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Calando Says Strength of Phase I Trial of CALAA-01 Will Attract Partners, Including Suitors

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By Doug Macron

Calando Pharmaceuticals could soon find a partner for its siRNA-based cancer drug CALAA-01 thanks to publication of positive data from an ongoing phase I trial of the drug, the head of parent firm Arrowhead Research said last week.

And although it will remain focused solely on CALAA-01 in the near term, Arrowhead is considering initiating new drug-development programs, CEO Christopher Anzalone said during the company's fiscal second-quarter earnings call.

"We believe these findings [from the CALAA-01 trial] indicate that Calando has created significant value for itself, Arrowhead, and the broader industry," Anzalone said during the call. "We are working to realize that value now … [and are] currently evaluating the many options in front of us. These range from an all-out sale of Calando to a series of partnerships."

Calando had been a high-flyer in the RNAi drug space when it became the first company to begin testing a formulated siRNA therapeutic — CALAA-01 — in humans. That milestone, reached in mid-2008, relied on Calando's proprietary Rondel drug-delivery technology to advance the drug.

However, financial troubles within Arrowhead in general, and its failure to secure partnerships for Calando in particular, forced the parent to eliminate all of the subsidiary's preclinical programs and to halt development of CALAA-01 when the phase I trial ended (RNAi News 5/21/2009).

However, Arrowhead, emboldened by positive early data from the CALAA-01 study, disclosed later that year that it had decided to continue advancing the drug past phase I, despite turning Calando into a virtual company after shuttering its laboratories earlier that year (RNAi News 11/5/2009). CALAA-01 is currently being developed through contract research organizations.

"We have some very exciting data from the clinical trial that support our confidence that CALAA-01 and the broader Rondel platform have significant value, and may be attractive acquisition targets,” Anzalone said at the time.

A few months later, he said Calando had put on hold all partnership discussions pending the publication of certain phase I CALAA-01 data in a peer-reviewed journal. He reckoned that having the data in print would strengthen its hand during negotiations.

In March, the company, together with researchers from the California Institute of Technology, hit this milestone. The study, which appeared in Nature, found that CALAA-01, when delivered intravenously to humans, could knock down its intended target mRNA and protein inside a tumor through an RNA-interference mechanism.

CALAA-01 comprises a linear, cyclodextrin-based polymer decorated with a human transferrin protein targeting ligands on its surface, which are designed to engage transferrin receptors on the surface of cancer cells. It also contains polyethylene glycol to promote stability in biological fluids, and an siRNA payload targeting the M2 subunit of ribonucleotide reductase, an established cancer target.

In the phase I trial, patients with solid tumors refractory to standard therapies were given 30-minute intravenous infusions with one of three doses of CALAA-01 on days 1, 3, 8, and 10 of a 21-day cycle by, according to the paper.

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Biopsies from melanoma patients enrolled in the study found the nanoparticles to be present inside the tumors, and that they accumulated in a dose-dependent manner. Additionally, "a reduction was found in both the specific messenger RNA and the protein levels when compared to pre-dosing tissue," the researchers wrote.

"These data demonstrated that our drug and delivery system have achieved what no other delivery system has, solving the longstanding systemic delivery problem associated with RNAi," Anzalone said during last week's conference call.

In regards to possible partnerships, Anzalone said that "many possibilities exist, including partnering on an indication-by-indication basis; partnering on a specific target-by-target basis; and partnering on a geographic basis."

He did not, however, give guidance on when a deal might be forged. With the phase I data having just been published, "we are still evaluating these options," he said.

Nonetheless, "there is an awful lot of interest [in Calando] because, right now, we are the only game in town in terms of showing definitively that we can silence genes via RNAi and that we can effectively siRNAs systemically," Anzalone noted. "While large companies are certainly testing dozens and in some cases literally hundreds of delivery strategies, right now we are the only one that has proof of concept in humans.

"I don't know how long we'll keep that lead … but right now, we are the only ones and we have clear first-mover advantage," he said.

Ultimately finding a partner for CALAA-01 "will be among the next important steps for our company," he added. In the meantime, the company is continuing the phase I study, which is expected to be completed by the end of 2010.

And while Arrowhead has said it is committed to seeing the drug advance into phase II testing, just what form such trials will take is not yet known.

In the current phase I study, "we are in a dose-escalating trial and we have not seen … any drug-related" serious adverse events, Anzalone said. "We are at dose levels where we can see some activity … [but] it's unclear how high we go with this."

CALAA-01 "is not like a traditional cancer drug … [which] are poisons, and you put in as much poison as you can without killing the host, and that's the dose you use," he said. "It's not clear to me that we are ever going to find that maximum tolerated dose," with dose escalating stopping only when the highest possible target knockdown is achieved.

"It is unclear, right now, what sort of dose we're going to use for a phase II, and it's unclear precisely what type of cancer we'd go after" in that trial, he said. "We're going to have to wait and see."

Anzalone also hinted that Calando may eventually launch additional drug-development programs, though he did not elaborate.

"Our ultimate strategy need not rely solely on partners or acquirers at this time, and may include retaining some targets or fields for further development in-house," he said.

Fiscal Q2

For the three-month period ended March 31, Arrowhead's net loss sharply narrowed to $2.1 million, or $0.03 per share, from $5.3 million, or $0.12 per share, in the same period a year earlier.

Operating costs in the quarter slipped to $2.3 million from $5.4 million, reflecting a cost-cutting program that included the elimination of most of Calando's staff and facilities.

Revenues in the fiscal second quarter declined to $157,000 from $236,000, reflecting the receipt of research grants in the period last year that were not matched this year.

At the end of the quarter, Arrowhead had roughly $2.6 million in cash, which it expects to be sufficient to fund operations through the end of the fiscal year.

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