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With Drugs in the Clinic, Publicly Traded RNAi Firms See Gains in Market Caps

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As the development of RNAi-based therapeutics has advanced during 2013, each of the major publically traded companies in the field has seen significant increases in both stock price and, more importantly, market capitalization.

Although there have been gains made in terms of the basic science behind the gene-silencing technology during the year, it is RNAi's translation from a genomics research tool into a clinical-stage therapeutic modality that has driven Wall Street's interest.

"For a long time, RNAi was a very cool scientific project," Piper Jaffray analyst Edward Tenthoff told Gene Silencing News.

And while there was much interest in the technology in its earliest days — as evidenced by big pharma "mega-deals" such as Merck's $1.1 billion buyout of Sirna Therapeutics in 2007 and the awarding of the Nobel Prize to RNAi discoverers Andrew Fire and Craig Mello around the same time — company valuations remained relatively modest because "there just weren't products yet," he noted.

But over the past 12 months, with more advanced delivery technologies now available, there has been a surge in clinical data, helping establish proof of concept for RNAi as a therapeutic and indicating that marketable drugs based on the technology are just down the road — which is precisely what investors are looking for, Tenthoff added.

Topping the list is Alnylam, which has seen its stock price surge from around $19 at the beginning of the year to almost $60 this week, translating to a market cap increase to $3.8 billion from around $1 billion.

Alnylam has long led the RNAi drug space, and the company continued the tradition this year, reporting in the summer phase II data showing that its TTR-mediated amyloidosis treatment patisiran, formerly ALN-TTR02, could knock down levels of its target protein by up to 93 percent.

Given the close association between TTR protein levels and the disease, the findings were especially compelling, and last month Alnylam moved the compound into phase III testing, marking the first time the company has reached this pivotal stage of human trials with any of its drug candidates.

This year Alnylam also moved a subcutaneous version of its TTR drug into phase I, and is poised to begin clinical testing of a hemophilia therapy in early 2014.

Arrowhead Research's stock has also benefitted from the company's clinical activities, jumping from around $2.10 at the start of 2013 to roughly $8 a share this week, with a rise in its market cap from about $33 million to nearly $256 million.

The company first reached the clinic in 2010 with the siRNA-based cancer drug CALAA-01, which was developed by subsidiary Calando Pharmaceuticals. Although that molecule failed to perform and was ultimately dropped from Arrowhead's pipeline, the company has had better luck with the hepatitis B treatment ARC-520.

That drug is based on novel delivery vehicles called dynamic polyconjugates, which were acquired from Roche in 2011, and advanced into phase I testing this summer. A few months later, Arrowhead announced that results from that study showed ARC-520 to be safe, while non-human primate data indicated that it can lower levels of HBV DNA and two key viral antigens, while triggering an immunological flare indicative of adaptive immune system derepression.

On these data, this month Arrowhead filed to begin testing the drug in a phase IIa trial.

Also getting a boost amid advances in human trials is Tekmira Pharmaceuticals, which is best known for its lipid nanoparticles but has been transforming itself into a full-fledged therapeutics developer.

This year, the company began a phase I/II trial of its oncology drug TKM-PLK1 in patients with gastrointestinal neuroendocrine tumors or adrenocortical carcinoma. And this week, the company announced that it has gotten regulatory clearance to begin phase I testing of a more potent formulation of its Ebola drug TKM-Ebola, which had previously been in the clinic but was pulled in order to conduct the refinements.

Bolstered by these milestones, Tekmira's stock has risen to around $7.50 from about $5 at the start of 2013, with its market cap doubling to approximately $142 million on the Nasdaq. (Tekmira's shares are also traded on the Toronto Stock Exchange.)

Even RXi Pharmaceuticals has gotten in on the action, despite a series of reorganizations associated with its 2011 acquisition by Galena Biopharma, which poached the company's Nasdaq listing before spinning it out into a separate company again in 2012.

After years of false starts on a number of different pipeline programs, in mid-2012 RXi began its first clinical trial with a phase I study of the anti-scarring agent RXI-109, which was followed by a multi-dose phase I a few months later.

This summer, the company released data from both studies showing that the drug was safe, and last month RXi kicked off a phase II trial.

Investors have taken notice of RXi's achievements, pushing its stock from around $0.07 a share at the start of January to almost $3 this week. The firm's market cap, meantime, has risen from about $11 million to almost $33 million.

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