In April, after reviewing a business model that incorporated RNAi-based drug development, Cenix Biosciences made the decision to refocus strictly on offering RNAi reagent design, target discovery, and target validation services.
“We even considered spinning out a daughter company that would do the therapeutics, but that was abandoned eventually,” Chris Echeverri, the German company’s co-founder, CEO, and CSO, told RNAi News this week. “In the end, mainly, it was an issue of realizing that to be able to do the two sides of the business model, to do them justice, we’d need a lot more resources than what we had. Really, we’d rather use the resources that we have and focus on the area where we felt we were strongest.”
Six months later, the company has found that it has more than enough work, and is seeing demand for its RNAi services stretch downstream into drug development, according to Echeverri.
“It took us a little bit by surprise, because the response [for the company’s services] … has been overwhelming,” he said. “We’re struggling a little bit to keep up, from a business development point of view.”
Echeverri noted that while Cenix is still conducting RNAi work in systems such as Drosophila and C. elegans, “we’re doing more and more of our work in human cells. Most of the demand now [from academic, pharmaceutical, and biotechnology customers] for these projects is in human cells.”
The typical collaboration with pharmaceutical firms, he said, involve Cenix applying disease-specific assays to a series of druggable genes, looking for those that make the best target for small molecule intervention. As for biotech companies, they “are often asking for validation projects,” he said.
“Over the last few years, a lot of biotech companies have used what I would call first-generation functional genomics technologies, like expression profiling arrays or the large two-hybrid screens,” he said. “But the reality is that all those methods really only give you … a target candidate. But it is very poorly validated; you still have to do experiments to really establish the real physiological relevance of those genes.
“The other problem is that, often, those techniques have left people in those biotech companies not just with a handful of targets, but a big collection of target candidates — hundreds, sometimes thousands, which look interesting based on their analyses, and [the researchers] are a little bit stuck and they need to narrow down the list using some method that would give better validation … data,” Echeverri said.
“It turns out that RNAi, especially high-throughput RNAi, is ideal for relieving that bottleneck.”
Aside from preclinical work, Echeverri said that Cenix is finding that the drug industry is also becoming increasingly interested in applying RNAi to its later-stage efforts.
“The interesting thing is that the large pharmas have also started understanding that you can use this technology to characterize the mode of action of compounds in the pipeline, even compounds that are quite advanced in their development.
“A lot of times these are compounds that are … in clinical trials, [and] their mode of action is very poorly understood,” Echeverri said. “So combining RNAi … with drug treatments using those compounds can be very informative. You can help track down, for example, the sources of unwanted side effects or unexpected toxicities, and try to address those.
“This is a concept we’ve been talking about for over two years now, but it seems like people in the pharmaceutical industry have only over the last eight to 10 months realized how valuable, or how feasible, that is,” he said.
Pharmaceutical firms, he said, are also realizing that RNAi can be used for “directing their new target discovery efforts toward pathways that are already targeted by compounds that are under development.
“The typical situation is that a company … knows the pathway they want to hit, they know it’s a great pathway from a therapeutic point of view, and they have a compound, maybe, that already hits that pathway, but the target for that compound turns out not to be very easily druggable,” Echeverri said. “They would like to find other targets that may be more easily druggable in that pathway, so you can do, again, a combination of RNAi plus drug treatment in what we call modifier screens.”
In line with this growing awareness, and the sometimes surprising adventurousness of some of the major drugmakers, Echeverri said that Cenix is currently in negotiations with “several large pharma” firms to begin “large projects beginning next year, or possibl[y] … the end of this year. We’ve also been approached by a number of larger biotech companies.”
While he declined to provide specific details about these possible deals, Echeverri said that Cenix — at least right now — generally structures its deals so that it receives all its fees upfront or in the near term. “We don’t ask for royalties at the moment … we ask for compensation in line with the immediate commercial value of what we deliver.
“So we don’t ask for reachthrough unless the partner wants to have that … to share the risk,” he said. “This is in reaction from feedback from the industry.”
While drug companies may have been willing to strike target deals with hefty downstream payouts for the partners in the past, “we’re being told that people prefer to stay away from sharing long-term reachthrough,” he said. But, he noted, Cenix’s willingness to accommodate this preference “is something … that may change over the next year, depending on demand.”
Echeverri declined to disclose any new deals the company is currently establishing that involve product royalties, but said press releases due by the end of the year “will answer some of these questions.”
Echeverri also said that Cenix expects to announce before the end of the year additional senior management appointments. He declined to specify which positions are to be filled, but the company’s website is currently advertising jobs for a business development manager, and an application programmer to support the development of a laboratory information management system.
Since the summer, the company has named a new head of finance and expanded the role of Birte Sönnichsen, director of discovery programs, to include COO. Both appointments have helped relieve Echeverri of a heavy workload resulting from the company’s heretofore intentionally thin layer of management.
“I came to this position directly out of a post doc, directly out of academia, and the plan from the beginning was that I would be in the position only during the start-up phase of the company,” he said, “until we could reach a certain critical mass and a certain level of performance that I could then hire senior management to replace me.”
But this spate of executive appointments shouldn’t lead one to believe that Echeverri’s days at the company are numbered, he said.
“For the foreseeable future, I feel like I’m very much able to drive the company’s development at the right rate, and so I don’t foresee stepping out of this role,” he said. “Of course, that’s not my decision only, it also depends on my performance in these positions and whether our shareholders are happy with that.”