Delivery versus Product Candidates? RNAi Therapeutics Business Development Strategies Need to Adapt

Since the beginnings of the RNAi Therapeutics industry, it has been a mantra that platform/enabling technology licenses are the business development way to go.  Indeed, broad and financially attractive platform deals by Alnylam and Sirna Therapeutics supported that notion.

The time has come, however, for companies focused on developing RNAi enabling technologies to carefully reconsider their business development strategies.  The biggest warning sign is that despite of the clear technological value of delivery, in my mind there has not been a financially attractive transaction in this area for over 4 years now despite the intense and also public focus on this bottleneck.

On the other hand, unlike you have carried a halo since birth similar to Regulus and Moderna Therapeutics, it is product-specific deals and attractive capital raisings based on interest in certain product candidates (e.g. TTR amyloidosis) that gives you the most attractive cost of capital right now.  Also witness the ~1 billion dollar market capitalizations of RNA Therapeutics companies Prosensa and Sarepta Therapeutics where single ultra-orphan product candidates have captured the imaginations of investors willing to pay up for a slice of the dream.  Contrast this to anemic $100M and less market capitalizations of companies with much stronger technology engines such as Arrowhead Research and Tekmira.

Misled by Big Pharma

I have intensely followed the Tekmira story and how they invested in developing SNALP and their derivatives for not just knockdown in the liver, but cancer, respiratory disease and beyond.  The apparent motivation has been that Big Pharma companies are interested in respiratory disease and especially oncology, so work on something this constituency, once believed to be the only source of capital, wants.  But is it really the right strategy to invest in something where you may get 50-60% knockdowns rather than genetically much safer 80% knockdowns and more in other tissues, all in the hope of maybe fetching low double-digit upfronts in the end?  Wouldn’t be the capital better invested exploiting what you already have and drive forward specific development candidates for a few million dollars and which the public markets may value in the hundreds of million dollars in the not-so-distant future?

Arrowhead e.g. recently decided to double its share count to raise $30-40M when it probably easily could have sold its then preclinical HepB program for that amount (see also blog entry yesterday on HepB area getting hot).  It would have gotten even less for monetizing its DPC delivery technology. the key element in the HepB program.  In the end, also as a shareholder, I agree that a 50% dilution, but retaining full control of this product was the far more attractive option.

My advice to these companies: don’t build your future on the notion that Big Pharma makes rational decisions.  Big Pharma would rather pay $100M for a bundle of RNAi trigger and delivery (=product candidate) with some type of early clinical knockdown result than $5M each to essentially get the same thing.  And in the end, you have to realize that not many companies in Big Pharma land, maybe Merck, Novartis, Takeda, GSK and AstraZeneca, would consider a platform-type RNAi Therapeutics deal these days in the first place.  So why try to please a handful of Big Pharma players which have proven to be penny wise but pound foolish when it comes to RNAi Therapeutics?

In the end, I am still hopeful that the RNAissance will lead to large technology transactions and acquisitions.  I do not believe, however, that most of the companies developing enabling RNAi technologies will benefit from such deals.  Instead, you are most likely better off focussing your attention and capital where it can create the most promising and differentiated product candidates.

The times have changed.  If Big Pharma wants a piece of RNAi Therapeutics, they have to pay up to compete with the public markets.

RXi Reports 43% CTGF Knockdown in Multi-Dose Dermal Anti-Scarring Trial

Today, RXi Pharmaceuticals announced the results from its multi-dose phase I study of RXI-109, the company’s self-delivering RNAi compound for dermal anti-scarring.  Importantly, in the two highest of the three dose cohorts a credible 43% (average) gene knockdown was observed three days after the last (=third) intradermal injection of RXI-109.  It is the first time that a knockdown was reported for the so-called ‘self-delivering’ class of RNAi triggers.

The results followed those from a single-dose study lastmonth where dose-dependent gene knockdowns were claimed three months after the single injection (note the difference in the time points).  Turns out that this was a slightly misleading conclusion as in my book a numerical 15% target reduction does not constitute a clinically meaningful knockdown for the vast majority of target genes and indications, and I'm not even discussing the precision of gene expression measurements.

Whether a 43% knockdown of CTGF is clinically meaningful also remains to be seen as no data were presented on the actual impact of RXI-109 on scar formation.   Pfizer, following its acquisition of dermal scarring antisense company Excaliard, would probably know best what type of knockdown was required.

   

In a broader sense, the 43% number also raises the question of whether self-delivering RNAi triggers by RXi Pharmaceuticals will be a class of gene silencing agents that will struggle to achieve 50% gene silencing, instead of 70, 80, 90% and more that might be required for most indications.

Overall, mediocre results and it stands to reason that the future of RXi Pharmaceuticals will be in ocular indications and not in dermal anti-scarring.

Comment on Alnylam's $3B market cap

I, like many of you, have watched with wide open eyes Alnylam reaching a $3B market cap today. In less than two weeks, this company added over $1B in valuation based on highlighting in their press releases the best single datapoints from individual patients (e.g. 'over 80% knockdown' for ALN-TTRsc), instead of average knockdowns, area under the curves, and dosages.

While that does not entirely surprise me as a veteran of reading between 'topline data', a more intriguing question is what the company will do with such a low cost of capital.  Remember, the situation was similar about 5 years ago when Alnylam failed to either raise capital and/or acquire Tekmira to avoid the litigation.  I expect the company to act this time on its share price, a view supported by constant analysts upgrade on any news piece the company throws in front of them (--> fees for investment banking business).

Alnylam Indicates that 80% Subcutaneous TTR Knockdown Achievable with Magic 2.5mg/kg Dose

This morning, Alnylam announced a milestone in the development of subcutaneously administered, systemically acting RNAi Therapeutics.  A ‘more than 80%’ knockdown was achieved in a phase I trial of ALN-TTRsc, the GalNAc-siRNA conjugate for the treatment of TTR amyloidosis.  It is the first time that a meaningful knockdown in Man was reported using the subcutaneous route of administration.

The key question as to the clinical attractiveness of the liver-specific GalNAc delivery platform versus intravenous alternatives such as SNALP (compare to just reported ALN-TTR02 clinical results) relates to injection volume and frequency of administration.  The hurdle to overcome here would seem a once weekly regimen with dosages of 2.5mg/kg or less.  2.5mg/kg is widely considered to be a threshold as this amount of drug can be accommodated in a 1ml syringe.  Higher injection volumes would likely be quite painful and possibly increase the risk of injection site reactions.  Higher dosing frequencies in order to stay within the 2.5mg/kg limitations would reduce the convenience factor.

Unfortunately, these data points were left undisclosed in today’s announcement.  Instead, we were given a riddle.  The company first stated that the results were in-line with observations in non-human primates.  At another point, they say that 80% knockdown with ALN-TTRsc were achieved in non-human primates with the magic 2.5mg/kg dose.  Logically, Alnylam stated that in humans 80%’ knockdowns were seen with the 2.5mg/kg dose. 

Curiously, the company also stated that dose escalation was continuing.  It makes, of course, sense to push the degree of knockdown.  The difference between an 70% knockdown (e.g. ISIS-TTRRx), an 80% knockdown (current ALN-TTRsc results), and 90% knockdowns (e.g. ALN-TTR02) is that compared to a 90% knockdown, the amount of remaining insulting protein (here: mutated TTR) is twice (80%) and 3x (70%) as high which could result in dramatic differences in the clinical outcome, or even whether a knockdown approach would even work for a disease like TTR amyloidosis.

Maybe we will get more clarity on dose and dose frequency at today’s R&D day.  If not, more detailed results are to be presented at the Annual Scientific Meeting of the Heart Failure Society of America (HFSA), September 22-25.

Arrowhead Research: The Next Two Years

Over the last year, Arrowhead Research has undergone a corporate transformation putting it into a position to develop important drugs and create sustained shareholder value.   After what must be a decade of chasing after the latest and hottest in nanotechnology, the company finally appears to have realized that it is in possession of a platform technology that can deliver not just dreams, but actual life-changing products: Dynamic Polyconjugates.

In the following, I will describe how I see the company go about creating value over the next 2 years.

ARC520, ARC520, ARC520

The current corporate messaging is clear: it’s all about the company’s potential cure for chronic hepatitis B, ARC520 (for review, follow this blog and Arrowhead's investor day).  ARC520, of course, is enabled by DPC delivery.  However, as its own experience and that of fellow Tekmira, Silence Therapeutics, and others have shown, the financial markets do not care much about valuing the key enabling delivery technologies in RNAi Therapeutics.  As a result, the company is focusing public attention on its lead product candidate which by now probably has commenced dosing in the first clinical study.

ARC520 has the makings of the start of an enormous franchise (note: I expect ARC520 to be followed by other versions should initial clinical results bear out the immune reactivation hypothesis).  Chronic HepB, a disease affecting over 300 million globally, has to be considered an incurable infection and there has not been an experimental medicine that can knock down the key surface antigen (HBsAg) as rapidly and potently as ARC520.  By knocking down HBsAg, it is hoped that the immune system can be reawakened to seroconvert against HBsAg which would be considered a functional cure.

We should find out whether the hypothesis is correct with the results from the first multi-dose phase IIb study which I expect to come in by the end of 2014/early 2015.  There is a slight possibility, however, that first functional cures may be observed in the single-dose phase IIa Hong Kong study with results in less than a year.

Beefing up the DPC-enabled pipeline

While ARC520 has enormous potential for which spelling out the market size would yield ridiculously high numbers, there are two main risks that need to be overcome. 

The first one is the safety of a DPC-enabled RNAi Therapeutics.  DPC has never been tested in Man before, so you always cross your fingers as it enters the clinic.  Nevertheless, the company has repeatedly reported in the peer-reviewed literature and otherwise that the safety profile, from rodents to a chimpanzee, is looking clean.  This gives me confidence that safety might actually be a strong point of the liver-targeted, short-circulating DPCs.

The second one is about the validity of the HBsAg immune reactivation hypothesis.  Key opinion leaders in the chronic HepB field support it, but as long as the direct link has not been demonstrated, it remains a risk.

As a result, the company would not do justice to DPC technology or itself by making ARC520 multi-dose results a binary event.  Instead, Arrowhead Research should add one or two additional DPC candidates to the pipeline by the end of 2014 when critical results for ARC520 are to be expected.

The first one is expected to be announced in 2013.  This should be another liver-targeted, two-molecule, intravenously infused DPC RNAi Therapeutics.  As Alnylam’s efforts show, there are numerous attractive, often orphan indications that involve gene expression in the liver.

In 2014, I would hope that a liver-targeted candidate based on their newly developedsubcutaneous DPC technology will be added to the pipeline.  Arrowhead presented first such subQ data in late 2012 so that with a few CMC refinements and gene specific development work, they might have a candidate in 2014.

Adding a subcutaneously administered DPC candidate to the pipeline would not only be progress in that this route of administration opens up new therapeutic opportunities, it would also mean that Arrowhead succeeded at where it historically has struggled with: making a single-molecule DPC at high enough yield and which can be properly analyzed.  Remember, Merck at the 2012 OTS meeting more or less announced single-molecule DPCs to be their RNAi delivery dream.  This means that Big Pharma will be and probably are already queuing up for the technology.  Big Pharma loves single-molecule solutions.

Going after the TTR cake: a proven path of value creation

Going by the analyst reports, more than half of Alnylam’s market capitalization ($2.4B) rests on their TTR amyloidosis pipeline: intravenous SNALP-based ALN-TTR02 in mid-stage phase II, and GalNAc subcutaneously delivered ALN-TTRsc in early phase I.  I believe that Arrowhead can create a candidate that is superior to both of them and thus claim a good part of that ~$1.5B in a relatively short period of time (~1.5 years from first IND to generate ALN-TTR02-type data).  Compared to ALN-TTR02, the subcutaneous mode, but equal potency could make it the preferred RNAi Therapeutic.  On safety, we have to wait, but this could be another differentiator.  Compared to ALN-TTRsc, improved efficacy and less frequent administration with lower injection volumes would make an ARC-TTRsc the winner in the market place.  Compared to phosphorothioate antisense-based ISIS-TTRsc, the winning differentiators would be potency and safety.

Arrowhead is a $70M market cap company.  It would seem like a no-brainer to go after the $1.5B market cap attributed to early-stage TTR amyloidosis data for their first subQ IND.  With a superior product and quite different molecular composition (delivery chemistry, possibly Dicer-substrate RNAi trigger) and superior clinical performance, no orphan drug designation by Alnylam or ISIS could hold it back.

Price Target: $30

In summary, by H2 2015, the time current funding is expected to last, Arrowhead Research could have demonstration of functional cure for chronic HepB (I won’t even start trying to value that), two additional product development candidates in the clinic one of which likely with a value between $1-2B, and a potent single-molecule delivery platform that will attract much attention in the industry. 

The achievements of these goals do not assume heroic operational feats.  Even in a worse-case scenario, namely that the immune reactivation hypothesis fails to live up to its expectations, ARC520 should add to the evidence of DPCs being a strong delivery platform thereby also de-risking the other two pipeline candidates.

Anybody laughing at a price target that is 15x that of its current price, by somebody who has put most of his stock market investment in that company at that, should perform an apples-to-apples comparison of clinical programs (ARC520 vs ALN-TTR) and delivery technologies (DPC vs GalNAc) with $2.4B market cap Alnylam.  Could it be that Wall Street has it all wrong?  Of course, Arrowhead Research is not the chosen one in RNAi Therapeutics on Wall Street, but I believe that clinical data on chronic HepB could lower Arrowhead’s cost of capital such that by mid-2015, a financing or business development deal would be on much improved terms.

Alnylam Moves to Increased Dosing Frequency as Knockdown Duration Shortens

The ALN-TTR02 phase II results have finally been announced.  The results are consistent with the view that ALN-TTR02 is a strong candidate for becoming RNAi’s first marketed drug.  Having said that, the knockdown efficacy results came short of what one could have expected based on the phase I and non-human primate results and explain why the company has amended the protocol to test increased dosing frequencies.

Non-human primate studies show cumulative dosing

Alnylam had long telegraphed the results for the phase II studies.  They stated that we should expect the clinical results to be essentially the same as what they are seeing with the drug in non-human primates.  I understand that non-human primates are an immensely insightful model system in RNAi Therapeutics development.  Still, making such strong suggestions just weeks before clinical data release seemed a bit odd in that it risked stealing its own thunder.

Anyhow, the non-human primate studies showed the peak and the terminal knockdown (terminal knockdown defined as the knockdown just before repeat dosing) increased with each additional dose administration.  Whereas the peak/terminal knockdown in cycle 1 was ~85%/47% at 0.3mg/kg, they were ~90%/58% in cycle 2 and so on.  This is what Alnylam refers to as with ‘cumulative’ efficacy.

Unfortunately, this was only partially repeated in humans.

Knockdown not as sustained with repeat dosing

The ALN-TTR02 phase II study represented the first opportunity to rigorously test gene knockdown of a SNALP-delivered RNAi Therapeutic following repeat dosing.  Whereas the phase I study in healthy volunteers was a one-dose study, this phase II study was a 2-dose repeat-administration trial in European patients with TTR amyloidosis (FAP form).  In both studies, target gene knockdown could easily be determined by measuring TTR levels in the blood.

In my analysis of the data, I will stick with slide 10 of Alnylam’s slide set which seems to provide the clearest overview of the data.  At the critical 0.3mg/kg dose level, the peak knockdown either remained +/- the same (~80à80% for once-every-4-weeks) or showed evidence of cumulative activity (~80à88% for once-every-3-weeks) when comparing the first with the second dose administration.  While this looks quite good, albeit somewhat less than what was observed in the phase I study, slide 5), the downside surprise comes with the terminal knockdown values.  Here, the knockdown for cycle one (day 28; n=6) was around 75% with tight error bars, but dropped to 60% for cycle two (day 56; n=5) with much more considerable inter-patient variability.  The same was observed for the 0.15mg/kg dose level with ~53% and ~45% reductions after cycle one and two, respectively.

I have no idea where Alnylam is getting the 93% knockdown from that is so prominently mentioned in the press release.  Are they referring to a single patient that achieved such knockdown?    

Once-every-3-weeks to stay on top of competition

You can safely assume that reduced knockdown duration and the fact that the critical phosphorothioate antisense competitor by ISIS/GSK has a ~70% knockdown have driven Alnylam’s decision to amend the ongoing phase II study by including once-every-3-week regimens.

Data for the first such cohort was provided.  As noted above, once-every-3-weeks showed evidence of cumulative peak knockdown activity thus staying on top of the antisense competition.  It is a shame though that the data provided coincidentally ended on day 35, only a week before the important repeat terminal knockdown point.  It is thus not possible to tell whether diminished terminal knockdown is also an issue for the once-every-3-week regimen.

Safety findings largely related to route of administration  

Safety findings were only reported at the 0.3mg/kg level (4 events in 9 patients).  The infusion-related reaction and the 'nuisance' side effect of fever/chills are known for SNALP delivery, but do not appear to be prohibitive.   Unfortunately, there was a serious adverse event due to a misplacing of the infusion needle.  New to me is the finding of polyuria (peeing a lot). 

Based on this profile, Alnylam will try to lower the amount of immune suppression given with the drug.  Immune suppression is given as a precaution to avoid hypersensitivity reactions seen with SNALP-enabled TKM-ApoB.  It seems to me that in introducing the once-every-3-week regimen, Alnylam wants to dial up the product profile by lessening the burden of the immune suppression.

The future of ALN-TTR02

Given the high unmet medical need for FAP patients, ALN-TTR02 should remain on track of making it to the market provided reduced TTR levels indeed translate into a clinical benefit (a low risk at 80% knockdowns).  Some additional warts, however, have been added to the product profile and my main interest as to the future data will be how efficacy and safety is maintained not after just two, but after 3, 4, 5 doses and so on.  

It would also be good to find an explanation for the diminished knockdown duration (e.g. some neutralizing antibodies or a peculiarity of TTR gene regulation?).  Tekmira, the delivery partner which should receive a $5M milestone on the initiation of ALN-TTR02 phase III studies at the end of this year, would be an important ally in answering this question.  This could therefore be an important test of whether the two companies can put aside past differences.

  

The ALN-TTR02 Phase II Results...Abstract Today, Presentation Tomorrow

The abstracts for the Peripheral Nerve Society Meeting in France have been published.  The abstract on ALN-TTR02 does not reveal the results, but I post them anyway as a warm-up for tomorrow.  You can notice though that there is a relative shift towards the once-every-3-week regimen and the dose escalation started at the same point as the phase I study did (0.01mg/kg).  Check back for more tomorrow.

INTERIM RESULTS FROM PHASE II TRIAL OF ALN-TTR02, A NOVEL RNAi THERAPEUTIC FOR THE TREATMENT OF FAMILIAL AMYLOIDOTIC POLYNEUROPATHY

Adams D1, Coelho T 2, Suhr O3, Conceicao I4, Waddington-Cruz M5, Schmidt H 6, Campistol J7, Pouget J8, Buades J9, Falzone R10, Harrop J10, De Frutos R10, But- ler J10, Cehelsky J10, Nochur S10, Vaishnaw A10, Gollob J10. 1Centre Paris-Sud, APHP, Hopital de Bicetre, INSERM U788, Service de Neurologie, and Centre de Reference des Neuropathies Amyloides Familiales Le Kremlin-Bicetre, France; 2Unidade Clinica de Paramiloidose, Hospital de Santo Antonio, Porto, Portugal; 3Department of Public Health and Clinical Medicine, Umea University, Umea, Sweden; 4Centro Hospitalar Lisboa Norte-Hospital de Santa Maria, Lisbon, Por- tugal; 5Hospital Universitario Clementino Fraga Filho, Rio de Janeiro,Brazil; 6TheUniversityHospitalofM¨unster,M¨unster, Germany; 7Hospital Clinic, Barcelona, Spain; 8Centre de Ref- erencedesMaladiesNaueromusculairesetdelaSLA,Hopital de la Timone, Marseille, France; 9Hospital Son Llatzer, Palma de Mallorca, Spain; 10) Alnylam Pharmaceuticals, Cambridge, MA, USA.

Familial amyloidotic polyneuropathy (FAP) is a fatal, autosomal dominant, multi-system disease caused by abnormal tissue deposition of mutant and wild-type transthyretin (TTR). Almost all circulating TTR is synthesized by hepatocytes, and in FAP this liver-derived TTR is responsible for amyloid accumulation in the main target organs, including peripheral nerves, gastrointestinal tract and heart. Treatment approaches have focused on reduction of amyloidogenic TTR monomer either through elimination of hepatic production of mutant TTR (liver transplantation) or stabilization of the TTR tetramer (tafamidis). While both of these approaches have been shown to slow neuropathy progression in a limited subset of FAP patients with the V30M mutation and early disease, there remains a significant unmet need for new therapies that can impact FAP patients with different TTR mutations across a broader range of disease severity. ALN-TTR02 is a systemically administered lipid nanoparticle (LNP) formulation of a small interfering RNA (siRNA) targeting wild-type and all mutant forms of TTR. This formulation predominantly delivers the siRNA to the liver, thereby inhibiting synthesis of TTR at the primary site of production. In non-human primates, repetitive dosing with ALN-TTR02 every 3–4 weeks at doses up to 0.3 mg/kg resulted in an average relative TTR suppression of up to 90% with no tachyphylaxis of the pharmacodynamic effect. In a randomized, placebo-controlled, Phase I dose-escalation trial in healthy volunteers, a single intravenous infusion of ALN-TTR02 administered over 60 minutes was shown to be safe and well-tolerated, and potently suppressed serum TTR levels by 82-94% at doses of 0.15–0.5 mg/kg. TTR reduction of up to 67% was observed out to 28 days post- dose, suggesting that sustained TTR knockdown could be achieved with a monthly dosing schedule. Based on these promising results, a multi-national Phase II trial of ALN-TTR02 in FAP patients was initiated in mid-2012 to evaluate the safety/tolerability and pharmacodynamic effect of multiple doses of ALN-TTR02. Patients receive two doses of ALN- TTR02 administered every 3–4 weeks at dose levels ranging from 0.01 to 0.3 mg/kg, with a total anticipated enrollment of approximately 27 patients. In this presentation, we will provide an update on the results of this ongoing clinical trial.

Alnylam Reports Potential Advance in SNALP Safety

One concern with the use of any drug is that it ought to be eventually eliminated from the body.  This is a particular issue with nanoparticulate drugs for which efficacy have been the main design criterion.  To address biodegradability for Tekmira's SNALP delivery, a technology that routinely involves un-natural lipids which may not be easily biodegradable, Alnylam has just published on SNALP lipid-derivatives containing readily degradable ester bonds.   The results show that such SNALPs are rapidly eliminated from the body and indicate that their use can increase the therapeutic index.

In the paper, Maier and colleagues took the (once fiercely contested) MC3 lipid, which is part of the ALN-TTR02 formulation for which phase II results are imminent, and tested whether the incorporation of ester bonds at various positions in the lipid tail would retain knockdown efficacy.  The ester bond was chosen because it was predicted to maintain the MC3 lipid geometry and can be degraded by the ubiquitous esterases in the body.  Consistent with the idea that the apparent pKa of the head group is important for efficacy, positions were identified that left the pKa, and consequently knockdown activity in mice largely unchanged (ED50 of <0 .01mg="" kg="" o:p="">

To confirm the prediction that the resultant SNALP particles, economically formulated with microfluidics, were less stable than their parent particles, plasma and tissue elimination rates as well as the generation of turnover intermediates were tested.  Indeed, the new SNALP particles were much less stable.

What is more, at doses of more than 3mg/kg SNALP-siRNA there was a trend towards slight elevations with the MC3 SNALP, but not with a derivative.  The authors stopped short, however, to test concentrations at which much more toxicity can be seen.

The major downside of the study, however, was that in non-human primates, the new SNALPs had less activity than expected for MC3 SNALPs.  At 0.3mg/kg, the dose at which 80-90% knockdown was observed in the phase I study of ALN-TTR02, only a 70% TTR knockdown was achieved.  Nevertheless, it is likely that other biodegradable SNALPs optimized for primates will achieve MC3-type efficacy.    

I do not expect SNALP biodegradability to become an issue for the upcoming ALN-TTR02 phase II results.  The longer-term dosing experience with cancer RNAi Therapeutic ALN-VSP02, however, suggested that there could be spleen toxicity with extended dosing and at higher dose levels.  The last word from Alnylam on that issue had been that the spleen toxicity was due to on-target activity.   The paper by Maier et al., however, leads me to believe that both explanations are still on Alnylam’s table.