First Commercializations of Systemic Therapies as Backstop for CRISPR Investors

There is widespread consternation about the disconnect between recent clinical breakthroughs and the performance of CRISPR-related stocks.  I am highly confident that this will correct by mid-2027 at the latest when NTLA-2002 should become the first systemically administered CRISPR therapeutic to be commercialized.  It will demonstrate the high demand by patients and physicians for this revolution in medicine and commercial viability.

 

KOL enthusiasm

In 2017 at the iconic Paris ATTR Amyloidosis Meeting where Alnylam unveiled the biggest clinical breakthrough in RNAi, the eyes of key opinion leader Dr Julian Gillmore (UCL) lit up when going another step forward into the future, talking about the promise of one-dose CRISPR genome editing for the disease.  This was notable since he is essentially involved in all the key clinical programs in ATTR amyloidosis irrespective of modality, including TTR stabilizers and RNAi silencing.    

I noticed similar genuine enthusiasm at last year’s ACAAI meeting from hereditary angioedema (HAE) KOL Dr Banerji (Harvard) regarding NTLA-2002 after experiencing NTLA-2002 in her own patients.  Another seeing-is-believing moment was recently voiced by Prof Patel of UCL, an investigator in the VERVE-102 PCSK9 base editing trial:

 “This is reality; it’s not science fiction. We’re actually doing it. I’ve had patients of mine in the trial receive this one-and-done treatment, and it’s going to change the face of cholesterol management going forward.”

I have yet to see a single trial investigator or KOL who has deeply thought about the implications of one-time therapies in clinical development for the above diseases and discarded them as freakish or irresponsible as people invested in competing therapies like to do.

 

Patient enthusiasm

The same holds true for patients, that is the people whose voice should have the most weight in the discussion on the risk/benefits and ethics of genome editing. 

In a patient preference survey commissioned by Verve Therapeutics, one third already stated that a one-time genome editing treatment would be more appealing to them than daily pills or injectible drugs.  I expect this number to further increase as VERVE-102 makes its way through the clinic and first patients get treated commercially (word of mouth will be tremendous). 

Similarly, HAE patients confronted with NTLA-2002 look to it with hopes of allowing them to forget about their disease and not having to worry about getting repeat-administered drugs covered by insurance in perpetuity.  Accordingly, enrolment in the phase 3 HAELO trial is extraordinarily swift as patients are lining up for NTLA-2002 according to Intellia Therapeutics.

 

But what about payors?

Besides public acceptance of CRISPR genome editing, cost for these one-time therapies is often brought up as an argument against CRISPR.  Surely, they will be prohibitively expensive.  Why for example would anybody pay $2M for ATTR-drug NTLA-2001 when you can get the RNAi alternative for just $500k annually.  Sure, some people will rent the child booster from the rental car company at $20 a day, instead of buying one from a Walmart around the corner for the same price.

If anything, it is CRISPR Therapeutics that have the pricing power in most settings, including for mass markets like cholesterol lowering (--> VERVE-102).  The vastly superior outcomes in terms of morbidity and mortality projected for life-long LDL cholesterol lowering, especially when initiated early on, should more than compensate the $100k or so price tag I expect it to carry initially.  There is also a noticeable shift in the new US administration towards preventing rather than treating disease.  No better modality than genome editing for that as long as the delivery and gene target is safe.

In the words of Stanford’s genome editing scientist Matt Porteus at the 2025 Copenhagen CRISPR conference, the US insurance system is 'f*cked up', but with many eyes nowadays on how the insurance and PBM industry deals with access (see United Health) and the aforementioned inherent pricing power of (non-viral) genome editing, payors will not meaningfully stand in the way of these therapies.  Similarly, the new modality should run into open doors with Medicare and Medicaid who are most vested in the long-term outcomes of covered lives.

 

Momentum building

With NTLA-2002 likely wrapping up enrolment in Q3, we should see the first commercialization of the promising crop of systemically administered CRISPR drugs in mid-2027.  NTLA-2001 for ATTR-PN, BEAM-302 for AATD, VERVE-102 for heFH and high-risk ASCVD, and finally NTLA-2001 for ATTR-CM should follow in 2028/9.  When the sales numbers finally come in, even the longest naysaying hold-outs will have to admit defeat and CRISPR stocks should rebound.  This could be greatly catalyzed if that happens in a lower interest rate environment (Powell will be replaced in 2026).

But even before that, the steady stream of recent clinical successes (VERVE-102, urea cycle N=1 base editing, NTLA-2001 ATTR-PN data at PNS, BEAM-302 initial data) have led to increased broader interest in CRISPR with large social and traditional media accounts talking about the technology once again.  If industry validation is what you are looking for, with Regeneron and Eli Lilly having to make their respective NTLA-2001 and VERVE-102 opt-in decisions soon and share prices dangerously low, we could see ‘strategics’ stepping in.  The dam could break any day, in a positive way, for long-suffering investors.

Fed-Induced Sell-Off Offers Attractive Values in RNA Therapeutics

For whatever reason, Janet Yellen does not like cheerful biotech investors and between her first policy speech as new chairwoman of the Fed in April and comments last week decrying biotech and social media stocks as inflated she caused two major sell-offs in RNA Therapeutics stocks.  As a result, industry bellwethers ISIS Pharmaceuticals and Alnylam are trading at less than half their 52-week highs, though better than ‘second-tier’ RNA Therapeutics companies such as Tekmira and Arrowhead Research which are trading down even more than that.

When the technology has matured to the point that it can bring significant value to patients, pipelines rapidly progress and expand, and with companies flush in cash by historical standards, this sell-off offers in my opinion great risk:rewards.  Here is a run-down of my five favorite plays.

1.       $ISIS. ISIS Pharmaceuticals is my current RNA Therapeutics core holding that I would not want to be out of.  With ligand-targeted technologies offering much lower tissue exposures and therefore much better safety margins, multiple mechanisms of actions and a pipeline that rivals any in the industry, this company is on track to become the most valuable in the industry- if not economy (subject to the vagaries of the healthcare policy directions). 

At a $3B market cap, no foreseeable financing needs, and a healthy newsflow (especially regarding partnerships), the downside should be relatively limited, and I will sleep tight even knowing that Yellen (who seems to confuse the Dow and large cap biotechs with the broad biotech industry) might open her mouth again to talk about something she obviously understands very little about.

Best long-term risk/reward.

2.       $TKMR. Tekmira is the most beaten-up stock of the bunch that gets credit for almost nothing.  This is mainly the result of the Ebola trial results which were a disappointment- little doubt about that.  However, translating these results from the unthankful ‘Haertetest’ to the rest of the pipeline is unwarranted.  This is because a highly most potent knockdown technology for the liver, should be able to carve out some market for itself.  And if the HBV product won’t require transient immune suppression and/or if its use is deemed acceptable in HBV with its expected finite treatment period, there is an enormous opportunity for which the favorable newsflow is only about to heat up with the presentation of the preclinical dataset..

It is the newsflow from new product candidates (esp. HBV)), clinical trial starts (liver cancer, HBV, alcohol dependency), clinical trial results (ALN-TTR02 OLE, TKM-PLK1 interim phase II with little to no expectations by the markets), and business development (mRNA), that makes TKMR an attractive buy at these severely depressed levels ($31 in April, now trading at $9).  And with the Ebola Haertetest on Clinical Hold, TKM-EBOLA does not scare me anymore as an investor.  It even offers a potential near-term catalyst should the Hold be lifted.

Best 6-12 month risk/reward (until release of phase IIa HBV knockdown results).

3.       $RGLS.  I’ve never liked Regulus much as a stock, mainly because of its anemic pipeline that its own management does not even seem to be excited about given that it now calls the potent GalNAc-targeted anti-miR122 product candidate for HCV merely a proof-of-concept for the company.  However, given that the HCV market emerges as one with a long-tail, not all is lost for this pan-genotypic, potentially one or two-shot treatment when used in conjunction with other HCV drugs. 

When HCV-competitor Achillion recently surged on the back of the Merck takeout of HCV play Idenix as it reminded investors of the long-tail nature of the market, Regulus was forgotten.  It may reach investors’ consciousness when they report phase I results possibly early next year.  Solid financials with more than $100M in cash and a reasonable $300M market cap given its prominent position in the microRNA Therapeutics industry.

Speculative buy with regard to single catalyst.

4.       $ARWR. All eyes are on the outcome of the ARC520 phase IIa study in HBV-infected patients which could be announced any day now.  My prediction is a ~80% HBsAg knockdown at the 2mg/kg dose.  My problem is that I have little idea about how the market will respond to that given that the trial is not designed to achieve the ultimate goal for this therapeutic candidate: a functional cure.

Most investors seem to expect an easy double (or more) from current levels, an notion that I do not want to necessarily reject for an 80% knockdown.  It all seems to depend on how the results will be framed by the analysts and how successful the dueling hedge funds are in painting the tape to their advantage. 

With more than 10% of the float short and given ARWR's historical trading pattern, great volatility is a given.

Highly speculative buy, so much so that options may actually be the best way to play it.

5.       $SRPT. No matter the negative market reception to the recent release of the 144-week study results, Sarepta and patients will get their accelerated approval for eteplirsen.  The debate has reached a point that the drug development clock for Duchenne Muscular Dystrophy cannot be set back another 5-10 years by rejecting the current class of candidates of which Sarepta’s looks to be the most promising- despite the highly anecdotal nature of the results.  This is because eteplirsen seems amazingly safe, so the potential harm from giving a potentially non-effective medicine is limited.  This is clearly not the case for Prosensa’s exon skipping drug candidate, and don’t even get me started about PTC Therapeutics …

Solid 12-month risk:reward juiced by the large short position (>30%).

Money from the Sidelines Moving into RNAi Therapeutics Again

The recent signs that the appetite for RNAi Therapeutics by Big Pharma is returning coupled with accumulating evidence that RNAi can be triggered in Man with some of today’s delivery technologies, is finally translating into investors buying into the promise of RNAi Therapeutics again. Today’s almost doubling in the shares of Arrowhead Research (ticker: ARWR) on volume of over 40% of outstanding on the heels of a Nature publication showing that their RONDEL delivery system was able to induce an RNAi mechanism of action in solid tumor tissues in real patients, is quite impressive evidence for this. The incredible performance of RXi Pharmaceuticals (ticker: RXII) which has made much out of their ‘self-delivering siRNAs’ and who are also positioning themselves as an RNAi trigger alternative to Alnylam another one.

If the trend were to indeed continue, this time around I would expect much of the action to be in the limited RNAi delivery technologies that have made it into the clinic. Except for the $125M acquisition of Mirus Bio by Roche, I have long felt that the RNAi Therapeutics marketplace and investment community has never really reflected the importance of delivery in making RNAi Therapeutics a reality. In addition to being the critically enabling factor for RNAi Therapeutics, such IP should also be the most valuable kind.

The argument for delivery-related investments is based on the expectation that any Big Pharma that is seriously considering RNAi Therapeutics would first want to secure access to technologies that have shown potential as clinically viable platforms. This would allow them to gain familiarity with RNAi Therapeutics and, by being on its cutting edge, assemble know-how and lay down further IP to help position them as leaders in the field, an opportunity that was missed in the case of recombinant proteins and monoclonal antibodies.

A scarcity of technologies that have made it into the clinic providing some evidence of RNAi efficacy in the absence of show-stopping toxicities should further increase their value. At the moment these are SNALPs, RONDEL, Atuplexes, a lentivirus and tkRNAi bacteria. You will not be surprised to hear that based on the strong and abundant pre-clinical, including non-human primate data, highest quality science, modularity as a platform, well-defined structures and scalable manufacturing, and the proven ability to assist partners in bringing their RNAi triggers into the clinic, I am particularly fond of SNALPs and Tekmira. I cannot believe that companies like Novartis or Pfizer do not consider it a risk that access to Tekmira could be lost due to an outright acquisition of the company.

In times of cost-cutting, it is important for companies that want to partner or sell their technologies to keep the necessary talent to make technology transfer possible. Such a group of people would also enhance the attraction to acquire a company as an important pillar of the broader RNAi Therapeutics efforts of a Big Pharma, similar to what Alnylam Europe was for Roche or Coley for Pfizer. Losing such capabilities could quickly render a technology stale as Targeted Genetics seems to be running the risk.

All the ingredients of a small acquisition wave of RNAi Therapeutics technologies and companies are therefore in place: a limited supply of enabling technologies and scientific talent, capital markets that make it difficult, if not impossible for small RNAi Therapeutics companies to realize the full value of these technologies on their own, and big pharmaceuticals that will consider the recent results by Tekmira and Calando/Arrowhead as important de-risking events and feel the urgency to act now.

RNAi Therapeutics Portfolio Review: Time for Bottom-Fishing?

A quick look at the table on the right shows that 6 out of the 10 RNAi-related stocks in the RNAi Therapeutics portfolio suffered serious declines of over -15% since January '08. Clearly, the tight credit markets and an overall risk-averse investment climate had an adverse affect on the biotech market in general, and the valuation of early-stage companies in particular.

While the share price decline in companies such as Nastech is to a large degree to be blamed on company-specific issues, the difficulty of raising capital at reasonable terms has only accentuated the downfall of companies in need of near-term funding and has taken on dynamics that make me think twice about whether the time to do some bottom-fishing has come.

When it comes to bottom-fishing in RNAi Therapeutics, the issue is whether the markets have only accelerated the inevitable process of separating the good from the bad, or whether some the of the affected companies could be turned around with good management if they were afforded the necessary funding.

Separation based on scientific and financial track records probably accounts for the difference between Alnylam’s +1.6% increase versus -46.4%, -48.9%, and -67.9% declines, respectively, for Alnylam’s main synthetic RNAi competitors Silence Therapeutics, RXi Pharmaceuticals, and Nastech. Among those three, RXi with its motley patent portfolio (access to Hannon and Tuschl I) and preferential treatment by the State of Massachusetts may be the most interesting, but is hurt by development programs that do not appear to have sufficient maturity.

Nastech may be better off not to compete on the RNAi trigger side (“mdRNAs”) and instead concentrate on peptide-mediated RNAi delivery. As by far the best performer in the portfolio, Tekmira, demonstrates, innovative and clinically credible RNAi delivery capabilities are more likely to be rewarded by the market than companies built on yet another, not-so-innovative RNAi trigger designs.

Next to siRNA delivery companies that have gone down with the overall markets, but of which the science is promising, it is DNA-directed RNAi companies that may offer some of the most attractive investment opportunities right now. Admittedly, gene therapy investments historically have been a huge disappointment with an even much greater failure rate than for normal drug development already and a handful of overly publicized safety incidents. This means that even a phase II rheumatoid arthritis program by Targeted Genetics is valued essentially at zero. However, an increasing number of exciting gene therapy proof-of-concept studies, such as the two recent publications on the vision improvement by AAV gene therapy for Leber’s Congenital Amaurosis, indicates that gene therapy is finally starting to realize its therapeutic potential after years of trial and error.

While (synthetic) siRNA Therapeutics may be preferable for the majority of RNAi Therapeutics applications, DNA-directed RNAi, especially in conjunction with AAV and lentivirus, due to its often more advanced delivery efficiencies, potencies, and long-term expression may have a number of applications for serious and difficult-to-treat conditions such as neurological disorders or together with stem cell therapy (e.g. HIV trials by COH/Benitec). With the right IP, therapeutic portfolio selection and resource allocation strategy, an investment in DNA-directed RNAi at this point may both give the companies' R&D efforts the much needed financial boost as well as reward the investor once the biotech market has returned to more normal valuations. Of course, if the overall market conditions don’t change, there is nothing to stop investors to remain on the sidelines and just wait for even cheaper prices while, unless of course Big Pharma's thirst for innovation causes it to pull the trigger first.

RNAi Therapeutics Model Portfolio

Before the biotech investment year kicks off tomorrow with the JP Morgan Healthcare Conference in San Francisco, I would like to initiate an RNAi Therapeutics model portfolio that should track the fortunes of publicly listed companies with significant stakes in RNAi Therapeutics and microRNA-related applications (excluding large pharmaceuticals). My subjective valuation of companies is the main determinant for their accorded weightings in the portfolio. Consequently, they do not necessarily reflect their relative technology/IP strengths. The selections, of course, are my opinion only and not meant as investment advice. Investments in the RNAi Therapeutics field are highly speculative and not suited for most investors. With that out of the way, some rules to keep me honest:

1) Initial balance: $10,000.

2) Initial purchases are made based on last Friday’s closing prices (January 4, 2008).

3) Currency fluctuations are not taken into account.

4) Sales/Purchases based on closing prices and are posted on the blog the same day.

5) Updated portfolio balance will be displayed at the beginning of each month.

Some comments on my selections:

Alnylam: The proven leader in RNAi Therapeutics. Human proof-of-concept data, new collaboration deals (including for Regulus), ability to file for new INDs, and the upcoming Novartis adoption license decision as potential value drivers. Main concerns: human proof-of-concept taken for granted by market and priced in and delays of systemic delivery programs.

Tekmira: Most speculative position in my portfolio. Timely advancement of SNALP-enabled RNAi development programs into the clinic should be well received and trigger a significant bounce in the stock. Strong Alnylam relationship with R&D essentially paid for by Alnylam. Main concerns: making SNALPs safe enough for clinic may take more time than anticipated, and protracted Protiva litigation.

ISIS Pharmaceuticals: Partnering of mipomersen (ApoB100 antisense) could be eye-opener for how much Big Pharma is willing to pay for novel RNA-based therapeutics. Growing revenue stream from IP (esp. from Alnylam, but also other companies based on RNA technology), diagnostics, and licensing out antisense programs. Should also benefit from Regulus deal. Main concern: Safety of mipomersen.

Benitec: Main DNA-directed RNAi player. Potentially lucrative, lean IP licensing model with some strategic investments in clinical programs. Main concerns: weak balance sheet and currently shaky patent estate; perception of DNA-directed RNAi versus siRNA-mediated RNAi.

Rosetta Genomics: Main publicly traded microRNA diagnostics player with potentially large, valuable microRNA target IP estate set to commercialize first microRNA diagnostics products and looking for partnering opportunity. Main concerns: issue of patenting microRNA sequences and pre-mature focus on microRNA therapeutics.

Nastech: Punished stock should recover if they can capitalize RNAi spin-out MDRNA on favourable terms. Strategy of patenting the steps of RNAi around the classical Tuschl siRNA design could attract partnering interest from Big Pharma. Main concerns: poor negotiation position with credibility problem and weak balance sheet; unvalidated IP.

Silence Therapeutics: So far productive RNAi Therapeutics engine and deal flow. Depending on the eventual scope of Kreutzer-Limmer I and ability to get their own patent applications granted, a takeover candidate by Big Pharma.

CytRx: Tuschl I play. Main concerns: delay of Tuschl I, getting their RNAi therapeutics R&D into gear and spinning out RXi.

Targeted Genetics: DNA-directed RNAi play with Sirna/Merck relationship. Leading AAV gene therapy company that should benefit from the fact that AAV is very promising for RNAi delivery to the liver, eye, and brain, with near-term clinical opportunities. Main concerns: perception of DNA-directed RNAi versus siRNA-mediated RNAi.