Having covered the most developed RNAi companies (Alnylam,
Arrowhead, Dicerna) yesterday, this blog entry will discuss RNAi plays that are somewhat less established, but nevertheless could represent interesting investment opportunities.
Silence Therapeutics (SLN.L)
This London-listed company is roughly 2 years behind Arrowhead Pharmaceuticals
and Dicerna. Similar to those, Silence
has set its sights on exploiting targets in liver hepatocytes using GalNAc
conjugate technology. Its first program
targeting TMPRSS6 for iron overload disorders should enter the clinic in the
first half of 2019.
The strength of Silence is partly its RNAi trigger IP
position which, if the claims stand, should read on Alnylam’s 3-4 drug candidates
that could come on the market over the next 2-3 years. In my opinion, it would take a generous
interpretation of what constitutes a ‘pattern’ for LNP-enabled Patisiran to
fall under Silence IP, but it is much less of a stretch for the more stabilized
GalNAc-enabled Givosiran, Fitusiran, and Inclisiran molecules in late-stage
development.
Part of the potential upside could therefore come from a
settlement of the IP litigation that Silence has filed against Alnylam as it
could hamper the commercialization of Alnylam's RNAi drug, especially as it ramps up for the launch of Patisiran.
The reason why such revenues would
be meaningful to the company is that Silence is run extremely well in
financial terms such that these funds would neatly feed into Silence's operations as it is
about to expand clinically all the while minimizing shareholder dilution.
This, however, could also be
viewed as a necessity since it is much more difficult for a London-based
company to raise the kind of biotech ‘risk capital’ that allows companies like
Alnylam in the US to really press down the gas pedal to pursue a grand vision without
killing shareholders.
Silence Therapeutics is an
investment for those that value the pursuit shareholder return instead of
mere market cap growth (=management bragging rights). While I support this
strategy, I am still largely on the sidelines as the company needs to address
the anemic trading volume which makes it very costly to trade in and out.
RXi Pharmaceuticals (RXII)
Who doesn’t dream of striking it
rich overnight? If so, RXII is the type
of stock that in the right biotech environment could be your daily biotech
double in the not-so-distant future.
After all, which other biotech with a
market cap of ~$15M can boast about 3 clinical data read-outs before year-end and one
additional in early 2018?
1) Q4 2017: phase II results dermal scarring (RXI-109)
2) Q4 2017: phase II results warts (samcyprone, non-RNAi)
3) Q4 2017: UV-induced hyperpigmentation results,
consumer testing (RXI-231)
4) Q1 2018: phase I/II results retinal scarring
(RXI-109)
It is possible that the first 3
data read-outs could show that the agents are active and well tolerated, but
where there will be a discussion about the commercial adoption of these agents in the real
world. Therefore, the real fireworks may
occur following the results from the retinal scarring phase I/II trial in early 2018. Here, the self-delivering RNAi trigger
technology is tested for the first time in the eye where for reasons of technical
feasibility (more equal biodistribution throughout eye than in the skin) and clinical application I see the most potential for this
technology.
Downside risk comes from
management that is pitifully ignorant about the workings of the financial
markets and shareholder value creation.
If RXi fails to ignite investor interest in the wake of any of these 4
shots on goal, we could well see a
continuation of the financial death spiral that has seen RXII lose 98-99% of
its value in the last 3-4 years!!!
I own approximately 3% of the
outstanding shares of RXII and will try to add on any weakness ahead of data release.
Arcturus Therapeutics (ARCT)
In sharp contrast to RXi, I view
management of Arcturus as far more savvy when it comes to the financial markets
and building a biotech company of decent size.
Arcturus, which has recently gone
public via a reverse merger, has its roots in RNAi technology, largely by
copying liposomal delivery technology from Tekmira (now Arbutus) and then
licensing related RNAi IP from Marina Biotech.
In light of the Patisiran APOLLO results, you could view the platform as
fundamentally de-risked.
In fact, its lead program was an RNAi program to address TTR
amyloidosis. Since then, however, Arcturus has largely
re-tooled itself as an mRNA Therapeutics company using LNP delivery technology. Although its pipeline is not as prolific as
that of much-better known Moderna, it appears impressive for a company with a market cap of still less than $100M just as its partnering activities.
Therefore, Arcturus is a bet on a management that can take
average science to build a significant biotech as it talks the language of Wall
Street and Pharma deal makers. It was
one of my early biotech investment mistakes to undervalue big-mouthed
management relative to science. The best science can always be acquired once
you have lowered your cost of capital by growing market cap.
I have a starter long position in ARCT as I wait for it to be discovered by larger hedge fund manager.
The final instalment
of this series will cover oligonucleotide therapeutics companies Ionis
Pharmaceuticals, Wave Life Sciences, Regulus Therapeutics, and Sarepta.
