Nastech Pharmaceutical is shifting its attention away from its core nasal drug-delivery technologies for small molecules and onto RNAi-based therapeutics, the company revealed in a filing with the US Securities and Exchange Commission last week. The company stressed that it will continue developing the delivery technologies.
“Our business model now centers on continuation of research and development activities focused on RNAi” and partnering out its non-RNAi programs, Nastech said in the filing. “Our goal is to become a leader in both the development and commercialization of RNAi therapeutics, as well as in innovative nasal drug-delivery products and technologies” related to those and other drugs.
In connection with the change, Nastech has also dropped plans to spin out its RNAi assets into a separate entity called MDRNA, instead proposing that it takes that name to reflect its new direction, according to the filing. Shareholders are scheduled to vote on the name change during Nastech’s annual meeting on June 10.
News of the corporate shakeup was provided in a prospectus released last week describing Nastech’s direct stock and warrant offering, through which the company expects to raise $7.93 million (see RNAi News, 5/1/2008). The offering could be worth up to $13.9 million if the warrants are fully exercised.
Although it was founded as a developer of drug-delivery technologies, Nastech began investing in RNAi therapeutics as early as 2005 (see RNAi News, 4/8/2005). The company’s efforts in the field picked up the following year when it acquired the RNAi assets of startup Galenea (see RNAi News, 2/23/2006).
That fall, in an effort to find its own place in the increasingly crowded RNAi drugs space, Nastech became one of the first entities to license the City of Hope’s Dicer substrate technology, which essentially comprises 27-nucleotide-long RNA duplexes that have been shown to trigger an RNAi effect without inducing an interferon response (see RNAi News, 11/9/2006). Significantly, Dicer substrates are expected to fall outside the intellectual property estates controlled by companies such as Alnylam Pharmaceuticals and Merck.
“Our business model now centers on continuation of research and development activities focused on RNAi. … Our goal is to become a leader in both the development and commercialization of RNAi therapeutics, as well as in innovative nasal drug-delivery products and technologies.”
Still, Nastech has found it difficult to get any of its RNAi pipeline programs moving in any significant way. In 2007, the company had said it would move an influenza drug candidate into clinical testing that year (see RNAi News, 2/15/2007), but missed that goal. Since then, the company has not provided updated guidance for either the flu program or a rheumatoid arthritis effort.
Hoping to give a shot in the arm to its RNAi programs, Nastech began exploring as early as last summer the possibility of spinning out its RNAi operations into an independent, pure-play company — MDRNA — in a bid to improve the valuation of its RNAi assets and differentiate them from its non-RNAi activities.
But those plans ran aground last November 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 contributed to Nastech’s decision to reorganize, a process that has included about 140 layoffs and reduced the company’s headcount to about 85.
Four months later, Nastech’s Chairman, President, and CEO Steven Quay told investors during a conference call that the company may not spin out MDRNA — which had already been set up as a subsidiary — as it struggles with a sharply decreased stock price (see RNAi News, 3/6/2008).
He did say at the time, however, that Nastech was evaluating “alternative structures” since it still believed that “it’s very important to receive independent investor validation” for its RNAi drug assets. While details on those alternative structures were not forthcoming at the time, it now appears that transforming Nastech into MDRNA is the approach the company wants to take.
“We believe that we are at the forefront of small interfering RNA therapeutic research and development,” Nastech said in last week’s SEC filing. As such, Nastech said it has asked its shareholders to approve the changing of the company’s name to MDRNA.
“We own … all of the issued and outstanding equity securities of MDRNA,” Nastech said in the SEC filing. “If prevailing market conditions are favorable, we anticipate seeking independent financing for MDRNA through the sale of the equity securities of [the subsidiary] to third party investors in a public or private transaction.” Additionally, Nastech is considering distributing a portion of MDRNA stock to its existing shareholders in the form of a dividend.
At the same time, Nastech said in the filing, the firm will seek “strategic collaborations with pharmaceutical and biotechnology companies” as it focuses its research and development efforts on therapeutic siRNA, acquiring and developing in-house RNAi technologies and IP, and “eventually” expanding its RNAi pipeline to additional therapeutic areas.
During his March conference call, Quay had noted that the company’s “clear 2008 goal” is to “establish partnerships in the RNAi space.”
In light of deals Sirna and Alnylam forged before they moved any of their programs into the clinic, “it’s pretty clear that big pharma has a profound interest in this particular space for companies that have good technology and intellectual property,” he said at the time. “A partner is … the most critical validating event … and we are in discussions.”
Officials from Nastech were not available for comment in time for this publication.