Friday, February 23, 2018

Recognizing and Addressing Critical RNAi Off-targeting Issue

In late 2016, Alnylam discontinued its alpha-1-antitrypsin program due to observed increases in liver transaminases. A year later, its HBV program was also terminated with the goal of advancing a new compound with increased targeting specificity.  

Apparently, close to half of RNAi triggers largely picked based on potency cause hepatotoxicity in rodent studies.  It's been clearer than ever that Alnylam, if not the industry as a whole needed to pay more attention to minimizing off-targeting and not just focus on potency in candidate selection.

Formal presentation of their findings of the causes underlying the toxicity  have now been published in a paper titled ‘Selection of GalNAc-conjugated siRNAs withlimited off-target-driven rat hepatotoxicity’.  

In an elegant series of experiments, the authors first sought to disprove that other steps in the delivery pathway that were possible candidates for the observed toxicity were responsible.  They then went on to show that it was indeed microRNA-type off-targeting that were at the root.  

Endolysosomal Constipation

GalNAc-conjugated RNAi triggers need to be highly stabilized to be active.  As a result, they reach high, antisense-type tissue accumulation, largely through sequestration in the endolysosomal compartment.  This has led to the concern that toxicities may arise from interfering with endolysosomal functions in the liver.

Strongly arguing against this possibility, when a toxic GalNAc-conjugated RNAi trigger with standard 2’-O-methyl and 2’-F-chemistry and partial phosphorothioation was rendered incapable of being taken up by the RISC RNAi effector complex, liver toxicity was abrogated without much change in the tissue accumulations of the respective oligos in rodents. 

Still, it will be important to further follow this risk in humans, especially when there is long-term, chronic exposure given that the present studies lasted for ‘only’ 5-9 weeks.  Also, patients with pre-existing morbidity in the liver may be particularly susceptible to adversely reacting to the accumulation of RNAi triggers in the endolysosomal compartment. 

Modification Chemistry

One concern with the high degree of chemical modification of the RNAi triggers which are employed to stabilize them in the absence of nanoparticle delivery formulations is that the modification chemistry could be toxic.  Rival Ionis Pharmaceuticals e.g. had previously claimed that 2’-F-modified antisense and RNAi constructs are genotoxic- at least in cell culture system.  Alnylam, however, had already disputed this claim and now argues that this is only the case with single-stranded, phosphorothioated formats Ionis is using.

The fact that preventing RISC uptake abrogated toxicity already exonerated chemistry and degradation intermediates as culprits since such abrogation in itself does not change overall RNAi trigger metabolism (note that RISC-incorporated RNAi trigger represents only a very minor fraction of overall tissue RNAi triggers).

To further rule out this possibility, the Alnylam scientists varied the degree of relative 2’-O-methylation and 2-F-modification to see whether this impacted toxicity in the rodent models.  There was no correlation between the type of modification and toxicity.

So at least for acute treatments, 2'-F modification does not appear to be a relevant tox issue for RNAi Therapeutics.  Based on the recent demonstration that 2'-F metabolites can be incorporated into endogenous RNA and DNA, there still remains a need to be vigilant about this modification regarding its potential to be genotoxic, i.e. promote cancer.

Competition with endogenous microRNAs

Years ago when I joined as a post-doc in the Kay lab in Stanford, colleagues of mine had found that high levels of RNAi trigger small hairpin precursors expressed from DNA templates could trigger severe toxicity in mice and that this could be traced back to these precursors interfering with normal microRNA function. Subsequently, studies to investigate the same were performed using synthetic RNAi triggers and modest competition with endogenous microRNA function was sometimes seen.

In contrast to the elegant investigations above, Janas and colleagues from Alnylam offered only circumstantial evidence to rule out competition.  In particular, they found no correlation between the degree of RISC occupation of the exogenous RNAi trigger and toxicity. 

It would have been interesting to study e.g. whether delivery of the RNAi triggers resulted in the de-repression of known targets of endogenous microRNAs to get insights into whether further investigation of this issue had merit.

MicroRNA-type Off-targeting

By contrast, the authors found strong evidence that it is microRNA-type off-targeting that is the culprit for the toxicity of many RNAi triggers in vivo.

To wit, in addition to directing the cleavage of mRNAs with near complete sequence complementarity (~20 base pairs), RNAi triggers may also participate in microRNA-type mRNA interactions based on limited sequence complementarity (mainly ~7 nucleotide seed) with more subdued silencing impact and without the canonical RNAi cleavage.   

Importantly, a reversir molecule with the function to soak up RNAi trigger-loaded RISC and consequently interfere with its silencing activity, reversed the toxicity.  Parenthetically, if competition with microRNAs were the problem, this ‘freezing’ of the RISC complexes would not have been expected to relieve the toxicity since it would not have freed RISC for loading the endogenous microRNAs.  

Supporting evidence came from seed swapping experiments where it was the seed from the toxic RNAi trigger that dictated toxicity. 

Practical solution

Since microRNA-type off-targeting does not translate well- if at all- between species (it doesn’t take much to change a microRNA target into a microRNA-refractory sequence), simply screening RNAi triggers in rats to weed out the toxic ones does not help much.

Fortunately, following a decade of studying microRNA off-targeting in RNAi, one chemical strategy in particular has risen to the top to minimize microRNA-type off-targeting.  Based on the hypothesis that the limited sequence interaction in microRNA target recognition renders it more susceptible to weakening the binding energy compared to a fully, or almost fully complementary RNAi target, incorporating energetically less favorable nucleotide residues were found to greatly minimize microRNA-type interactions while leaving RNAi on-target recognition intact.  

I  consider studies by Jackson et al. (2006) and Vaish et al (2011) to have been seminal, and long underappreciated, if not downplayed by RNAi industry leaders in this regard.

Similar to such prior efforts, Alnylam incorporated an ‘empty’ placeholder residue (glycol nucleic acid, GNA) which cannot base pair.  This indeed greatly reduced off-targeting as assessed by transcriptomics and, importantly, abrogated liver toxicity.  

In the end, the risk of clinical failure due to microRNA-type off-targeting can never be fully excluded before studying the RNAi trigger in humans.  Still, reducing clinical attrition due to this from 30-40% to more like on the order of 5% is well worth the effort.


Clinical studies with the new candidate for AAT by Alnylam will be the first direct test of this hypothesis.

Tuesday, February 20, 2018

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!

Tuesday, February 6, 2018

Happy Gene Therapy Talk Presaged Market Correction

In January, many biotech stocks went parabolic shattering all-time-highs.  Now they have started crashing back down to earth.

The run-up was partly driven by real fundamentals.  These include corporate tax reform in the US, a new FDA commissioner (Scott Gottlieb) who makes all the right decisions (speeding access to innovative medicines, fostering generic competition, amenable to rational discussion etc), and a voracious appetite for innovative pipelines in the pharmaceutical industry which has manifested itself in a number of chunky, multibillion dollar acquisitions. 

At the same time, ever-increasing valuations in a deceptively low-volatility stock market environment has emboldened analysts, investors, and managements alike to proclaim that the golden era of curative medicines is upon us.  Gene therapy and genome editing in particular got hyped beyond reason as if all of a sudden critical bottlenecks in tech development had been solved.  CRISPR companies Editas Medicines and CRISPR Therapeutics, without a single drug candidate in the clinic, were bid up to $2B valuations although access to genome editing tools have become a commodity and cannot be considered gate-keeping tech any more.


Not much changed technology-wise

I understand that gene therapies have made tremendous inroads into the pharmaceutical marketplace with the first 3 gene therapy approvals in the US over the last year, one for an eye disease by Spark Therapeutics and two CAR-T cell cancer therapies going after the same target.

While I acknowledge these successes, what is really surprising here is that it took that long to get there given that the related delivery and genetic technologies (AAV, gene insertion, immune cell transfer) have been in existence for a decade or two already.  In that light, the recent Happy Talk around gene therapy seemed overdone.

The CEO of one genome editing company, Sangamo Therapeutics, is a great example of this divergence between scientific progress and clinical reality.  

Having come on board only a year ago, the good Dr. Macrae looks as if he is having a steep learning curve ahead of himself.  The reason I got the impression is that he likes to grandiosely talk about how the company's AAV capsid shuffling will enable them to cure all these CNS disorders while making great progress with LNPs to address the rest of humanity's afflictions.

Well, LNPs have gotten 10x more potent every year for the last 15 years so we must have reached homeopathic doses by now; and looking at the literature, AAV shuffling hasn't changed all that much since I completed my post-doc in an AAV lab in Stanford.  Or maybe Jim Wilson has grown exceedingly gun-shy when he resigns from his well-paying function at AAV company Solid Biosciences over concerns of toxicity from high systemic AAV doses and possibly also his finding that delivery to a certain tissue in the mouse does not predict same delivery in humans.

Certainly, there are also tailwinds supporting gene therapy that had not been around a decade ago.  As alluded to above, society and regulators have finally warmed up to a very sensible approach to medicines in the genomic era.  Moreover, there are established paths now to effectively develop such therapies and the challenge of producing large quantities of viral vectors is gradually being addressed.

Still, amid the hype and stock market giddiness, valuations in many of these companies have run ahead of themselves and were ripe for a pull-back.

Next time you hear so much Happy Talk around a biotech subsector leader as has been the case for gene therapy, watch out for a correction.   

What about RNAi stocks?

RNAi stocks have also benefited from the overall bullishness in the biotech sector with ARWR and DRNA having run up by 300% or so in a matter of months.  While I still hold shares in these companies, I have written calls (largely in-the-money) on essentially all of them meaning that I am fairly insulated should they fall another 10% or so.   

Since I still like ARWR and DRNA ahead of their first clinical GalNAc knockdown data, and in the case of Dicerna the potential removal of the overhang from the Alnylam litigation, I am eyeing (and have been) selling out-of-the money puts on these for 10+% premiums or so.

If the market turns back up, you pocket the premium. 10% or so in a matter of 2 months is not bad in my mind.  If, however, the stocks decline and the puts are in-the-money at expiration, you get handed a stock that you like anyway.  Say Arrowhead for a price of $4.5 instead of $5.45 yesterday.  

But before you place any such options bets, consult with your investment advisor first to familiarize you with the risks of writing options!

On the simple, naked long side, I like Ionis Pharmaceuticals which, as a biotech stock that has essentially missed out on the post-Trump rally and with the upcoming Huntington’s data catalyst, has the potential to become a new biotech bellwether following subsector rotations that usually occur following corrections (remember the 2015 correction following which oligonucleotide stocks turned from sector leaders to laggards?).  Alnylam, meanwhile, looks tired here with a lot of the upside priced in, at least regarding the TTR story.


Happy trading and be mindful.

Saturday, January 27, 2018

Biotech M&A Heating Up, But Only One Oligo Company In-Play

The M&A activity in biotech has picked up additional steam this week with Celgene buying CAR-T player Juno Therapeutics for $9B and Sanofi buying blood disorder biotech Bioverativ for $11B (the latter shining a positive light on the recent Alnylam-Sanofi deal restructuring). And according to insiders, an unusually high number of additional deals are being finalized following the JP Morgan conference.

RNAi, ASO, genome editing, gene therapy platforms not in-play

Although another CAR-T player, Kite Pharmaceuticals, got acquired late last year by Gilead for $12B and both Juno and Kite had been billed as CAR-T platform plays, these acquisitions are unlikely to read through to gene-targeted platform technologies that are more broadly applicable across disease areas.  These include RNAi, antisense oligo, genome editing, and traditional gene therapy.

This is because the CAR-T acquisitions were driven by the desire of the acquirer to add near-term revenue growth to the topline while strategically positioning themselves in the blood cancer arena.  Of course, the underlying CAR-T platform technology will continue to be further utilized, but it is the near-term revenue streams from their drug sales that justify the multi-billion price tags to the bean-counters inside these companies and like-minded investors.  

These deals therefore do not signal to me a willingness of Big Pharma and Biotech to shell out $3B or so that they would have to acquire companies like Editas, Sangamo, and CRISPR in genome editing or Arrowhead and Dicerna in RNAi in the current marketplace.  This may also be informed by their experience in the RNAi space a decade ago when companies like Merck and Roche made large investments in the platform only to literally die in their hands while it was much smaller, nimbler pure-play companies that have now advanced the technology to commercial maturity.   

Also, more so than a decade ago, Big Pharma/Biotech has adopted a model where they focus on a few disease categories such as oncology, cardiometabolic, or the CNS, in a modality-agnostic fashion.

Target-based technology access 

Accordingly, when technology access for early-stage product development is sought, large companies prefer to partner on a limited number of targets.  This is illustrated by a range of deals over the last year or so such as in the RNAi (Dicerna-Boeheringer for NASH, Arrowhead-Amgen for cardiovascular disease) or genome editing (Sangamo-Pfizer CNS deal) spaces. 

In some cases, such deals may cover multiple targets in the same tissue using the same delivery technology.  These include deals such as the one by Editas Medicine with Allergan in ophthalmology.  

And only in rare cases such as the partnership between CRISPR Therapeutics and Bayer are multiple targets spread across multiple disease types (blood disorders, blindness and congenital heart disease) and may be largely unknown at the signing of the deal.  Such multi-target deals, however, have become less likely as the cost of capital for raising money on the Street has gotten lower and the market caps of these companies commensurately have increased.  At that point, it is advisable for the platform company to forego upfronts and near-term milestone payments that pale relative to their market caps and instead retain maximal low-hanging-fruit target-picking flexibility. 

Only Ionis Pharmaceuticals in-play

According to the above, only Alnylam and Ionis Pharmaceuticals with multiple important drug candidates about to be approved over the next 3-4 years would fulfill the requirement for adding needle-moving near-term revenue growth to a large acquirer.  With a $13B market cap already and a power-hungry management to build the most successful biotech company in history, I do not see large companies ultimately offering the ~$40B it would likely take for a successful bid for the company.

By contrast, Ionis Pharmaceuticals with a market cap of $6B and a likely more robust stream of oligo drugs hitting the market (Spinraza for SMA last year, Inotersen for TTR amyloidosis and an ApoCIII-lowering drug this year alone) appears to me a more realistic target despite its history of engaging in multiple partnerships with a number of large pharmaceutical companies, partly in an effort to make it a less appealing takeover target.

The likely acquirer would be Biogen, of course.  When Ionis and Biogen initially partnered to address in early 2012 on what has become the SPINRAZA blockbuster, Biogen quickly learned how powerful and widely applicable antisense technology could be for addressing CNS disorders.  In less than 2 years, the companies would sign another 3 partnerships ultimately covering numerous targets in the CNS which is where Biogen has gone on to firmly stake its future on.  

As we know today, giving away so fast so much of the upside to the CNS franchise was a mistake on Ionis' part as the CNS has emerged as the area of highest value to the current antisense platform full-stop.  SMA was only the beginning and diseases like Huntington’s, Alzheimer’s, ALS- you name the neurological disorder- suddenly seem within targeting reach.

Still, adding up the royalty payments and milestone payments for such licensed products would add up quite a bit.  In fact, SPINRAZA payments alone would justify Ionis' current market cap as it is growing into a multi-billion annual revenue drug and cornerstone to Biogen's SMA franchise.

Because other Ionis-licensed CNS product candidates would also address the root causes of diseases, they would similarly lend themselves to become cornerstones in new CNS franchises that Biogen is targeting, e.g. ALS.

So when Biogen’s CEO calls M&A valuations being reasonable and not over-stretched as frequently asserted by his colleagues and then goes on to mention recent CNS breakthroughs in SMA (à Spinraza), Huntington’s (watch out for knockdown data from phase I/IIa late Feb/early March), migraine, and multiple sclerosis, I cannot shake the feeling that Ionis will be the target of the big M&A move that everybody is expecting Biogen to make.  $20B and we have a deal. 

it could mean that the company that tried its best in the oligo space not to be an M&A target, Ionis, could be one of the next to be acquired.  

Sunday, January 21, 2018

Say 'No' to Rosetta Genomics Take-Under by Genoptix

The first wave of efforts to commercialize microRNAs, the close molecular cousin to RNAi, either for diagnostic or therapeutic purposes is about to fizzle out.  With Regulus Therapeutics getting a last chance to prove its worth with clinical data on its Alport's microRNA therapeutic program pending, today's post symbolizes the end of commercial efforts to establish microRNAs as a broadly applied diagnostic platform.  

Rosetta Genomics Surrenders Despite Promising Products

Last month, the Board of Rosetta Genomics, the main torch-bearer of microRNA diagnostics for close to two decades, announced that it was recommending a take-under by Genoptix.  Genoptix is a larger molecular diagnostics player for which Novartis had paid $470M in 2011 and then was acquired by Ampersand last year.  Under the proposed terms as detailed in this proxy statement, the Board has been recommending shareholders to accept what constituted at the time of the announcement a new all-time low price of between $0.6-0.7 per share, that is  ~1/2000, 1/100, or 1/10 of its value 10, 5, and 1 year ago, respectively. 

Please somebody call the Guiness Books of Records.  

Unsurprisingly, instead of admitting their commercial and financial ineptitude, this surrender is blamed on a financial market that would provide no more support microcap molecular diagnostic companies.

Well, if the company had executed properly, it wouldn’t be a microcap company, would it?  And last time I checked, complex molecular black-box diagnostics was the way the industry was going, although I admit that the Wild West culture of this industry with hardly any market entry barriers has been harmful to the industry and burned many an investor. 

There have been at least two products by Rosetta that I thought had real commercial potential.  The first one was a test to determine the tissue origin of a cancer to better inform treatment (RosettaGX Cancer Origin).  Given the trend towards drug regimen that are increasingly aimed at the molecular changes that have occurred during oncogenesis regardless of tissue origin and immuno-oncology approaches that couldn't care any less, the medical relevance of this test might be waning.  This can happen, but doesn’t subtract from the value of quantifying microRNAs for diagnostic purposes per se.

The other test, RosettaGX Reveal, got me (and apparently Genoptix) excited enough to invest in Rosetta, in my case amounting to a ~3% stake of the company (which curiously I had no problem acquiring in a heart-beat since my bids were hit with volume).  

RosettaGX Reveal is intended to prevent the many unnecessary, and medically harmful thyroid gland surgeries performed today on nodules of uncertain cancer potential based on cytology.  The test appears to be conservatively at least as good as the currently leading test by Veracyte in this ~$350M molecular test market (of which 2/3 remain to be tapped) in terms of making a solid recommendation against performing a surgery without missing the malignant ones.  Importantly, Reveal has the advantage of not requiring fresh tissue and can thus be performed on the same cytology sample that the original indeterminate diagnosis had been made.  This is due to the remarkable stability of microRNAs, in contrast to the longer and thus more fragile mRNAs.

The test has shown solid growth since start of commercialization in early 2016, now running at roughly $1M in quarterly sales with lots more room to grow by increasing reimbursement rates (yes, the test is frequently performed without the company getting paid), tapping the 2/3 untapped market, and converting users of competing tests.

Unacceptable Terms to Holders of Ordinary Shares

The reason why I will not vote my 3% of shares in favor of the merger at the upcoming Meeting of Shareholders (note: the 3% should weigh heavier since related parties in the transaction are apparently barred from voting) is that the proposed $0.6-0.7 per share is at a 25% discount from when merger discussions began, at a time when shares were already tumbling daily to new all-time lows.

While letting shareholders feel the pain, convertible debt holders get $2.5M of the $10M pie, obviously worthless warrants get attributed $1.2M, the two key executives get a combined $0.5M good-bye present (in addition to the windfall from the warrants that they will likely be beneficiaries thereof and insurance benefits), and to add insult to injury the transaction cost of the take-under is estimated at $3.3M, about as much as ordinary shareholders would get!


So unless Genoptix sweetens its offer to at least $13.3M, meaning a decent premium and doubling of the consideration to shareholders, I would rather go down with this ship and let this Lipdub clip by Rosetta on Youtube be their lasting memory:


Sunday, January 7, 2018

Going into 2018, OligoRx Has Become Mainstream Drug Modality

When I became interested in drug development almost 2 decades ago, I just didn’t get it: why was it that gene-centric biotech was seen as an esoteric, money-losing endeavor, and why did shot-in-the-dark small molecule drug development represent the pharmaceutical elite?  After all, biology has fully moved into molecular gear and how could medicine not follow that?

After a quarter of a lifetime I now understand that what makes sense often takes a decade or two to manifest.  So if you are dead sure about your view of the world, stick to your conviction and resist the urge to follow the herd.

The gene-centric drug development revolution has occurred, long live Oligonucleotide Therapeutics

In 2018 though, gene-centric drug development has taken the pharmaceutical world by storm.  This just 8 years after gene therapy, RNAi, and oligonucleotides were widely ridiculed for having been hyped and supposedly failed.

Yes, in 2017, antisense drugs Spinraza (for spinal muscular atrophy) and Exondys 51 (for Duchenne muscular dystrophy) made a big commercial splash, RNA knockdown for TTR amyloidosis proved positive in 2 large phase III trials, all the while the first gene therapy products (2 CAR-T cell/gene therapies and 1 ocular gene therapy) got approved.

This momentum will only pick up speed on 2018.  The year is already starting with an onslaught of drug development VC investments prominently featuring mRNA and gene-modulation startups (e.g. $270M investment in personalized/mRNA oncology Co bioNTech, and ~$100M for gene processing plays ExpansionTherapeutics and Stoke Therapeutics).
 
Further down the pipeline, we should see approvals and commercializations for at least 3 important oligonucleotide therapeutics drugs: Patisiran (RNAi/Alnylam) and Inotersen (RNaseH antisense/Ionis) for TTR amyloidosis in addition to Volanesorsen (RNaseH antisense/Ionis-Akcea) for lowering triglycerides.  At the same time, Sarepta will continue to walk the tightrope with their first-generation PMO splice skippers for DMD hoping for approvals of additional exons.

RNAi drug Givosiran should also be speeding towards approval in 2018.  After a sweet and brief phase I/IIa study sponsor Alnylam is pursuing a laser-like direct-into-pivotal study/biomarker-based approval strategy.  Expect this to become quite commonplace rather than the exception, especially under the new FDA.

Adding gravitas to all these activities will be the further commercialization successes of Spinraza and Exondys51 that will break down pretty much all commercialization barriers that may have been put up by payors.  After all, these are all delay tactics intended to save the system a few billion dollars (at the cost of childrens’ lives mind you), get a few bureaucratic underlings promoted, but really won’t stand a chance against the desire of patients and their families to get access to such foundational drugs.

It is my belief that with the commercial successes of Spinraza and Exondys51, all previous reservations with regard to oligonucleotide therapeutics being mere scientific tools rather than real-world drugs have disappeared among pharma and investors.


RNAi Therapeutics Stock Thoughts for 2018

Moving on towards the investment end of the business, Alnylam will be a show-me stock which will have its ups and downs as the market will challenge Patisiran sales numbers against its $12B market cap.  Alnylam knows this and is throwing everything behind the commercialization of Patisiran to the extent that it renegotiated its platform deal with Sanofi to retain full global responsibility for commercializing Patisiran and follow-on ALN-TTRsc02.

The easiest RNAi money in my opinion will be made with Arrowhead Pharmaceuticals (~400M market cap) which has impressed me recently with the vengeance with which it is getting back into the clinic (IND equivalents filed recently for its HBV and AAT drugs) and between it and Amgen it could have brought half a dozen drug candidates to the IND stage within the span of just one year (from having zero in the clinic!).  Just by executing on bringing these drugs to the clinic, Arrowhead’s market cap should exceed those of genome editing high-fliers like Sangamo and Editas (~$1.5B).

The topping on the cake, however, will come from potentially first proof-of-concept biomarker data from their GalNAc programs by the end of the year.  And who knows what will happen to the stock if they can declare HBsAg seroclearance based on the legacy HBV program (ARC-520/1)!  And this is not all as we have yet to learn more about Arrowhead’s lung delivery platform which could be a very big franchise onto its own without much competition.

In terms of striving towards first proof-of-concept and critical biomarker data for its GalNAc RNAi platform, Dicerna is similar to Arrowhead.  The difference is that Dicerna’s goals are not as grandiose as those of Arrowhead (Arrowhead is built to become a $50-100B biotech juggernaut) focusing its resources on a few (ultra-)orphan indications which they are addressing with much care and detail.  At a market cap of $450M after the recent conversion of their convertible debt, the downside could be enormous should the lead program for primary hyperoxaluria stumble.  The upside, however, is also significant as they have their eyes set on 2 orphan drug approvals by 2023.

Critically for Arrowhead, Dicerna, and other companies in the space, given the positive news from Spinraza and Exondys51 sales and TTR trial results, the resistance of more conservative investors to invest in second-tier companies so they can grow into substantial multi-billion companies themselves should also be alleviated.

Finally, investors in Ionis Pharmaceuticals face a critical year.  No, this time it’s not about hitting clinical endpoints and how well their drugs are selling.  Instead, Ionis will have to decide its corporate future.  Run away if it makes the mistake of continuing to try and dominate every area of oligonucleotide therapeutics development.  It is this ambition and resulting lack of focus that is responsible for the company giving away much of the commercial upside of its drugs to its partners.

As the basic oligonucleotide chemical building blocks and designs are coming off patent and more and more disease-focused, nimble companies come online, this train has left the station.  Boy, this company is in dire need of fresh management blood from the outside world. 


The macroeconomic environment also bodes well for a blockbuster oligonucleotides stock year: low inflation and interest rates, good economic growth at low unemployment, lowered corporate taxes in the US and an FDA that seeks to speed up and protect innovation in exchange for ensuring that off-patent drugs are highly affordable.  It is probably this blue sky, however, that scares me most and it is my New Year’s resolution to take it easy on my margin balance for a change.

Wednesday, December 13, 2017

Dicerna Exploits HBV Biology For Less Frequent RNAi Dosing

Despite recent findings by Arrowhead Pharmaceuticals suggesting that finite treatment with an RNAi medicine might be possible in the search for a (functional) cure of HBV, less frequent dosing is always a plus.  It now seems that fresh HBV entrant Dicerna may have stumbled across a way to reduce dosing frequency and at the same time uncovered an intriguing piece of HBV biology involving the mysterious HBV X protein (HBx).

Search for perfect RNAi target site uncovers important HBV biology

Gene knockdown trigger selection has become critical in a highly competitive field featuring not only Arrowhead and Dicerna, but also Arbutus, Ionis (along with partner GSK), and the Alnylam-Vir alliance in the Western World alone.  This is because ‘by rotten luck’, Arrowhead found that an RNAi trigger that was designed to hit all the HBV transcript did not take into account the absence of the target site on transcripts that derive from host chromosomally integrated HBV.    

The finding that in many patients, e-antigen negative patients in particular, most viral transcripts derive from integrated HBV, has to be considered the most important new discovery in HBV biology and  disease progression since the finding of NTCP as the viral entry receptor.

This has established the selection of a target site upstream of the integration breakpoint as the new industry standard.  Little did we know that the search of the perfect RNAi target site should yield another fundamental insight into HBV biology that could also be therapeutically valuable and provide for some important competitive differentiation for late entrant Dicerna.     

HBx-sparing RNAi trigger has dramatic impact on HBV core protein localization

When scanning the HBV genome for target sites, Dicerna found that an RNAi trigger that hits all HBV transcripts except for HBx was associated with considerably more sustained gene silencing following a single dose (>>8 weeks in a mouse model where GalNAc-RNAi is generally less long-lived compared to humans) compared to an RNAi trigger hitting all HBV transcripts without exception (~3 weeks until knockdown was considerably lessened). 

Further underlining the longevity of the effect, Arbutus’ LNP-based formulation was only able to produce 1 week of good gene silencing in the same (HDI; slide 6) mouse model.

Interestingly, this effect was correlated with striking differences in the cellular localization of the HBV core protein: when all gene products were equally targeted, core protein was predominantly in the nucleus.  By contrast, core protein was almost exclusively cytoplasmic when HBx was spared.  Since phosphorylation of the C-terminal domain is known to be important for HBx nuclear trafficking, it was speculated that HBx may bind in that region and thus mask the nuclear localization signal.  This would be useful during the late stages of a viral infection when core protein would be needed for pregenomic RNA packaging and ultimately viral release.

The reason why gene silencing would be shorter lived when core was in the nucleus is likely due to its stimulating activity on transcription from the HBV cccDNA which would increase transcript dynamics and thus more quickly dilute out the anti-HBV-loaded RNAi machinery in the cytoplasm.

Indeed, in a non-cccDNA-dependent mouse model (e.g. more reminiscent of e-antigen negative patients), this beneficial effect was not observed.  

In summary, while the mechanistic basis of the differential silencing phenomenon remains to be fully fleshed out by further experimentation, Dicerna has found a way to quite dramatically extend gene silencing and thus decrease drug administration frequency.  This is a useful competitive feature in antivirals in general where drug resistance due to missed doses is always a concern and also simply due to patient convenience.


Disclosure: long DRNA.
By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.