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MDRNA Aims to Market Cequent FAP Drug, File Three INDs by 2011

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By Doug Macron

With its purchase of Cequent Pharmaceuticals expected to close by mid-summer (RNAi News 4/1/2010), MDRNA is weighing the possibility of marketing Cequent's lead drug candidate on its own rather than choosing a commercialization partner, a company official said last week.

Meanwhile, MDRNA anticipates that the addition of Cequent's pipeline to its own will enable it to file at least three new investigational new drug applications by the middle of next year.

Cequent's flagship drug, dubbed CEQ508, is designed to treat familial adenomatous polyposis, an inherited, colorectal cancer syndrome characterized by the growth of colorectal polyps. An IND application to begin testing it in humans was recently approved, and Cequent expects that a phase I study will begin this quarter.

Because only about 30,000 people in the US have FAP, the US Food and Drug Administration has given it an orphan drug designation, "which typically provides for expedited regulatory review," MDRNA President and CEO Michael French said last week during a conference call held to discuss the acquisition.

"Further, a COX-2 inhibitor was approved for this indication after a phase II trial, which doubled as its pivotal trial," he added, noting that that drug was pulled from the market after drugs in this class were linked to severe adverse effects.

French, who will serve as president and CEO of the combined company, said that "for these reasons, we believe CEQ508 is a product that the combined company could commercialize with a small specialty sales force [with] minimal sales and marketing infrastructure. With an expedited clinical and regulatory path, we believe that it might be possible to launch an RNAi-based therapeutic for FAP in the 2014 timeframe."

This week, Cequent President and CEO Peter Parker, who will become chairman of the merged firm, told RNAi News that his company had not planned on handling the drug's commercialization on its own, but that it might have the wherewithal to do so in conjunction with MDRNA.

Cequent's plan had been to find a partner, likely a specialty drug shop focused on either gastrointestinal disorders or orphan diseases. But based on a "conservative" estimate pegging the annual FAP market at $150 million, and given the expected low cost of manufacturing the drug, Parker said that MDRNA thinks it could be worthwhile to market and sell the drug on its own.

However, he said that the companies are still crunching the numbers and that "it's an analysis exercise at this point."

In addition to CEQ508, the Cequent acquisition will give MDRNA an early-stage effort in inflammatory bowel disease covered under an option with Novartis as part of an investment deal its Novartis Option Fund made with Cequent in 2007 (RNAi News 7/21/2007).

The arrangement originally gave Novartis three points from which to exercise its option. However, during last week's conference call, Parker said that the arrangement has advanced to where Novartis will have its last chance to option the program when an IND is filed and dosing in man is about to begin. He told RNAi News that he expects the firm to reach this milestone in the first quarter of 2011.

In addition to this IBD program, Cequent is conducting work on proprietary IBD targets that Parker said could yield an IND before the Novartis-optioned one. And even if Novartis exercises its option, the combined company could still move forward with its own project given the anticipated low cost of doing so.

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With the FAP program, Parker said that it cost roughly $7 million to get from the point of having selected a target and sequence to the IND-filing stage. Because much of the groundwork has already been laid when it comes to issues such as manufacturing and toxicology, "we think it will cost us about $1 million or less to do the same thing for either of our two IBD candidates."

It is not clear how MDRNA will prioritize its newly expanded pipeline, and company officials were not available for comment. However, during last week's call, French said that the firm expects to "advance … three INDs by mid-2011 in both oncology and inflammatory diseases," in addition to the FAP program.

Currently, MDRNA has two major drug-development programs. The first, in non-muscle-invasive bladder cancer, is expected to yield an IND before the end of this year (RNAi News 3/25/2010). An IND for the second program, in liver cancer, is expected to be filed in the first half of 2011 (RNAi News 2/11/2010).

Doing a Deal

According to Parker, while venture capital-funded biotech firms are typically on the lookout for a "liquidity route" to pay off their investors, Cequent's decision to seek a merger or acquisition deal was a result of a difficult economy.

"We were well funded … but to stay well financed through clinical trials and so forth [would require us] to attract new VCs," he told RNAi News.

"That's usually not a problem with good news," he noted, pointing to Cequent's publication of proof-of-concept data in non-human primates (RNAi News 2/12/2009), the filing and approval of its FAP IND, and the achievement of a key milestones in its arrangement with Novartis.

But with the widespread financial troubles, venture capitalists "were basically not making investments," Parker said. "Early-stage venture capitalists around the country really stopped making investments … in '09. It was that kind of year."

So although Cequent had cash to last through 2011, the company began exploring other financing options, and in December began discussions with MDRNA, he said. In a matter of months, the deal was arranged and consummated.

Under the terms of the arrangement, MDRNA will acquire Cequent for roughly $46 million in stock. During the conference call, French said the combined company will remain based at MDRNA's headquarters in Bothell, Wash., where RNAi drug discovery, research, and biology will continue to be conducted. An office in Cambridge, Mass., where Cequent is located, will be maintained to handle clinical operations and regulatory affairs.

After the transaction's expected close in July, the company will have between 55 and 60 employees. Currently, MDRNA has about 50 and Cequent has about 9, French said.

MDRNA said that the deal includes "certain loan provisions that will fund MDRNA operations through the anticipated closing of the merger." Additionally, Cequent will have "certain cash amounts on hand at the close of the acquisition [that] will fund the combined operations into December 2010."

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