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Calando Finds Partner for Non-RNAi Technology, Has No Plans to Restart In-House RNAi Programs

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By Doug Macron

Arrowhead Research said this week that its Calando Pharmaceuticals subsidiary has signed a deal granting the exclusive, worldwide rights to its cyclodextrin co-polymer drug-delivery technology, as well as a phase I, non-RNAi cancer drug, to Cerulean Pharma.

In doing so, Arrowhead has taken a significant step forward in its efforts to find partners for Calando's drug-development programs and delivery technologies as it struggles under a severe cash crunch.

But while the deal provides Arrowhead with a measure of much-needed financial relief, the company indicated that it still has no plans to restart on its own any of its RNAi programs, which were halted due to financial constraints and have been on the block for some time.

Under the terms of the arrangement, Cerulean paid a $2.4 million upfront fee to Calando, and has agreed to pay milestones of up to $2.75 million if the in-licensed drug, called IT-101, is successfully developed and receives regulatory approval.

Calando also stands to receive up to $30 million in sales milestones, plus royalties on net sales. In addition, Calando will receive $3 million in development milestone payments for any drug Cerulean develops using the cyclodextrin delivery technology, up to $15 million in sales milestones, and royalties on net product sales.

"Importantly, this agreement does not include rights to develop and commercialize RNAi products or the clinical-stage RNAi candidate CALAA-01, both of which Calando intends to partner separately," Arrowhead noted.

Finding a partner for those RNAi operations has been a key goal for Arrowhead since at least late 2008, when Calando CEO James Hamilton told RNAi News that the parent firm was weighing the possibility of either divesting Calando or splitting up and out-licensing its RNAi and non-RNAi programs and technologies (see RNAi News, 10/23/2008).

Calando was originally established by Arrowhead in 2005 to develop an RNAi-delivery technology under development at another of its many subsidiaries, Insert Therapeutics (see RNAi News, 2/25/2005). As a pure-play RNAi shop, Calando advanced its siRNA-based cancer drug CALAA-01 into phase I testing, but last year Arrowhead decided to merge Calando and Insert in order to cut costs (see RNAi News, 5/1/2008).

Despite the move, Arrowhead was still facing financial dire straits and late last year said that Calando would not move any of its preclinical programs, including one related to a second siRNA-based cancer drug dubbed CALAA-02, into clinical studies until it could ink a money-generating deal for the company (see RNAi News, 12/18/2008).

Unable to do so, Arrowhead this year went one step further, disclosing in a filing with the US Securities and Exchange Commission that Calando would halt development of CALAA-01 entirely once a phase I trial had been completed, and that it would cease all preclinical research and development activities (see RNAi News, 5/21/2009).

Arrowhead noted in the filing that none of the programs would be restarted until they are out-licensed or partnered. And although it has succeeded in securing funding through its deal with Cerulean, a company spokesman reiterated the firm's plan to pursue deals for Calando's technologies rather than continue working on them in-house.

"Should Cerulean be successful [in developing the cyclodextrin technology and IT-101], then Calando may utilize some of [the milestone money] to restart a clinical program," Thomas Haag, Arrowhead's general counsel and chief patent officer, told RNAi News this week. "But currently there aren't any concrete plans for that."

Additionally, depending on the kind of deal Calando strikes for its RNAi technologies, the company may, in effect, become a pharmaceutical firm in name only, he added. But there is also the possibility it could once again get back to the business of drug development.

If Calando finds a partner interested in exclusively licensing its delivery technology, "at that point [it] would be more of a holding company," Haag explained. "However, if there are one or several non-exclusive licenses to the system whereby a third party would be delivering their own therapeutic agents, I could foresee some research and development taking place at Calando to help optimize the system."

Haag confirmed that Calando is in discussions with "a small number" of parties interested in a deal, but declined to provide specific details on the talks.

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