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MDRNA Unveils New RNAi Pipeline, Reports Q2 Financials Amid Ongoing Restructuring

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Having just completed its transformation from intranasal delivery company Nastech Pharmaceutical into a pure-play RNAi drug shop, MDRNA this week unveiled its new therapeutic pipeline, which includes programs in hypercholesterolemia, bladder and lung cancer, and rheumatoid arthritis and inflammatory bowel disease.
 
The firm disclosed the news during a conference call this week to discuss its second-quarter financial results, which included rising losses on sharply lower revenues.
 
The company also announced the continuation of a corporate restructuring that started in February, which will include the termination of an additional 23 employees. The move will cut MDRNA’s workforce to about 55 from a high of 235 in late 2007.
 
“We believe the restructuring will leave us with a lean organization dedicated to the discovery and preclinical development of RNAi-based therapeutics and committed to our partners,” MDRNA CEO Michael French said during the conference call.
 
As of Sept. 1, “the company will no longer have ongoing operations related to intranasal delivery,” as it explores out-licensing opportunities for those non-RNAi programs, he said. He stressed, however, that MDRNA would maintain non-RNAi programs covered by ongoing partnerships.
 
In its hypercholesterolemia program, MDRNA will target apolipoprotein B, a protein involved in cholesterol metabolism, according to MDRNA CSO and Chairman Steven Quay, who previously served as Nastech’s president and CEO.
 
“The selection of apoB may not come as a surprise … as several companies have chosen this target because … apoB is primarily synthesized in the liver and therefore is more readily targeted by lipid-based delivery systems,” he noted.
 
Among the companies developing their own RNAi drugs against apoB is Tekmira Pharmaceuticals (see RNAi News, 7/24/2008). Isis Pharmaceuticals, meanwhile, has an apoB-targeting antisense drug called mipomersen in phase III development.
 
Quay said that MDRNA’s hypercholesterolemia drug, called MDR-04227, uses the company’s new DiLA2 liposomal delivery technology and has demonstrated greater than 80 percent knockdown of serum cholesterol over one week in a mouse model.
 
He noted that the drug is also capable of knocking down apoB messenger RNA in the small intestine.
 
“Recently, it has been shown that atherosclerotic plaques contain more intestinal apoB than liver apoB based on relative serum concentration, implying that the intestinal [low-density lipoprotein] particles may in fact be more atherogenic,” he added. “If this is so, the ability to knock down both forms of apoB could have significant clinical impact.”
 
Quay said that MDRNA expects to begin investigational new drug application-enabling studies for MDR-04227 by the fourth quarter. An IND submission is anticipated for the third quarter of 2009, with a phase I trial beginning before the end of the year.
 
In terms of bladder cancer, MDRNA is developing RNAi molecules against three targets: survivin, a member of the inhibitor of apoptosis family; polo-like kinase 1, a gene linked to solid-tumor growth; and epidermal growth factor receptor, a cell-surface receptor that is over-expressed in many cancers.
 
Quay said that all three targets are over-expressed in bladder cancer and that MDRNA is still weighing which will ultimately be the target for its bladder cancer drug candidate, named MDR-09521. A lead candidate is expected to be chosen in the fourth quarter, with IND-enabling studies starting in the first quarter of next year.
 
An IND filing for MDR-09521 is expected to be submitted by the fourth quarter of 2009, with phase I studies beginning in the first quarter of 2010, he noted.
 
MDRNA’s lung cancer program, meanwhile, is also focusing on three possible targets: survivin, EGFR, and the oncogene Ras, according to Quay.
 

“We believe the restructuring will leave us with a lean organization dedicated to the discovery and preclinical development of RNAi-based therapeutics and committed to our partners.”

The company expects to have selected a drug candidate by the second quarter of next year, with IND-enabling studies starting in the third quarter. Phase I development of the lung cancer treatment, called MDR-09513, is slated to begin sometime in 2010.
 
At the same time, Quay said that all four targets under examination in the two cancer programs have been shown to play a role in various other cancers. As such, “we would hope and expect that RNAi-based therapies developed against these targets for bladder cancer and/or lung cancer may be expanded … to include other cancer types.”
 
MDRNA’s two inflammatory disease programs, which focus on rheumatoid arthritis and inflammatory bowel disease, both target tumor necrosis factor-alpha and are expected to incorporate the company’s new DiLA2 delivery technology.
According to MDRNA, the DiLA2 platform allows for the creation of novel lipids from amino acids, as well as the modification of the lipids’ charge, linker, and acyl chains so that delivery can be optimized for specific target tissues.
 
Quay said during the conference call that the company expects to have selected lead drug candidates for the two programs in the first quarter of next year, with IND-enabling studies for one of the programs beginning in the second quarter of 2009.
 
Although MDRNA expects to begin phase I development of either the RA or IBD programs in 2010, Quay noted that advancement of either drug candidate will depend on “both in vivo therapeutic response, as well as the availability of funding to support preclinical studies for both programs.”
 
An MDRNA spokesman confirmed to RNAi News that all of the company’s drug candidates would be based on either the Dicer-substrate technology licensed from City of Hope in 2006 (see RNAi News, 11/9/2006) or the company’s own meroduplex technology.
 
Dicer-substrates are essentially synthetic RNA duplexes around 27 nucleotides long capable of triggering robust RNAi silencing. Meroduplexes are siRNAs containing a nick or gap in the sense strand, a feature designed to prevent sense strand loading into RISC and subsequent off-target effects.
 
Importantly, the two technologies are expected to fall outside of fundamental RNAi intellectual property controlled primarily by Alnylam and Merck’s Sirna Therapeutics unit.
 
Conspicuously absent from MDRNA’s new pipeline is its influenza program, which was one of Nastech’s earliest RNAi efforts. Quay noted during the conference call that the company has selected a lead candidate for this program called MDR-03030 that has “demonstrated knockdown against multiple strains of influenza A virus including … H5N1” and has completed all work up to IND-enabling studies. However, the company has put the program on hold.
 
“For strategic business reasons, we will be seeking a partnership for this program and not advancing it ourselves,” he said without elaborating.
 
MDRNA isn’t the only company to have stepped back from a once highly touted RNAi-based flu drug. About a year ago, Alnylam announced that it had delayed plans to file an IND for its own flu drug indefinitely because it had been unable to achieve satisfactory in vivo efficacy with its optimized siRNAs (see RNAi News, 8/16/2007).
 
Reorganization
 
As it settles into its new role as an RNAi drug developer, MDRNA continues to look for new homes for its unpartnered, non-RNAi programs.
According to President Gordon Brandt, MDRNA is working with Bank of Montreal Capital Markets to “identify out-licensing opportunities” for these programs.
 
“We’ve received a number of inquiries … and are pleased with the progress we and BMO are making toward monetizing our nasal [delivery] assets,” he said. “Such transactions take time, and we hope to be able to announce one or more transactions in the near term.”
 
At the same time, MDRNA is shedding 23 more jobs, primarily from its nasal programs, which will bring the company’s headcount to 55. The layoffs will also include three executives, the company noted, including Brandt, Chief Business Officer Timothy Duffy, and Henry Costantino, CSO of delivery.
 
According to a recent MDRNA filing with the US Securities and Exchange Commission, Brandt and Duffy’s base salaries are $376,000 and $249,500, respectively. As such, their departures will shave more than $625,000 off of the company’s annual expenses. Each, however, will receive one year’s salary as severance.
 
MDRNA said that it anticipates incurring roughly $1.9 million in severance and related payroll costs associated with the latest round of layoffs.
 
Charges related to the ongoing reorganization also contributed to an increase in the firm’s second-quarter net loss, which rose to $14.3 million, or $0.48 per share, from $12.4 million, or $0.50 per share, the year before.
 
Also contributing to the loss increase was a decline in revenues, which fell to $700,000 in the second quarter from $4.9 million in the same period last year, and included payments from one-time partner Procter & Gamble.
 
MDRNA’s second-quarter research and development costs slipped to $8.5 million from $12.8 million in the year-ago period, reflecting the abandonment of certain non-RNAi programs. Total operating costs in the second quarter fell to $15 million from $17.9 million.
As of June 30, MDRNA had cash, cash equivalents, and short-term investments totaling $19.7 million.
 
Lost Gamble
 
MDRNA formally entered the therapeutic RNAi arena in early 2006 when, as Nastech, it acquired the RNAi assets of privately held startup Galenea, which had been focusing its efforts with the gene-silencing technology on influenza (see RNAi News, 2/23/2006). Less than a year later, the company picked up the exclusive rights to the City of Hope’s Dicer-substrate technology.
 
Although it had been simultaneously working on both RNAi and its core intranasal delivery programs, by mid-2007 Nastech began exploring the possibility of spinning out its RNAi operations into an independent company called MDRNA, a la CytRx and RXi Pharmaceuticals (see RNAi News, 11/11/2005 and 1/11/2007).
 
But those plans ran aground late last year when Procter & Gamble pulled out of a collaboration with Nastech to develop a nasal spray-based treatment for osteoporosis. The resulting loss of alliance funding and drop in stock price forced the company to reconsider the spinout and begin the restructuring.
 
Earlier this year, Nastech announced it had dropped plans to spin out the RNAi operations and would instead take the MDNRA identity itself (see RNAi News, 5/15/2008).
 
The company did so earlier this summer after its shareholders approved the move (see RNAi News, 6/12/2008).

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