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Arrowhead Considering Selling Subsidiary Calando to Cash In On Delivery Technology

Roughly six months after merging its Calando Pharmaceuticals and Insert Therapeutics subsidiaries into a single unit under the Calando name, Arrowhead Research is considering selling off the combined firm in a bid to profit from its drug-delivery technologies, a company official confirmed this week.
The official, Arrowhead’s vice president of medical technologies and Calando CEO James Hamilton, also indicated that the parent company would be willing to split up the company to separate its RNAi and non-RNAi activities as part of a sale if the terms of the deal were right.
Citing the ongoing challenges facing systemic RNAi drug delivery, Arrowhead President and CEO Christopher Anzalone said in a letter to shareholders issued this week that Calando’s Rondel siRNA-delivery technology has made the subsidiary an “attractive near-term acquisition target.”
There are “well-documented technical hurdles associated with systemic delivery of siRNA-based therapeutics,” he wrote, and “Calando’s Rondel system has the potential to circumvent the impasse to siRNA systemic delivery.”
Hamilton told RNAi News that Arrowhead has received inquiries regarding the possible sale of Calando, and that seeking an acquirer for the subsidiary is “Arrowhead’s strategy to monetize Calando as … an asset.”
“Arrowhead’s basic approach is to build subsidiaries … and exit after they are up and running” either by selling them off, floating their shares publicly, or maintaining the units as a “revenue-generating companies underneath the Arrowhead umbrella,” Hamilton explained.
Although Calando already has two drugs in the clinic, including the siRNA-based cancer therapy CALAA-01, both are only in phase I trials and therefore years away from generating revenues. At the same time, an initial public offering is unlikely given current market conditions, he noted.
Hamilton declined to comment on the existence or status of any possible negotiations that may be underway regarding the sale of Calando.
Divide and Acquire?
In weighing the possible sale of Calando, Arrowhead has put itself in a position to take advantage of a hunger for RNAi-enabling technologies among those big biopharmaceutical players that have embraced the field.

There are “well-documented technical hurdles associated with systemic delivery of siRNA-based therapeutics. Calando’s Rondel system has the potential to circumvent the impasse to siRNA systemic delivery.”

In 2007, Roche acquired Alnylam Pharmaceuticals’ Kulmbach, Germany-based subsidiary for $15 million in cash as part of a broader drug-discovery arrangement in a bid to rapidly gain RNAi expertise and jumpstart its in-house RNAi drug efforts (see RNAi News, 7/12/2007).
About a year later, Roche announced that it would buy Mirus Bio for $125 million in cash, holding onto that company’s therapeutics operations while divesting its reagents business, in a deal that was largely driven by Mirus’ know-how in nucleic acids delivery (see RNAi News, 7/24/2008). 
In 2006, Merck made one of the biggest investments in RNAi when it acquired Sirna Therapeutics for $1.1 billion in cash, a move a Merck official said was based on Sirna’s RNAi intellectual property estate and expertise (see RNAi News, 11/2/2006).
Whether a company interested in Calando’s RNAi capabilities would also be willing to buy its small-molecule assets, however, is unclear. But according to Hamilton, Arrowhead is open to the idea of once again dividing the two in order to make a deal happen — if the terms are right.
Such a split “would depend on how an acquirer would want to structure a deal,” he said. Although “I wouldn’t say that it’s necessarily the strategy that [the two parts of Calando] are going to become unbundled … [such a move could hinge] on the kind of interest” expressed by a possible acquirer.
And breaking up Calando isn’t likely to be too challenging since Arrowhead already has experience separating and combining the company’s RNAi and non-RNAi activities. In addition, Calando currently maintains two separate arms of operations, one overseen by Thomas Schluep as CSO of small-molecule delivery and the other managed by Jeremy Heidel, a Calando co-founder, as CSO of oligonucleotide delivery.
Calando was founded in 2005 to advance an RNAi-delivery technology that had been under development at Insert, which had stopped working with the gene-silencing technology (see RNAi News, 2/25/2005). 
As a pure-play RNAi shop, Calando advanced its lead RNAi drug, CALAA-01, to the point of a successful investigational new drug application filing (see RNAi News, 4/24/2008). After initiation of a phase I study in June, CALAA-01 became the first formulated RNAi drug to be tested in humans. 
But early this year, Arrowhead announced that it had taken over management of Calando and planned to merge the company with Insert in order to streamline their operations. The merger closed in April (see RNAi News, 5/1/2008).

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