTO.

Overcoming target picking limitations

This view seems to be shared also by others in the industry. Notably, Roche RNAi (now part of Arrowhead Research) in 2009 gained access to Marina’s usiRNAs, meroduplex siRNAs, and Dicer-substrate RNAi triggers.  This came as a surprise given that Roche had spent over $300M just two years earlier to gain access to RNAi trigger IP held by Alnylam.  Given that none of the three licensed RNAi trigger forms and related IP poses any FTO threat to traditional Baulcombe-Tuschl designs, the most likely explanation for the move is that it was about allowing the company to escape the target picking limitations under the license from Alnylam.  This included the 31 targets exclusively held by Novartis, some Tekmira exclusive target picks, and some targets pursued by Alnylam that Alnylam exempted from competition.  Whether the last of Alnylam’s Big Pharma licensees, Takeda, might pursue a similar strategy is an interesting question.

Facilitating platform partnerships

When Alnylam and ISIS sued Tekmira for infringing on their RNAi trigger IP by collaborating with Bristol-Myers Squibbs on RNAi delivery, it became a priority for them to have access to or control over non-Alnylam RNAi triggers.  As a consequence, they obtained an exclusive license to Halo-Bio’s multivalent RNAi triggers (more than two strands).  Subsequently, they gained access to Marina’s usiRNAs, including the ability to sublicense.   This now puts them in the position to engage in platform partnerships with Big Pharma companies that do not have access to Alnylam IP.

The same strategy would likely also apply to Arrowhead Research with its various RNAi trigger options that it inherited from Roche, especially if Alnylam provided Roche with only product-specific sublicensing rights, if at all.  As RNAi Therapeutics enjoys a return of pharmaceutical interest, this one-stop-shop option by the two leading delivery companies could be critical to bringing new companies into the space.

And for Alnylam, these developments would not only diminish the royalty it might earn from licensing its IP, they could undermine their own product candidates, including ALN-PCSK9 (hypercholesterolemia) and ALN-AT3 (hemophilia).  Accordingly, the preclinical data strongy suggest that subcutaneous DPCs can do everything that Alnylam’s GalNAcs can do, only much more potently and with less frequent dosing. 


 

What to Expect from RNAi Therapeutics in 2013

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

Clinical results to look out for

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

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

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

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

Cool pipeline additions

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

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

Deals and Big Pharma

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

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

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

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

A Happy New Year everybody.

Tekmira Regains Control over Leading Delivery Technology

When Tekmira filed its lawsuit against Alnylam in March 2011, it found itself in an impossible position: Alnylam’s apparent mis-use of SNALP-related trade secrets not only diminished their strategic value to Tekmira, including depriving it of potential pharmaceutical partnerships, Tekmira may even not have been able to use the technology it invented.  As a result, it might have been left to die in a little cage with ‘1^st generation’ technology as its technology was making rapid progress.    

Cash and Control

Based on the disclosed terms of last night’s settlement with Alnylam (Tekmira's version here, Alnylam's version here), Tekmira got essentially all that it needed: control over its leading systemic RNAi Therapeutics delivery technology, including the contested MC3 lipids of which the IP was assigned to Tekmira, and a $65-75M payment (~$16-18M of which will go to pay outstanding legal fees).  The payment, of course, will finally allow the otherwise financially conservative company to push forward their development pipeline with interesting therapeutic candidates such as TKM-PLK1.  Notably, as part of the settlement, Tekmira obtained full ownership over this candidate which I believe addresses one of the most exciting RNAi targets in oncology. According to the Q3 financial results, also released today, TKM-PLK1 has been making good progress, including showing signs of drug activity and will advance into phase II studies next year.

Beyond the cash, the new IP licensing arrangement between the companies is at least as valuable.  Importantly, Tekmira has regained exclusive sub-licensing rights to ‘LNP intellectual property’, an incredibly important part of the settlement as before that Alnylam enjoyed such control, mainly via its rights to the Semple-Wheeler IP covering important aspects of ionizable SNALP technology.  This should open the door for Tekmira to enter into the long-expected pharmaceutical partnerships. Novartis and Takeda are here the most obvious near-term candidates for platform-type relationships.

Assuming that the new relationship is not restricted to RNAi Therapeutics, an added bonus is that the settlement could similarly pave the way for relationships in the microRNA Therapeutics space, particularly for the delivery of microRNA mimics.  Only recently, privately-held Mirna Therapeutics made headlines by raising $34.5M to fund the development of a microRNA mimic into the clinic, indicating the significant interest in this area of drug development.

Value of the Trade Secrets

Less clear is the damage to the trade secrets that were at the center of the dispute and on which much of Tekmira’s strategic advantage rested.  Numerous groups and companies have attempted home-brew liposomal RNAi trigger delivery, but only Tekmira’s technology has made it into the clinic.  Especially the ability to formulate and manufacture the particles is what set Tekmira apart from the competition.  In their press release, however, Alnylam stated their intention to use its own LNP manufacturing capabilities.  Apparently, it has already established such GMP manufacturing capability over the last year (in a separate building apparently for added suspense).  Assuming that Tekmira did not assist them in establishing such manufacturing, this indicates that the number of people with critical knowledge to the trade secrets has grown.  This can be particularly a problem in the wake of lay-offs in a place like biotech world capital Cambridge, Mass. 

Still, I assume there to be significant hurdles for other companies to replicate Tekmira’s processes, and with its liposomal experts, Tekmira should continue to lead in advancing SNALP delivery, making it the liposomal delivery partner of choice.

With cash of around $50M (excluding the $10M which are contingent on likely 2013 development milestones for ALN-VSP02 and ALN-TTR02), partnerships likely to come in due to the clarified IP situation, the $141M DoD Ebola biodefense contract (a new more potent and safer formulation will be used) and the income stream from Talon Therapeutics, Tekmira has thus emerged as the vibrant RNAi Therapeutics company it should have become 3 years ago.  Nevertheless, today's terms underline the value of Tekmira and RNAi delivery in general.  Exciting times ahead.

Silence Therapeutics Signs Lung Delivery Deal with Mystery Partner

As Tekmira is struggling to regain possession over its delivery technology from mighty Alnylam, it is foremost Silence Therapeutics' business development that is benefitting from having one of the most advanced, clinically tested, and commercially uncontested systemic delivery technologies in RNAi Therapeutics. Less than a month after closing a deal with Dutch company InteRNA under which Silence’s AtuPLEX lipoplex delivery technology will be evaluated for the delivery of microRNA cancer therapeutics, the company has just announced another delivery collaboration, this time for the related DACC delivery system. Like AtuPLEX, DACC targets vascular endothelial cells, but unlike AtuPLEX it does so with a high preference for the vascular endothelia of the lung.

Curiously, the identity of the partner was not disclosed, although it was mentioned that it was a ‘Top 10 Pharma Company’. 'Top 10 Pharma Company'....didn't Takeda just become Number 10 with the acquisition of Nycomed? Moreover, the Nycomed acquisition included a fresh COPD drug, a pulmonary disease with an inflammatory component for which the DACC delivery system could very well be useful.

You can imagine that Takeda is a bit hesitant to talk about RNAi Therapeutics, maybe having overpaid a bit for what Alnylam really sold them, but with their significant investment in RNAi already it has every incentive to get things moving while Tekmira and Alnylam are fighting it out. Maybe following this rationale, Takeda and South Korean company Samyang announced earlier this year a somewhat surprising delivery collaboration.

The press release also noted that it is the partner that will provide the RNAi triggers. This pretty much excludes Silence’s existing Big Pharma partners AstraZeneca and Dainippon Sumitomo, the latter of which is not a Top 10 Pharma anyway. On the other hand, Takeda licensed RNAi triggers from Alnylam only for the metabolic and oncology fields, something that would probably add to the apparent sensitivities. I highly doubt that Takeda will hand over another $50M to Alnylam for pulmonary.

Of course, it is always possible that RNAi Therapeutics has gone so much out of fashion that Big Pharma companies are embarrassed to be publicly associated with it. Not only that, their investors shun the word ‘Research’ like the plague.

More seriously, the data that Silence reported for the DACC system has been quite impressive. Working on a model for acute lung injury, it has demonstrated potent and persistent gene knockdown in the pulmonary vascular endothelium following a single intravenous administration. While less is known about the clinical safety profile of DACC, it can be considered somewhat de-risked by the fact that its chemistry seems to be very similar to the clinically proven AtuPLEX system (see the highly encouraging safety profile of their phase I Atu027 clinical candidate so far).

Alnylam Responds to Amended Complaint by Tekmira

Last week, Alnylam responded to the Amended Complaint by Tekmira in which Tekmira disclosed the full scope of Alnylam’s alleged misappropriation and misuse of Tekmira technology and added Alnylam Canada, aka AlCana, as Co-Defendant (related blog entry here). The alleged transgressions included abusing insights into Tekmira trade secrets that Alnylam gained as a result of their collaborator status and by hiring ex-Tekmira employees to file for a battery of patents covering Tekmira technology, also to contest royalty obligations for ‘second-generation’ LNP formulations, disclosing them to Alnylam’s Big Pharma partners to circumvent Tekmira, and breaching the manufacturing agreement by providing Tekmira formulations to Alnylam partners.

Alnylam vague in Response

In its Response, Alnylam brushed aside Tekmira’s allegations that it took unfair advantage of insights into Tekmira trade secrets by simply stating that the written agreements would speak for themselves and gave them freedom to do so and that much of Tekmira’s technology had been in the public domain anyway. In doing so, Alnylam apparently attempts to hoodwink the court by failing to mention and address the significant limitations in the various agreements between the companies regarding the use of Tekmira trade secrets. These limitations stated that any use by Alnylam of Tekmira LNP delivery trade secrets for purposes other than advancing the agreements would have to be first blessed by Tekmira.

Perhaps realizing their failure to do so, Alnylam’s main defense with regard to the MC series of lipids that it now advertises to be its own and independent of Tekmira was based on a waiver to sue that was included in the Supplemental Agreement dated July 2009 between Tekmira, Alnylam, the University of British Columbia, and Alnylam Canada. For example (Fourth Affirmative Defense):

‘Tekmira has granted Alnylam a covenant not to sue on any contention that MC3 and other alleged “MC Trade Secrets” was misappropriated in an agreement to which it is a party.’ [emphasis mine].

See also:

‘15. The Supplemental Agreement and its attachments contemplated the research that ultimately led to the discovery of MC3 and other novel lipids.” [emphasis mine]

This defense, however, fails to address Tekmira’s allegations that the broader MC trade secrets were disclosed by Tekmira to Alnylam pursuant to the Research Plan of the Tekmira Agreement which pre-dates the Supplemental Agreement (and also Consultancy Agreement between the ex-Tekmira employees and Alnylam for that matter) whereas the waiver would only apply to actions carried out pursuant to the Research Program of the Supplemental Agreement and the Consulting Agreement. This distinction may become important as ownership over the broad MC series of lipids would affect the freedom-to-operate for MC3.

Alnylam's defense that Tekmira never realized that ‘MC’ constituted a series of lipids cannot be taken seriously as a) apparently some of the inventors of MC2 did realize this to be a series by filing for the MC3 patent application soon after their firing from Tekmira, b) the nomenclature implies a series (just as KC did before that), and c) Tekmira should easily be able to prove their disclosure of MC trade secrets via emails etc.

Tekmira statement of when MC trade secrets were disclosed to Alnylam (from the Amended Complaint):

‘34. Prior to its filing of the provisional patent application disclosing and staking its claim of ownership of the MC2 compound, Tekmira confidentially disclosed the MC Trade Secrets to Alnylam pursuant to the Research Plan of the Tekmira Agreement.’ [emphasis mine]

Waiver (from the Supplemental Agreement):

’12. Waiver; Non-suit Covenant. In consideration of the foregoing, Tekmira and Protiva hereby (a) waive all prohibitions and restrictions upon [**] (and any other UBC employee involved in the Research Program who was a former Tekmira employee) and each former Tekmira employee who is subject to the provisions of an Employment Agreement arising out of, under or in connection with their former employment by Tekmira, to the extent that any activities of such former Tekmira employee are carried out pursuant to the Research Program, the Consulting Agreements or in connection with the performance of obligations or the exercise of rights under this Supplemental Agreement; and (b) covenant not to sue Alnylam, UBC, AlCana or any of the former Tekmira employees employed by AlCana or UBC, for any cause of action relating to such activities that arises out of, under or in connection with the former employment by Tekmira of such former Tekmira employees. For clarity, a failure by any party to perform its respective obligations under this Supplemental Agreement shall not entitle any other party to sue any non-breaching party. Such former Tekmira employees are intended Third Party beneficiaries of this provision.’ [emphasis mine]

Therefore, even in the unlikely event that the waiver would be judged to allow for the broad misappropriation and use of Tekmira trade secrets and applied retroactive to the effective date of the Agreement (note that even the MC3 provisional was filed before July 2009), it has no bearing on what Alnylam did with the insights into other MC-related trade secrets. Note that the broad MC patent applications were filed by Alnylam alone- consistent with the timeline provided by Tekmira. To make this point clear, the Supplemental Agreement expressly states that it does not release the parties from liabilities arising from the other agreements:

‘19. Entire Agreement. This Supplemental Agreement is the only agreement between or among Tekmira and/or Protiva, on one hand, and any of Alnylam, UBC, and/or AlCana, on the other hand, bearing directly upon the Research Program and the Consultant IP. Except as expressly stated herein, neither this Supplemental Agreement nor any discussions, proposals or negotiations with respect hereto or otherwise with respect to the Research Program will alter the terms of, or constitute a waiver or release of any party’s rights or obligations under, any of the existing agreements between or among Tekmira and/or Protiva, on one hand, and Alnylam and/or UBC, on the other hand, including without limitation the provisions of such agreements regarding the termination of such agreements and the consequences thereof.’

Alnylam Admits to Providing Delivery Formulations and Tekmira Manufacturing Know-How to Novartis and Takeda

Much of the immediate financial damage to Tekmira and their investors arises from Alnylam allegedly stealing Tekmira’s manufacturing trade secrets and violating the manufacturing agreement by providing SNALP/LNP delivery formulations to Big Pharma companies with interest in RNAi Therapeutics. In its Response, Alnylam admits that it provided delivery solutions to Novartis and Takeda. Alnylam denies, however, that Tekmira took adequate care to protect its manufacturing trade secrets which was formalized, amongst other, in the September 2008 MBR agreement which limited Alnylam’s access to Tekmira trade secrets solely for the purpose of their regulatory obligations. Overall, with the Agreement and the Konys emails it should be relatively straightforward to prove this allegation which should be a key element in assessing the financial damage suffered by Tekmira.

The Big Picture Remains Unchanged: Alnylam Intent on Marginalizing Tekmira

If anything, Alnylam’s Response further emphasizes that it has been and still is intent on marginalizing Tekmira by having the audacity to claim ownership and control over Tekmira technology and to advertise itself to be leading in SNALP technology. It's the same company that 4 years ago along with Roche had to admit defeat and seek chemistry and manufacturing help from Protiva, and just 2 years ago still seemed to be learning the ropes of LNP delivery technology (see 2009 Molecular Therapy paper). To top it off, this company now claims that Tekmira’s work, including the newly disclosed lipids, is based on the misappropriation of Alnylam LNP trade secrets.

If that were not enough, Alnylam pretends to be an advocate of Tekmira shareholder interests by casually dropping in the Response that Tekmira failed to issue a financial regulatory filing due to Alnylam’s apparent notice to Tekmira that Tekmira lacked a license to its very own rights to the Semple-Wheeler patents, as well as the ISIS patent estate under its InterfeRx license from Alnylam!

From the Response:

‘23. Consistent with this pattern, Tekmira has failed to adequately disclose the limitations of its licenses to investors. Despite the clear terms of the license agreements and notice from Alnylam that it lacked licenses to the Semple & Wheeler patent series and Isis patents, Tekmira made representation to the contrary in its public filings with the SEC and in other documents provided to investors.’

Remember that Old Tekmira originally provided Alnylam the exclusive license to its rights to Semple-Wheeler for therapeutic RNAi and microRNA applications, in return for Alnylam RNAi target picks under InterfeRx, which includes ISIS, and the use of Old Tekmira SNALP-related IP for these target picks. Obviously, events have escalated and with the apparently unilateral revocation of the licenses Alnylam management apparently wants to cause additional pressure on Tekmira's share price hoping to outlast Tekmira financially, not based on arguments. I wonder which Alnylam top executive or lawyer came up with this admittedly innovative interpretation of the companies' agreements and would not be surprised if this move was also coordinated with Alnylam's connections to the financial world.

On the other hand, Tekmira has told Alnylam that it would not release certain data with regard to the hypercholesterolemia candidate ALN-PCS, for which guidance to submit an IND in H1 2011 has likely been missed, unless Alnylam gave added assurance that it would not use such information for purposes other than the clinical trial.

Why would Alnylam have problems agreeing to this measure and is willing to miss important guidances it gave to investors and resort to desperate acts like the Semple-Wheeler and ISIS stunt? Why does Alnylam not just pay off Tekmira and tell them to go away, as this would seem to be the least costly option to them at the moment? Is it really just greed that has been driving Alnylam’s actions? I cannot believe it and instead suspect that at the root of Alnylam’s conundrum are its deals with Big Pharma in which it took in over half a billion in non-dilutive funding, much of it quite obviously based on the strength of and access to Tekmira’s SNALP technology.

Tekmira continues to advance science

Despite the legal battle with top-heavy Alnylam (ironically it is Alnylam that tells Tekmira to focus on the science), Tekmira continues to make critical advancements in refining and expanding the uses of its LNP delivery technology. Following the recent conference report that it succeeded in generating defined LNPs for respiratory and directed delivery applications and the scale up of manufacturing to 1kg batches, a patent application (WO/2011/066651) by Tekmira published last month disclosed important advances in ensuring the long-term stability and therefore quality of its formulations. In order to avoid any confusion, some of the experimental examples involved MC3 (and MC4) to make it clear that the claims cover SNALPs independent of the specific lipid used. With this, Tekmira demonstrates that it continues to stay a step ahead and provides further reasons of why pharmaceutical companies would want to partner with Tekmira in order to practice SNALP delivery.

Related blog posts:

1) Tekmira Tells Alnylam 'Enough is Enough';

2) Alnylam Responds to Tekmira's Complaint;

3) Tekmira's Amended Complaint Suggests that Alnylam's Transgressions More Severe than Suspected

Tekmira’s Amended Complaint Suggests that Alnylam’s Transgressions More Severe than Suspected

The Amended Complaint against Alnylam filed in early June by Tekmira revealed that the potential damages to the company as a result of Alnylam’s alleged transgressions may be much more severe than initially feared based on the original Complaint and their public relationship over the years.

In particular, Alnylam apparently used their insights into Tekmira’s technology, gained as a result of its collaborator status and by secretly hiring ex-Tekmira employees (in breach of non-compete agreements) to file for patents that may question Tekmira’s freedom-to-operate in the technology that it itself developed. One example concerns the MC class of lipids.

From the Amended Complaint:

‘35. After learning Tekmira’s MC Trade Secrets in the collaboration, Alnylam misused those trade secrets by, among other things, filing for patents in its own name, and without including any Tekmira inventors, on a lipid structure that was broad enough to include the MC class of cationic lipids developed by Tekmira. In so doing, Alnylam improperly claimed ownership over Tekmira’s MC Trade Secrets, including the MC class of cationic lipids, for itself.’

Even worse, Tekmira’s significant competitive advantage of being pretty much the only company that can make quality SNALP/LNP at commercial scale is threatened as regulatory demands allowed Alnylam to learn of Tekmira's LNP manufacturing know-how and trade secrets which it abused to not only make such information fair game apparently throughout the Alnylam organization, but even to disseminate it to 3rd parties such as Takeda- all despite of Tekmira's best efforts to limit such information to only a few Alnylam employees on a need-to-know basis, password protection, written agreements, and all:

From the Amended Complaint:

‘Tekmira provided the MBR for the Lead Formulation, which is one of Tekmira’s MBR Trade Secrets, to Mr. Konys and specific, identified employees within Alnylam pursuant to the terms of the September 2008 MBR Agreement. Tekmira tightly controlled access to this information, including by securing the MBR computer files with password protection in order to limit the universe of individuals within Alnylam who could gain access to the MBR Trade Secrets.’

…

‘Tekmira learned about Alnylam’s wrongful disclosure of Tekmira’s MBR [Master Batch Records] Trade Secrets to Takeda when Alnylam’s David Konys told Tekmira that Alnylam had received questions from Takeda about Tekmira’s delivery technology.

Mr. Konys forwarded Takeda’s questions and asked Tekmira to answer them. The questions included information taken directly from Tekmira’s MBR.’

In addition, Alnylam has been manufacturing LNPs for 3^rd parties, including at least Takeda and Novartis, in an alleged violation of the exclusive LNP manufacturing status of Tekmira which apparently included certain non-clinical LNP manufacturing. No wonder Tekmira investors have been waiting in vain for those sure-fire Novartis and Takeda deals and were instead diluted by about 15% in a capital raise this month. Meanwhile, Alnylam pocketed $50M in ‘technology transfer’ milestones from Takeda.

From the Amended Complaint:

‘83. On information and belief, Alnylam is manufacturing delivery formulations for at least Takeda and has also done so for another third party pharmaceutical company called Novartis. On further information and belief, the delivery technology that Alnylam is providing contains, is based upon, and derives in whole or in part from Tekmira technology, including its confidential information and trade secrets.

Alnylam’s use of Tekmira’s manufacturing and delivery technology to manufacture formulations for third parties is not authorized by the restrictions on use and disclosure in the Protiva Agreement, Tekmira Agreement, September 2008 MBR Agreement, and Manufacturing and Supply Agreement. Alnylam’s manufacturing activity also constitutes a breach of the Manufacturing Requirements provisions of the agreements, which require Alnylam to use Tekmira as its “exclusive manufacturer to Manufacture and supply its requirements” for toxicology and other non-clinical studies and clinical development, through the completion of all Phase II studies for each product licensed from Tekmira. §11.1.1, Manufacturing and Supply Agreement.’

In general, it is quite clear that Alnylam’s own, ‘independent’ LNP development efforts were in competition with that of Tekmira. This actually is nothing new as David Bumcrots lipidoid-vs-SNALP comments four years ago illustrate. However, by not only licensing Tekmira IP, but also seeking practical help in using the technology, Alnylam greatly restricted its ability to build a competing LNP technology platform as that would have been destined to collide with the collaboration agreement that protected Tekmira’s ownership over its technology during and after the collaboration. This includes that Alnylam could not develop and claim technology that would have been derived from Tekmira’s technology and benefited from Tekmira know-how and trade secrets. It won’t take much effort for an expert witness to demonstrate that ‘2^nd generation’, MC3, formulation ratios etc as claimed in patent applications by Alnylam, including its Canadian subsidiary Alnylam Canada, are all obviously derived from Tekmira technology and know-how.

The Amended Complaint further illustrates that Alnylam showed no respect for its partner. Is it because it believed that money entitled them to all of Tekmira property, to the degree that it confuses an exclusive license with actual ownership (e.g. Alnylam citing, in defense of allegations that it misappropriated MC technology, the Greene-Murray letter in which Tekmira's CEO acknowledged Alnylam's exclusive rights to MC3)? Is it because it considered Tekmira’s existence a potential weakness in its quest for RNAi Therapeutics world domination? Or is it because historic business development successes (which ironically are largely based on Tekmira's technology) made them lose touch with reality?

I’m not exactly sure, but what I do believe is that all this has been a concerted scheme to marginalize and, yes, destroy Tekmira. The fact that Alnylam has published and been claiming to have discovered that ApoE explains the preferred functional uptake of ionizable SNALPs in the liver, although this was based on confidential information provided to it by Tekmira, nicely captures that Alnylam knew no shame when it came to Tekmira. In the long-term, no matter how this litigation ends, a company that interprets Open Innovation to mean that first you evaluate, and if you like it then marginalize the inventor, will find it difficult to attract (small) biotech companies with real enabling RNAi technologies.

A word about myself and the Tekmira-Alnylam litigation

It is not surprising that there is speculation about my motives and strong language in supporting Tekmira in their litigation against Alnylam. Yes, I am a shareholder of Tekmira and have disclosed that a number of times- not that I would have to anyway. This, however, is not without reason and based on Tekmira’s critical contributions to siRNA delivery, a leadership that is continuing to this day (see e.g. nebulized LNPs or the manufacturing of quality antibody-targeted SNALPs). I have long taken exception with the way Alnylam has been treating Tekmira and have seen it getting worse. Tekmira’s Complaint therefore only confirms what I had feared some time ago, and I see no reason to mince my words and expect Tekmira to vigorously pursue this case until it regains rightful ownership over all of its technology- plus damages and more.

For discussion purposes, here the Amended Complaint.

Big Pharma Support for RNAi Therapeutics Growing

In case you have not noticed: “Big Pharma” is slowly coming back to RNAi Therapeutics. This marks a fourth phase in the delicate relationship of the small pure-play RNAi Therapeutics companies with their larger counterparts.

The relationship in the first phase (2002-5) may be characterized as one of benign neglect and certain curiosity. Sure, RNAi was a hot emerging scientific area, but Big Pharma preferred to let the small companies kick the tires and take the risk while continuing to do what they were most comfortable with: small molecules along with some monoclonal antibody work. The patent cliff still seemed like a management generation away.

In the second phase (2005-8), some pharmaceutical companies like Novartis and Merck started to see the light. It became apparent to them that as small molecules alone won’t cut it any more that a technology like RNAi Therapeutics may ideally fit into the personalized medicine paradigm of the future. Following their initial investments in the space, other companies like Roche, Pfizer, and Takeda began to worry about being left behind and looked to catch up, in some cases frantically so. The Nobel Prize added fuel to the fire and a small bubble developed where investments were often not made based on the best science. Big Pharma companies wanted to be seen as being at the fore-front of this technology and were happy to advertise their association with the technology in public.

The US real estate-triggered global financial meltdown marked the beginning of the 3^rd phase (2008-2011). If that and subsequent widespread healthcare rationing did not inflict enough pain on the pharmaceutical industry, major blockbusters were falling off the patent cliff. Investors in Big Pharma demanded much reduced R&D spending and instead share buy-backs and dividends. Ironically based on the productivity with small molecules, it was often believed that R&D per se is a money-losing proposition. It’s therefore somewhat understandable that companies like Merck and Novartis that continued to put considerable resources into RNAi Therapeutics preferred to keep this quiet. In addition to pacifying shareholders, another objective for their secretiveness was, of course, to cool down market prices for the technology. The interview with Alan Sachs in Xconomy early last year about Merck’s view of RNAi technology as a target validation technology initially was a good example of this policy.

RNAi Therapeutics did not fare well in this climate. As larger companies realized that they made some bad investments in the technologies, some probably feeling that they have been deceived by some of the pure-play companies. I believe that the blame is to be shared between Big Pharma companies too lazy to undertake not only proper IP, but also scientific due diligence, and the bad actors in the RNAi Therapeutics industry of which there were without doubt quite a few (but definitely decreasing in numbers now).

It was then especially those Big Pharma companies that got into the game relatively late and consequently with often less conviction in the technology that were the first to curtail their RNAi Therapeutics spending. The most dramatic example of this is Roche spending north of half a billion US dollars and then calling it off already after only 3 years. It may also be that even if the scientific progress was considered acceptable, having agreed to paying hundreds of millions in milestones for RNAi triggers at the pre-clinical stage made RNAi drug development not economical considering that RNAi triggers are only one part of the equation.

Unfortunately, the backlash hit the entire industry hard, including those few companies that have done the real work underlying many of the promising drug candidates that have recently started to enter the clinic.

There are, however, increasingly signs that companies like Takeda, BMS, and Genentech are willing to show support for the technology (phase 4). It must have occurred to these companies that RNAi Therapeutics has been making some progress over the last couple of years in addressing issues such as delivery, immune stimulation, and building clinical experience, all the while prices for the technology were plummeting to what I consider highly attractive price points.

It has also become clear that in terms of RNAi trigger structure and IP, Alnylam is not the only game in town any more.

From a Big Pharma perspective, this is probably the best time to invest. Pipeline productivity problems remain the same. Many of Big Pharma’s current blockbusters based on small molecules turn out to bring little or no benefit to patients and if they are honest to themselves, the future of healthcare won’t support, i.e. reimburse, me-too drugs with only little if any incremental benefit even if you can take them only once a day in pill form. I believe this will be borne out in the multiple sclerosis field where oral pills are all the rage at the moment and some analysts believe this to be the end of the incumbent treatments that are administered parenterally. In the end, medicines that stall and reverse severe diseases will win out, and for scientific reasons, targeted technologies like RNAi Therapeutics should have an edge. There had been similar concerns about technologies like monoclonal antibodies, and now cell-based therapeutic cancer vaccines, but in the end social acceptance is greatly driven by how much the industry establishment and thought leaders endorse a technology.

It is therefore critical for Big Pharma to support pure-play RNAi Therapeutics companies. All the important innovations in the field have come from the smaller companies, and if those that have developed them disappear, everybody will be worse off. While I expect Big Pharma investment to increase from now onwards, especially in light of the clinical progress that should become particularly apparent over the next couple of months, this time should be different from the 2005-8 scramble to buy a piece of RNAi Therapeutics. The focus will be more than ever on quality, and companies that have shown hands-on ability to overcome the challenges in developing viable RNAi drug candidates should be well rewarded for their contributions to the space.

Alnylam and Big Pharma: Tekmira Caught in a Tangled Web of Interests

(Notice: The following account is a largely hypothetical explanation of what is underlying Alnylam's current troubles)

The last time Alnylam expressed surprise and regret was in September 2010 when Novartis declined to exercise an option for wide, non-exclusive rights to Alnylam’s RNAi Therapeutics IP estate ('Adoption License'). Since then Alnylam has been hit with a string of other partnership setbacks and other not-so-positive news pieces. The official party line, of course, is that these are all isolated events and Big Pharma does what it does because it has to cut down on R&D that won’t generate significant revenues in the next 3-5 years. Meanwhile, the popular story line is that Big Pharma has given up on RNAi Therapeutics because of the delivery challenge.

I believe that neither of these views are correct, and instead like to propose that while it is true that delivery is a challenge, there are technologies that show great potential, and it is the fight for ownership over and access to these technologies that is at the root of the recent developments. As you’ve heard me preach over the last 3 years or so, Tekmira’s SNALP delivery technology is at the forefront of systemic delivery and has consequently become the major bone of contention as Alnylam, its partners, and Merck struggle to protect their investments in RNAi Therapeutics.

Novartis Poses Target Threat to Alnylam and Partners, but needs SNALP

In retrospect it is clear why Novartis has acted the way it did. Initially, I had thought that Novartis' target selection strategy might be uncoupled from delivery considerations and instead would focus on the industry’s hottest GPCRs and kinases. Instead, Novartis appears to have done the scientifically sensible (Big Pharma and scientifically sensible in the same sentence...must be a first in this blog) and held off with their decisions until there was more clarity which targets and indications could be addressed based on the most advanced delivery technologies. As such, I believe that Novartis has mainly picked a bunch of targets in the liver, solid cancers, and maybe a few ocular and CNS indications, too.

In the Novartis post-mortem conference call, I was surprised to learn that as part of selecting their targets, Novartis and Alnylam had conducted quite a few pre-clinical in vivo studies in anticipation of IND filings, meaning that SNALP delivery was most likely employed, and that along with the targets came rights to some of Alnylam's current, and future (!) delivery capabilities!!! This to me was a bombshell because I had believed that delivery was Alnylam’s biggest negotiating advantage in making sure that Novartis will pay the $100M exercise fee. Well, the reason for my belief was that since Alnylam liked to emphasize that the Adoption License excluded delivery, similar restrictions applied to Novartis target picks.

Note that Novartis, which only recently appears to have ramped up their RNAi-related staff to around 100 (not really what you consider a sign of their losing interest in RNAi Therapeutics), was named in the Complaint by Tekmira as a company that Alnylam might have improperly shared SNALP delivery with. It may also be of interest that the first author of a high-profile Nature Biotech paper in 2005, David Morrissey, describing the use of SNALP delivery in a mouse model of hepatitis B is now heading RNAi Therapeutics efforts at Novartis.

31 targets, exclusive, heavily focused on the liver and solid cancers…what does that leave for Alnylam and its other Big Pharma partners? Is ‘5x15’, Alnylam’s strategy launched in January, i.e. after Novartis, a reflection of Novartis having picked higher-profile targets such as hepatitis C?

So 2 months after Novartis, Roche announces that it does not view RNAi Therapeutics a sufficiently broad commercial opportunity to justify the significant operations they had going. Since Roche, like Alnylam and Novartis, were likely to have focused their efforts on liver and cancer targets as they were looking at the same delivery technologies, this comment can also be interpreted as ‘After Novartis has taken many of the targets that we were interested in, what we are left with isn't attractive enough to make our large-scale effort worthwhile. Moreover, we are contrite that Novartis got so much paying so little'. And when they licensed the liver, metabolic, and cancer fields from Alnylam for $50M each, they must have done so in view of SNALP delivery.

Soon after, or even a little bit before the 2007 alliance, Roche together with Alnylam already got underway with validating targets and moving them into clinical development. But then another snag hit: Despite of what Alnylam might have promised Roche, Tekmira’s SNALP turned out to be more difficult to replicate than they thought. This is very apparent from Roche’s Factor VII patent application which started out with lipidoids up to the mouse stage, but then adopted Tekmira’s SNALPs for the non-human primate studies. If you are from Big Pharma and reading this, it is a lesson not to be blinded by company brands, but closely look at who actually has the know-how and partner with them instead.

These frustrations first came to the fore in comments by Alnylam’s David Bumcrot in the summer of 2007 in which he proclaimed that the MIT lipidoids that Alnylam helped fund are much superior to Tekmira’s SNALP technology and will be used for their upcoming clinical programs. To boot, he added that Tekmira’s ApoB was a terrible target. But, of course, despite of Alnylam’s efforts already in 2007 to marginalize Protiva/Tekmira, both Roche and Alnylam had to admit defeat and come back to Tekmira which allowed Alnylam to file their IND for liver cancer.

All this made it clear to Roche that it needed alternative delivery options. Roche went out to look for alternative delivery technologies and in 2008 bought Mirus Bio for the Dynamic Polyconjugates (DPCs) for $125M (almost 4x Tekmira’s current market cap). This number just illustrates the value of delivery in any of Alnylam’s deals, and if you consider that Alnylam most likely passed on DPCs and is betting the house on SNALP instead, the $1B figure that Tekmira demands is very well anchored in what actual money has changed hands.

In addition to Novartis crossing Roche’s RNAi plans, another reason for Roche unhappiness could therefore be that Alnylam over-promised them in terms of what Alnylam had to offer in delivery. As Roche interacted with Tekmira, it may also have noticed that Tekmira’s views on what SNALP know-how and IP access could be gotten from Alnylam and what Roche had to come to Tekmira for strongly differed with what Alnylam might have told them. As a result, on top of the ~$300M upfront they had given to Alnylam, they now had to close a separate deal with Tekmira to actually be able to do something with that RNAi trigger IP.

Obviously, as SNALP delivery solidified its position as the industry's leading systemic delivery technology with not that many other advanced options (maybe Silence's lipoplex comes closest, but for endothelial indications), it turned out to be a bad deal for Roche.

Coming back to Novartis and SNALP delivery. In early 2009, Novartis surprisingly bailed out Marina Biotech, under the name of mdRNA then, by giving them $7.25M for kicking the tires on their ‘DiLa2’ liposomal delivery technology. This came a bit surprising to me, because I had considered Tekmira to be leading in systemic liposomal delivery. This to me indicated that Alnylam indeed is trying to keep Novartis’ RNAi ambitions in check by restricting access to delivery and this is why Novartis, knowing of the potential of liposomal delivery, took a chance with Marina.

You can easily see what pressures Alnylam might be facing from its current and former partners. It has taken over half a billion in license fees, a lot of that presumably driven by Alnylam’s claims about the maturity of and, importantly, control over SNALP delivery. The question is: Do the partners want their money back or are they insisting on their promised access to SNALP delivery?

One of these partners not mentioned so far in this story is Takeda. In 2008, Takeda paid Alnylam $100M for non-exclusive access to the metabolic and cancer fields, plus $50M in technology transfer payments, the latter of which has apparently been completed just in the nick of time to meet the guidance provided by Alnylam. In other words, Takeda paid Alnylam $150M for SNALP technology. In previous conference calls, Tekmira noted that it was working together with Takeda to sort out SNALP delivery (as Takeda and Alnylam were working on the ‘tech transfer’). Despite of Takeda’s complementary comments in yesterday’s press release, I would not be surprised if Takeda, like Roche, is quite frustrated by now over the uncertainties over SNALP access and the Novartis exclusive target picks, and you’ve got to wonder what role Takeda will play in Tekmira’s case against Alnylam.

Merck

And lest we forget, there is, of course, Merck. Once spurned by Alnylam and having invested probably over $1.5B in RNAi Therapeutics development already with hundreds working on the technology, Merck has every reason to turn the table on Alnylam. Merck's publication record also makes it clear that they harbor strong ambitions in SNALP delivery. While the details of the Tuschl II settlement under which Merck gained access to Tuschl II IP are unknown to the public, it is quite possible that Merck is satisfied with that outcome and is now focusing their attention on gaining control over the most advanced systemic delivery technology. Should it view the Tekmira litigation against Alnylam an opportunity to gain leverage over Alnylam, I would bet that they will indeed grasp at it.

Considering this tangled web of interest and the central importance of Tekmira’s technology, it is no wonder that Alnylam is scrambling to stand on its own SNALP feet. Alnylam- setting aside personal issues for a moment, the decision can’t be that hard, can it? In fact, I don’t think there is even a choice.