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Arrowhead Names HBV as Next RNAi Program While It Consolidates Operations

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By Doug Macron

Just months after its acquisition of Roche's RNA drug assets, Arrowhead Research has essentially completed the consolidation of its operations, including its RNAi drug subsidiary Calando Pharmaceuticals, into a single nanomedicine firm with a strong focus on RNAi therapeutics.

The company also unveiled its newest RNAi program, a hepatitis B therapy combining standard 21-mer siRNA molecules with the dynamic polyconjugate delivery technology picked up from Roche, and expects to have a candidate in preclinical toxicology studies before the end of the year.

Arrowhead also released its fiscal first-quarter financial results last week, posting higher losses amid increased operating costs associated with the research facility included in the Roche deal.

Previously structured as a holding company for various subsidiaries, Arrowhead has long maintained an interest in RNAi through Calando, which in 2008 became the first company to bring a formulated siRNA-based drug into human testing with the cancer treatment CALAA-01.

Recently, however, Arrowhead started to consolidate its various operating units into a single entity. In late 2011, it acquired Roche's RNA drug operations, including its 40-person Madison, Wisc.-based facility, providing a home for all of the company's research and development activities (GSN 10/27/2011).

“Operationally, we are now running as a single company,”, Arrowhead President and CEO Christopher Anzalone said. The firm's business operations will continue to be based in California, he noted.

With this integration effort essentially complete, Arrowhead is now working to complete a phase Ib trial of CALAA-01 and is preparing to move the HBV treatment toward the clinic.

CALAA-01 comprises unmodified siRNAs against the M2 subunit of ribonucleotide reductase delivered via Calando's proprietary Rondel cyclodextrin-based polymer technology. In early 2010, Arrowhead published phase I data in Nature showing that the drug could knock down its intended target mRNA and protein inside a tumor through an RNA interference mechanism when delivered intravenously (GSN 3/25/2010).

In phase I, however, certain adverse events were observed among patients receiving a higher dose of the drug that the company believes are associated with the use of unmodified siRNAs rather than the Rondel system (GSN 8/11/2011). The company is currently testing a new dosing schedule in a phase Ib trial that involves pre-treating patients with low doses of the drug before moving them to higher doses in order to avoid the side effects.

Anzalone told Gene Silencing News this week that the phase Ib is expected to conclude “by this summer,” at which point Arrowhead will decide if it should move CALAA-01 into phase I or redesign the drug to incorporate a modified siRNA against RRM2.

“For not very much money, we can see if we can push the dose even higher with this new dosing schedule,” he said. But even if it can, Arrowhead intends to only move forward with modified siRNAs for any future drug candidates, he added.

First among those new compounds is a preclinical HBV therapy that was under development at Roche, Anzalone said.

“Roche spent a lot of time generating a lot of preclinical data on that program,” he said. “Rather than starting over again, we're going to stand on their shoulders.”

Few details on the program were made available, but Anzalone confirmed that the drug will use canonical siRNA molecules delivered using DPCs, liposomal delivery vehicles that Roche acquired through its $125 million buyout of Mirus Bio in 2008 and sold off to Arrowhead last year.

He declined to provide a timeline for when the HBV drug would be ready for phase I, but said that Arrowhead is currently working on selecting the siRNA sequence or sequences that will comprise the drug's payload, and will be in a position to begin toxicology studies “later this year.”

During a conference call held last week to discuss the quarterly financials, Anzalone conceded that acquiring Roche's Madison facility, along with the continued work on CALAA-01 and the addition of the HBV program, have increased Arrowhead's cash burn “substantially.”

Last year, Arrowhead officials noted that running the Madison site costs somewhere between $580,000 to $660,000 a month, which doubled Arrowhead's burn rate.

However, he said during the call that “we were okay with that because we were also increasing … we think, our ability to finance that burn rate,” namely through partnerships.

“We can present to potential partners a very compelling case that we should be a partner of choice,” Anzalone added on the call. “We think that we can bring in deals that will bring in non-dilutive capital so that we're not solely reliant on the capital markets for operating capital.”

This week, Anzalone said that he expects Arrowhead to be able to strike deals that are either delivery-centric, wherein a partner has a target of interest in hand and works with the company to develop an appropriate delivery strategy, or broader ones that include “sequence determination, sequence optimization, and delivery.”

In either case, Arrowhead is expected to maintain a co-development role, he told Gene Silencing News.

“I don't envision any straight, simple licenses,” he said. “They will all be true collaborations.”

Anzalone said that Arrowhead is not publicly providing guidance on when any partnerships may be forged.

Fiscal First Quarter

For the three-month period ended Dec. 31, Arrowhead's net loss rose to $2.5 million, or $0.25 per share, from a year-ago loss of $1.4 million, or $0.20 per share.

Revenues fell sharply, to roughly $24,000 from nearly $300,000 in the same period a year earlier, while total operating expenses climbed to $4.1 million from $3.6 million.

Arrowhead attributed the higher expenses to the added costs associated with its Madison operations, and said that it expects spending will “increase throughout fiscal 2012 as research and development efforts are accelerated.”

At the end of 2011, Arrowhead had cash and cash equivalents totaling $6.8 million.


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