New Zealand-based RNAi drug developer Genesis Research and Development has turned to existing investors for additional capital after it failed to secure the more than NZ$2 million ($1 million) it is owed for selling its majority stake in a biofuels company, according to a letter to shareholders issued this month.
“The massive downturn in global financial markets is having an impact on us all,” Genesis CEO Stephen Hall wrote in the letter. “Now we need to augment our funding by investment of new capital” as the company “actively [explores] opportunities to introduce substantial new shareholders.”
Meanwhile, Genesis is actively pursuing industry partnerships for both its RNAi drug program in oncology, as well as an early-stage single-stranded RNAi technology under development.
Describing the company’s need for additional capital, Hall told RNAi News in an e-mail this week that Genesis is “considering a rights issue for all shareholders” and is “talking to several potential large new investors.”
Adding urgency to Genesis’ fundraising efforts is the failure of renewable-energy firm Pure Power Global to pay the NZ$2 million plus interest it owes after agreeing in 2007 to buy Genesis’ stake in BioJoule, which is developing technologies to convert biomass into products such as fuels.
While Genesis had been banking on the money to support its nascent RNAi drug efforts, last month it announced that PPG would be unable to meet its financial obligation due to “difficult market conditions,” and that it “has not been able to assess the likelihood or timing of repayment.”
In the shareholders letter, Hall noted that Genesis’ cash balance as of Dec. 31, 2008, was NZ$859,000, “substantially lower than planned” as a result of PPG’s missed payment. And although the company is owed a NZ$700,000 research and development tax credit from the New Zealand government, Hall wrote that the company’s ongoing drug-development programs are expected to cost around NZ$300,000.
“So we need new funding,” he added.
According to Hall, companies in the pharmaceutical industry “have substantial cash balances and continue to license or acquire projects that fit their strategic needs and pass their commercial and scientific assessment.
“We have maintained contacts with many biotechnology and pharmaceutical companies … [and] are in discussions with a number of these companies and hope that this will lead to new commercial relationships [that] will provide funding for our business,” he added.
At the moment, however, Genesis appears to be looking for a quick cash fix from existing stockholders, although specific details about the proposed transaction were not available.
“The last time we sought funds from shareholders was in September 2000,” when Genesis had its initial public offering, Hall wrote. “I hope shareholders will continue to support Genesis so that they can share the future benefits from the position we have achieved.”
That position, which includes an antibody-based program in immunology, is largely focused on therapeutic RNAi after the failure of several non-RNAi drug candidates in clinical trials (see RNAi News, 8/5/2005).
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Genesis’s initial RNAi efforts centered around allergic disease, and by early 2006 company officials were predicting the start of clinical trials for an siRNA-based drug by early 2007 (see RNAi News, 2/23/2006).
About a year later, however, the company shifted its interest to oncology after hitting a roadblock during preclinical testing within its asthma and atopic dermatitis programs (see RNAi News, 3/22/2007). Specifically, it found “a number of cases [in which] promising results published by overseas groups did not correlate with our testing,” Hall told RNAi News at the time.
In this month’s letter to shareholders, Hall said that Genesis’ oncology research is primarily focused on “the altered nutrient uptake and metabolism in cancer cells,” and that the company’s goal is to “develop therapeutics that kill cancer cells in solid tumors and/or improve the effect of existing chemotherapeutic drugs.”
Genesis has identified “a number of genes with strong potential as therapeutic targets in cancer and [has] demonstrated that silencing these target genes inhibits tumor cell growth both in vitro and in vivo, and sensitizes cells to clinically used chemotherapeutic drugs,” he noted. “That screening program has been expanded to generate intellectual property covering a wide platform of potential targets that are suitable for internal development of external licensing.”
Hall said that the company’s lead target is the M1 subunit of ribonucleotide reductase, an enzyme that catalyzes the formation of the deoxyribonucleotide precursors required for DNA synthesis. Another RNAi drug shop, Calando Pharmaceuticals, is currently testing an siRNA-based drug against the M2 subunit in a phase I study (see RNAi News, 6/5/2008).
“We are in discussion with several groups to determine whether they wish to collaborate with Genesis to develop [an] siRNA [drug] against RRM1 as a therapeutic,” Hall wrote. “It is likely to be a number of months before we know the future for this project.”
At the same time, Hall noted in the letter that Genesis has begun working on a novel gene-silencing technology that uses single strands of RNA to trigger an RNAi effect.
According to a Genesis brochure, the so-called ssRNAi molecules are designed to be delivered without a vehicle as chemically modified, nucleobase-masked, single-stranded RNAs that “form an active double-stranded molecule only when the masking groups are removed inside cells.”
This technology, Hall wrote, “has the potential to solve the siRNA delivery problem by combining the delivery advantages of antisense oligonucleotides with the potent gene knockdown of siRNAs to yield a novel and vehicle-free gene-silencing technology.
“We have not been able to say much about this program until we completed a specialist review of our intellectual property position,” he noted in the letter. “However, three patent applications have now been filed and the review has been completed. It confirmed the patentable novelty of our technology and our freedom to operate.
“Recently, we disclosed some limited information to a number of companies [that] we assessed as being suitable collaborators to help fund and speed the development of the technology,” he added. “They have all expressed strong interest in the technology, so we expect discussions to occur in the next few months [that] will indicate the likelihood of external funding for this project.”