With the $36M fund-raising last night, Arrowhead Research
has become the 4th publicly traded RNAi Therapeutics company in short succession to cash
up for a real shot at drug development success.
The other companies are Tekmira, RXi Pharmaceuticals, and as it was made official this morning, Silence Therapeutics.
The
money will be spent on promising drug candidates in the cancer field (TKM-PLK1,
Atu027), chronic HBV (ARC520), and scarless wound healing (RXI-109) without
having to take dangerous short-cuts or partner the crown jewels prematurely. Moreover, it will help to advance critical
delivery technologies such as DPC, SNALP, and self-delivering RNAi triggers
which should provide for non-dilutive partnering opportunities without having
to entertain low-ball offers.
It is notable (and not surprising) that unlike Marina
Biotech and Benitec which so far have failed to similarly escape the financing maelstro,
Tekmira, Arrowhead and Silence all sport healthy in-house R&D operations. RXi does not have such operations- yet. However, they were critical for bringing
RXI109 into the clinic on which the company’s ~$80-90M market cap rests.
The cash infusions should also give the companies, which
among them own most of the leading platform technologies, the opportunity to
make up for the 20-30 fold gap in valuation to the likes of ISIS
Pharmaceuticals (2.3B market cap in antisense), Alnylam (1.5B market cap in RNAi), and Sarepta (1B
market cap for a phase II orphan indication). If monoclonal antibodies
are any guide, this will not play out as the winner-takes-all the public
markets have it right now.
Below is a quick rundown of the newly cashed-up crop of RNAi
Therapeutics companies for those new to the field.
Disclosure: I am
long Tekmira and Arrowhead Research.
Disclaimer:
Investments in RNAi Therapeutics carry more risks than you want to know and think
about. The following can only be a very
brief teaser for you to start your own due diligence.
Arrowhead Research: In the pursuit of
a cure for chronic HBV
Market cap: ~60-70M (of which ~$35M in cash)
Unless Arrowhead Research comes up with a compelling orphan
drug application of its technology when it will disclose its second development
program in H1 2014, investment success will hinge on the fate of ARC520. ARC520 is Arrowhead's unique attempt at a functional cure for chronic HBV that will enter clinical development shortly. I interpret last night’s
fund raising in that the IND-enabling tox studies were positive. The results of these will be critical in determining whether ARC520 can be dosed high enough to safely achieve the type
of 90% HBsAg reductions that will be required for that lofty goal.
With cash of around $35M, Arrowhead can now retain full rights to that program at least after
value-inflecting phase I proof-of-concept knockdowns have been achieved. To extend the cash runway beyond the
predicted ~2 years, Arrowhead owns the exciting Dynamic PolyConjugate delivery
technology, particularly the subcutaneous version and potential new developments
for cancer applications. DPC offers an obvious non-dilutive funding opportunity.
Having slept over the announcement of the PIPE financing which doubles the share count near multi-year lows, I believe it still was a good one in a
difficult situation. Potential partners
would have liked to exploit the financial weakness of Arrowhead and the
fast-money crowd (think Dawson and Rodman) would have liked to reap risk-free
gains from trading around a public offering.
Instead, Arrowhead seems to have found one or more significant investors
that share the vision with management. It is comforting that besides the sweet entry price, no special gifts in the form of
warrants and otherwise seemed to have been handed out. No wonder Arrowhead closed up 13% the day after the financing.
Upcoming catalysts:
- Determination of maximally tolerated dose in volunteer study with ARC520;
- - DPC partnering (always on the table);
- - Modest ALN-TTRsc results would emphasize value
of DPC (mid-2013) and may get Alnylam into play;
- - DPC data on cancer (probably H1 2013);
- - Nominating new development candidate (Q2 2014);
- - ARC520 viral
knockdown results in the Hong Kong trial (H1 2014).
Tekmira Pharmaceuticals: Quality Technology, Quality
Financial Management
Market cap: ~$70M (of which ~$40M in cash)
If you are looking for relative stability in RNAi
Therapeutics, Tekmira could be attractive.
It was its SNALP technology that enabled the current revival (with well over
$300M capital inflows in the industry in the first 4 months of this year) and
remains one of the two leading systemic delivery technologies with the value
possibly shifting towards oncology indications.
Its leading development candidate, TKM-PLK1 for solid cancers, is about
to enter phase II studies and has yielded promising dose-related evidenceof efficacy in phase I.
The company’s aerosolized LNPs could be an unanticipated
windfall for investors, although I have yet to see the all-important safety
data. Its Ebola biodefense program is
not valued much by the market, but has been an important stabilizing factor for
the company in terms of funding and represents an attractive commercial
opportunity in its own right.
Upcoming catalysts:
- - TKM-PLK1 data from the expansion cohort (H2
2013);
- - Design and initiation of phase II studies for
TKM-PLK1 (H2 2013);
- - Follow-up candidate and potentially data for
TKM-EBOLA (H2 2013);
- - Nomination of new development candidate;
- - $5M milestones each if ALN-TTR02 by Alnylam
enters phase III development and Ascletis initiates a trial in China with
ALN-VSP02 for primary liver cancer (both H2 2013/H1 2014);
- - Partnering of SNALP delivery technology, also
for non-RNAi, non-therapeutic applications (always on the table);
- Monetization of Talon royalties (uncertain timing if at all)
Silence Therapeutics: A novel cancer
approach and strong purchasing power
Market cap: ~150M (of which $30-35M in cash)
Following a remarkable financial turnaround and management reshuffle,
Silence Therapeutics has become a force to be reckoned with once again. Unlike in the early days, it is the product
candidates, and not RNAi trigger IP, that is the focus of the New Silence.
First and foremost is Atu027, an endothelially targeted RNAi
Therapeutics aimed at preventing cancer metastasis. The company believes that Atu027 will be most
useful in combination with small molecules that aim at killing primary tumor
cells and consequently is about to initiate phase Ib/phase II combination
trials.
According to the information in the latest financing (which
was approved today), a significant investment will be made in building a
broader pipeline. This will take
advantage of the company’s three lipid-based delivery technologies: Atuplex
(broad endothelial cells), DACC (lung endothelial cells), and DBTC (cells in
the liver). In general, the market cap and cash infusion position the company well to pick up some distressed RNAi and other assets.
Upcoming catalysts:
- - Initiation of pancreatic cancer combination
trial with Atu027 (H2 2013);
- - Nominating new development candidate(s) (H2
2013);
- - Pre-clinical data on liver delivery technology
(2013);
- - Partnering, also for non-RNAi, non-therapeutic
applications
RXi Pharmaceuticals: Just dermal
anti-scarring no more
Market cap: $80-90M (of which ~$20M in cash)
RXi Pharmaceuticals is the company that popularized the
self-delivering RNAi trigger concept.
Unfortunately for the company, it made a critical IP mistake of staying
clear of the most potent versions it could have created with its ideas (à dsRNA length). Furthermore, it seemed that it never was able
to get anything into the clinic.
This changed last year with phase I initiation for RXI-109,
a potentially superior alternative to Pfizer’s antisense-based dermal
anti-scarring candidate. However, as
part of a reorganization, it essentially got rid of its R&D to focus all
resources on RXI-109.
As you know, getting rid of in-house R&D is a mortal
mistake if you want to be a platform-based company. With the recent $16.4M cash infusion by OpkoHealth it will be interesting to watch whether they can become a
self-delivering RNAi trigger platform-based candidate again, or whether the
claimed company growth will largely be around expanding the indications of
RXI-109 to other anti-fibrotic indications, especially ocular ones.
Upcoming catalyst:
-
Presentation
of phase I data from RXI-109 (any day).
