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Market Upheaval Hits Public RNAi Drug Firms Though Some Fare Better Than Others

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Amid one of the worst economic slowdowns in decades, publicly traded RNAi and microRNA drug developers across the board have recorded significant declines in the value of their shares. And while this may prove the undoing of some cash-strapped firms, others may be better positioned to weather the financial storm.
 
Among these is Alnylam Pharmaceuticals, which in mid-2006 became the first RNAi therapeutics firm to go public (see RNAi News, 6/4/2006). Since then, it has become a top player in the field by aggressively consolidating intellectual property, most recently evidenced by the company’s purchasing the IP assets of now-defunct expressed RNAi shop Nucleonics (see RNAi News, 12/11/2008); publishing data in top-tier journals, as with a recent paper in Nature on miRNA targeting in animals (see RNAi News, 12/4/2008); and collaborating with big pharma and biotech including Takeda Pharmaceutical (see RNAi News, 5/29/2008).
 
And its stock has reflected this dominance. After debuting at $6, the shares quickly climbed, and by the close of the market on Jan. 2 of this year, they traded at $28.92. Alnylam’s stock rose even higher during the year, peaking at $35.95 at the beginning of August. Since then, however, the shares have faltered, closing at a 52-week low of $17.29 earlier this month.
 
As of midday Thursday, Alnylam’s stock was trading up at around $23.64.
 
Despite the slump, Alnylam’s stock remains more valuable than that of its peers. And even if they should further decline over the coming year, payments from collaborators have placed under the company a massive cash cushion. As of Sept. 30, Alnylam had cash, cash equivalents, and marketable securities totaling $520.2 million, not including a $20 million technology-transfer payment from Takeda that will be recorded this quarter.
 
Last month, Alnylam’s management said that the company expects to have more than $500 million in its coffers at the end of 2008, which will allow it to advance its “platform and RNAi therapeutic programs with no need to raise new capital in the equity markets for the foreseeable future,” according to Patricia Allen, vice president of finance and treasurer at Alnylam.
 
Another RNAi drug shop feeling the pinch of the down market is RXi Pharmaceuticals. A newcomer to the sector, RXi shares began trading publicly in mid-March after the company was spun out of CytRx (see RNAi News, 3/13/2008).
 

“Investors are understandably concerned about the challenges of raising cash in this market. While I can’t talk about the specific details of our plan, I can say to you with confidence that I expect we will achieve our objectives so that we can execute our business plan for 2009 and beyond.”

Over the past year, RXi has worked to carve out a niche for itself by touting proprietary siRNA molecules, including the blunt-ended, 25- to 30-nucleotides long molecules it terms rxRNAs, as well as a recently announced oral drug-delivery technology (see RNAi News, 10/23/2008). In addition, the company boasts Nobel Prize winner and University of Massachusetts Medical School researcher Craig Mello (see RNAi News, 10/5/2006) and Cold Spring Harbor Laboratory’s Greg Hannon as two of its co-founders.
 
Like Alnylam, RXi’s stock, which began trading at $10, has lost ground over the year. By midday Thursday, RXi shares were trading down at $7.59.
 
But with cash, cash equivalents, and short-term investments totaling $12.7 million, RXi said that it will be able to fund its operations “through the second half of 2009,” according to a filing with the US Securities and Exchange Commission.
 
Also dealing with a devalued stock price is Tekmira Pharmaceuticals, which this summer became an RNAi drug developer after it merged with Protiva Biotherapeutics in a bid to settle a protracted legal battle (see RNAi News, 6/5/2008).
 
A top player in the area of RNAi drug delivery, Tekmira’s core technology centers around its so-called SNALPs, or stable nucleic acid lipid particles, which has proven key to the company’s ability to secure money-generating partnerships, such as ones with Alnylam and Roche (see RNAi News, 4/3/2008).
 
The company also has its own in-house RNAi drug programs including ones in hypercholesterolemia and cancer, both of which are expected to enter the clinic in 2009 (see RNAi News, 11/20/2008).
 
Shortly after Tekmira completed its merger with Protiva, its stock, which trades on the Toronto Stock Exchange, hit a 52-week high of CDN$1.45 ($1.17). But it has fallen sharply since, and was trading around CDN$0.35 midday Thursday.
 
Nonetheless, revenues from the company’s string of collaborators, in addition to the CDN$34.2 million in cash it had as of Sept. 30, is expected to provide enough resources to fund Tekmira’s planned operations into the second half of 2010.
 
The troubles on Wall Street have also rattled Rosetta Genomics, which made a splash when it became the first miRNA technology company to go public in early 2007, although it was only able to do so after twice lowering the IPO price of its stock to $7 (see RNAi News, 3/1/2007).
 
With its strategy of pursuing both therapeutics and diagnostics, Rosetta has become a prominent presence in the miRNA space. Last week, the company launched its first miRNA diagnostic, miRview Squamous, which is designed to differentiate squamous from non-squamous non-small cell lung cancer (see RNAi News, 12/11/2008). It is also working with Regulus Therapeutics on a miRNA-targeting liver cancer drug (see RNAi News, 9/25/2008).
 
Rosetta also has a number of other miRNA diagnostics in its pipeline, including miRview Mets, designed to determine the source of cancers of unknown primary origin, and miRview Meso, which differentiates lung cancer from mesothelioma. Both are slated to launch in 2009.
 
Despite being one of the few companies in the space to have commercialized products, Rosetta’s stock has taken hits over the past year. On Jan. 2, the stock closed at $5.15, and by midday Thursday, shares of Rosetta were trading at $1.45.
 
Like Tekmira, however, Rosetta appears to have enough cash to buy itself some time. At the end of the third quarter, the company had had cash, cash equivalents, short-term bank deposits, and marketable securities totaling $12.9 million, with an expected fourth-quarter burn of $3 million.
 
One firm in more dire straits is MDRNA, which was created this summer when floundering nasal-delivery technology firm Nastech Pharmaceutical reorganized into a pure-play RNAi drug shop (see RNAi News, 8/7/2008).
 
Nastech first waded into the RNAi waters in 2006 when it acquired the RNAi assets of Galenea (see RNAi News, 2/23/2006), and it later extended its reach to include the novel Dicer-substrate technology developed at the City of Hope (see RNAi News, 11/9/2006), as well as a variety of internally developed technologies.
 
And while the corporate restructuring that transformed Nastech into MDRNA included overhauling both the firm’s focus and management, the new company is finding that investors remain wary.
 
As of midday Thursday, shares of MDRNA were trading at around $0.47, down from a 52-week high of almost $5 and well off the roughly $19 they were trading at two years ago when the firm was still operating as Nastech. In November, the company said that it had received a warning that its stock does not meet the Nasdaq exchange’s shareholder’ equity requirement to remain listed.
 
Worse still, MDRNA reported last month that as of Sept. 30 it had only $10.9 million in cash and cash equivalents, which it estimates is just enough to fund operations into the first quarter of 2009.
 
At the time, MDRNA President and CEO Michael French said that the company expects to form collaborations with big pharma that will help it shore up its balance sheet, but he was short on specifics (see RNAi News, 11/20/2008).
 
“Investors are understandably concerned about the challenges of raising cash in this market,” French said at the time. “While I can’t talk about the specific details of our plan, I can say to you with confidence that I expect we will achieve our objectives so that we can execute our business plan for 2009 and beyond.”

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