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Arrowhead Subsidiary Sees Phase I Data Publication as Key to Industry Partnership


By Doug Macron

Publishing data from an ongoing phase I study of its siRNA-based cancer drug CALAA-01 in a peer-reviewed journal remains a key step for Calando Pharmaceuticals in its efforts to secure a big pharma collaborator.

However, the company is uncertain when it will meet this goal and has put all partnership talks on hold, an official from Calando's parent firm Arrowhead Research said last week.

"It's important to us that the results will be published in a peer-reviewed journal — in fact, we hope a high-quality peer-reviewed journal," Arrowhead CEO Christopher Anzalone said. "So … we aren't in discussions with big pharma right now and will not be until we can freely talk about some of [these] data."

Meanwhile, Arrowhead continues to consider ways to maintain its listing on the Nasdaq Stock Exchange, from which it could be delisted as early as March 15 for failing to meet the exchange's $1 minimum bid requirement.

Speaking during a conference call held to discuss Arrowhead's fiscal first-quarter financial results, Anzalone indicated that a reverse-stock split remains on option, but said the company is "still hopeful" that it can boost its share value through "organic growth" driven by the achievement of corporate milestones, including a Calando partnership.

"Let me … stress that we have no immediate plan or desire to effect a reverse split of our stock," he said. Still, March 15 "is just around the corner, and the timing of achieving and, more importantly, publicly disclosing milestones has been slower than anticipated."

Arrowhead may, however, buy itself some additional time if it can meet all of the Nasdaq's other listing requirements, which would result in "an automatic 180-day extension of the grace period to meet the $1 minimum bid requirement," Anzalone noted. "This gives us another six months to disclose the business, technical, and organizational milestones that we believe will lead to a higher market value of our stock."

Arrowhead has been struggling financially over the past two years, and in mid-2008 merged Calando with another of its subsidiaries, Insert Therapeutics, under the Calando banner in a bid to control costs (see RNAi News, 5/1/2008).

The company continued to face difficulties, however, and by the end of 2008, Arrowhead announced that Calando would cease work on all of its preclinical drug candidates and not file any investigational new drug applications until it could forge some sort of money-making deal (see RNAi News, 12/18/2008). Calando is, however, continuing work on CALAA-01, which Arrowhead views as the subsidiary's best near-term value driver (see RNAi News, 11/5/2009).

The drug is a non-modified siRNA targeting the M2 subunit of ribonucleotide reductase and is delivered using Calando's so-called Rondel delivery system. In 2008, the drug moved into the clinic, becoming the first formulated siRNA therapeutic to be tested in humans.

The study is an open-label, dose-escalating trial in patients with non-resectable or metastatic solid tumors. Though its primary endpoints are safety and tolerability, the trial is also designed to evaluate pharmacokinetics and tumor response.

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Few details are available about the phase I study, although Anzalone noted during last week's call that Calando continues to enroll patients in the trial.

"We have dosed a number of patients so far and we have seen no significant adverse events that are drug related thus far," he said. "So we are really encouraged that we can continue to dose patients and increase our dose levels. We are still in search of [the] maximum tolerated dose, and I think every patient that we dose will increase the power of the platform, assuming that the data stay positive."

However, those data will not be disclosed, publicly or to potential big pharma partners, until they are published, he said.

"A manuscript has been prepared that describes some of the preliminary data arising from our phase I clinical trial," he said. "While we are eager to have these results published so that we can discuss them with you, we have no control over the timing of the publication."

Still, the company is "optimistic" the data will be published "soon," he noted.

Once this milestone is met, Anzalone said he anticipates that Calando will be better positioned to find industry players interested in both the drug and its delivery system.

"It is always been our goal to be the first company to provide a viable, safe, and scalable means of systemically delivering siRNA for oncology," he said. "This goal remains … [and key to achieving that goal] will be to demonstrate, via a publication in a peer-reviewed journal, evidence that we are able to deliver functional siRNA in humans that will initiate RNAi.

"We believe that demonstrating effective clinical data is critical to our ability to fully monetize the Calando platform," he said. "We've seen literally hundreds of delivery strategies initially look interesting based on preclinical data, only to prove inconsistent or ineffective in different models. Therefore going forward, we believe that high-value partnerships with large pharmaceutical companies will require clinical data."

Publishing the phase I data will help show that "CALAA-01 could be a valuable drug and that CALAA-01 is also a proof of concept that demonstrates the value of Rondel for delivering virtually any other oncology-related siRNA sequence," he added.

The Fiscal First Quarter

For the three-month period ended Dec. 31, Arrowhead's revenues dropped to $148,000 from $702,000 in the year-ago quarter.

Operating costs plummeted to $2.3 million from $9.3 million, reflecting a corporate-wide cost-cutting program that included a reduction of operations at Calando and other Arrowhead subsidiaries.

During the conference call, Anzalone said that the company's decreased burn rate "gives us better flexibility to address unforeseen challenges and opportunities going forward. With our cost-cutting measures largely complete, we expect to continue to operate at about this level going forward with some modest increases to our burn as we enroll additional patients in Calando's phase I trial."

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Arrowhead's net loss for its fiscal first quarter fell to $1.5 million, or $0.03 per share, versus a loss of $8 million, or $0.19 per share, in the same period a year earlier.

At the end of 2009, Arrowhead had cash totaling $3.8 million. Expecting that it will "need to obtain additional capital to meet its operating needs for the future," Arrowhead plans to focus on "near-term revenue opportunities, conserving cash, and seeking sources of new capital," the company said in a filing with the US Securities and Exchange Commission.

"To execute this plan, the company will seek to accomplish one or more of the following on favorable terms: the out-license of technology, sale of a subsidiary, sale of non-core assets, scaling down development efforts, funded joint development or partnership arrangements, and sale of securities."