By Doug Macron
New Zealand's Genesis Research and Development last week said that it is once again asking its shareholders to make additional investments in the company, this time to give the cash-strapped firm the resources to enable its subsidiary, Solirna Biosciences, to reach a key milestone with its single-stranded RNAi technology.
"Over the last year, we have made substantial progress with development of the ssRNAi technology, and a number of initial hypotheses have been confirmed through successful laboratory experiments," Genesis CEO Stephen Hall wrote in a letter to shareholders. "Work currently underway is intended to satisfy a milestone for the second tranche of funding" from Solirna's primary investor.
However, "at this stage, it is not known when the work will be completed to satisfy that milestone, or if the milestone will be met, so Genesis requires additional funds to invest in Solirna to ensure that its activities are maintained," the company added in the letter.
Specifically, the company is asking its investors to take part in a share purchase plan that would allow individual shareholders to subscribe for up to NZ$15,000 ($10,600) in newly issued shares at NZ$0.06 per share. The company's stock closed at NZ$0.07 on the New Zealand Stock Exchange on Tuesday.
Genesis first began working in the RNAi space around 2005 in order to reinvent itself after setbacks developing antibody-based drugs (see RNAi News, 8/5/2005). Initially, the company planned to develop drugs based on the gene-silencing technology for allergic diseases, but failures in this area led it to shift its focus onto oncology (see RNAi News, 3/22/2007).
Although it had been predicting it would begin its first clinical trial with an siRNA drug in 2008, the cancer programs also ran aground, and by early 2009 Genesis moved its attention onto an early-stage technology that uses single-stranded RNA to trigger an RNAi effect.
According to Genesis, the technology involves chemically modified, nucleobase-masked single-stranded oligos capable of forming "an active double-stranded molecule only when the masking groups are removed inside cells." In part because of their smaller size, ssRNAi agents are expected to be more easily deliverable than their double-stranded or hairpin counterparts.
Although the company had intended to develop the ssRNAi technology itself, it encountered difficulties raising the funding it needed to keep its operations going. Last June, the company said that its best chance for success was to spin out the RNAi technology into a new subsidiary — a move designed to allow would-be partners and financers to invest in the technology independent of the company's other programs (see RNAi News, 6/18/2009).
A couple of months later, Genesis announced that it had found investors willing to provide up to NZ$1 million ($700,000) to fund Solirna (see RNAi News, 8/6/2009). The primary investor in the new company is Japanese biotech firm MediBic Group, which, while primarily a pharmacogenomics company, has invested at least twice in Intradigm through its investment banking arm MediBic Alliance (see RNAi News, 10/15/2009).
Under the terms of its deal with MediBic, Solirna will receive the investment in two tranches: the first worth NZ$200,000 by way of a subscription for Series A shares and the second worth NZ$350,000 by way of convertible notes.
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Once the transactions have been completed, Genesis said that it will own 2.2 million ordinary founder shares of Solirna. MediBic investment vehicle MediBic Alliance Technology Fund-1, which is providing the money, will hold between NZ$300,000 and NZ$500,000 worth of the Series A shares, and between NZ$400,000 and NZ$600,000 worth of convertible notes.
Genesis said last week that the initial funding was paid to Solirna, adding that the MATF-1 fund has been terminated and all its shares have been transferred to MediBic, which has already "negotiated the terms of a commercial license" to use the Solirna technology to develop human therapeutics.
"These initial funds have been used to research activities over the last six months, but Solirna requires additional funds to continue activities during 2010," the company said. "Further funding from [MediBic] is scheduled to occur when it is satisfied that a specific scientific milestone has been achieved by Solirna."
But because it is not clear when or if the milestone will be achieved, Genesis is looking to funding that can be used to maintain Solirna's activities. Among these are a collaboration with a "leading nucleotide chemistry group based in Japan" to synthesize the single-stranded oligos and establish assays and models to test them, Genesis said.
Having already demonstrated the RNAi-triggering potential of the ssRNAi molecules in vitro, "during the first half of 2010 … Solirna will test a variety of single-stranded oligonucleotides in order to identify the most appropriate modifications that will allow the use of the [agents] for gene silencing as a human therapeutic," the company added.
The company said has received a "small grant" from New Zealand's Foundation for Research Science and Technology to help cover the cost of material synthesis, but noted that it was unable to receive a grant that would have provided "major funding" because the organization "was not convinced that there was sufficient benefit to New Zealand from the Solirna project."
Because of this, "Genesis needs additional funds to support the operations of Solirna until substantial proof of principle is achieved," the company noted. "Achievement of in vivo proof of principle is expected to provide a major uplift in the value of Solirna and is likely to generate opportunities for licensing revenue and raising further capital in Solirna from new trade investors."
Genesis did not disclose how much it hopes to raise through the share purchase plan.