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Nucleonics Gets $1.6M from NIH for Hepatitis B Program, But Financing May Outshine Grant

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Nucleonics said last week that it, the Scripps Research Institute, and the Hepatitis B Foundation, have secured a $1.6 million grant from the National Institute of Allergy and Infectious Diseases in support of the company’s development of an RNAi-based hepatitis B therapeutic.

Official notice of the almost four-and-a-half year government grant came about two weeks ago, Nucleonics CEO Bob Towarnicki told RNAi News. Of the total $1.6 million, roughly half will go to Scripps, 25 percent to Doylestown, Penn.-based Hepatitis B Foundation, and 25 percent to Nucleonics, he said. Under research agreements with the two non-profit institutes, Nucleonics is entitled to the commercial rights to discoveries stemming from the funded research.

According to the company’s description of the grant (number 1U01AI053988-01A1), the objective of the project is to “define the parameters required for optimal induction of PTGS (post-transcriptional gene silencing) in cell culture and in vivo, in adult mouse models.

“Chronic [hepatitis B virus] infection represents an ideal target for potential therapeutic strategies since RNA is an intermediate in both [hepatitis B virus] replication and expression,” the description reads. “Furthermore, a PTGS-based therapeutic, unlike current nucleoside analogue therapies, is predicted not only to decrease viral titers but to also effect decreases in antigen load.”

Specific objectives of the effort are to develop nucleic acid reagents and methods for hepatitis B-specific gene silencing, to develop nucleic acid formulations that target the liver, and the evaluation of developed formulations and methods for their ability to silence hepatitis B expression and replication in vivo.

Most of the work in Nucleonics’ hepatitis B program is being conducted in the lab of Frank Chisari at Scripps. Using a transgenic hepatitis B mouse model, Chiasari is evaluating the company’s preclinical candidates, with the goal of selecting two that hit multiple mRNAs in the virus, Nucelonics co-founder and vice president of R&D C. Satishchandran said.

Towarnicki added that the company hopes to file an investigational new drug application for a preclinical hepatitis B drug candidate by the end of 2004. An IND for a hepatitis C drug candidate, also being developed in Chisari’s lab, is expected to be filed about four months thereafter, he added.

The NIH grant is the second Nucleonics has received. According to Satishchandran, Nucleonics co-founder Cathy Pachuk received a one-year, $100,000 grant in late September 2002 supporting her preclinical hepatitis C research using a bovine viral diarrhea model.

He said that the company is planning to file for a phase II SBIR grant that could be worth as much as $250,000 to continue the hepatitis C work next year, and a phase I SBIR grant for research into HIV sometime at the end of the year.

Finding Financing

While Nucleonics’ share of the $1.6 million grant, not to mention other potential grants, could go a long way in helping the company offset costs, it’s looking like government money might not be such a big deal, after all.

Towarnicki, who is currently on the road talking to potential investors, said that his Series B fund- raising efforts are going better than expected. In late August, he told RNAi News that he hoped to raise $20 million, enough to fund the company through phase I testing of its hepatitis B and C drugs.

But now, said Towarnicki, Nucleonics has found parties interested in investing even more — as much as $50 million — which would eliminate the need for a Series C round of financing to support phase II trials.

Whether the company goes for the larger equity deal, however, doesn’t simply depend on money. He added that ultimately the decision would rest on the terms of bargain.

— DM

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