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Quark Aims to Pursue IPO in ’08 as It Builds Image, Develops Novel siRNAs

Unfavorable market conditions combined with an unwillingness to cut its proposed share price led to Quark Pharmaceuticals’ decision to scuttle a proposed initial public offering earlier this summer, Quark CEO Danny Zurr told RNAi News this week.
However, the company has not abandoned plans to go public. According to Zurr, Quark is now aiming to float its shares next year.
At the same time, the company is working to build a higher profile within the RNAi drugs space through increased public relations efforts and the development of a drug candidate that, unlike its two other clinical drug candidates, will not incorporate other companies’ technologies.
As reported by RNAi News, Quark had filed to float 5 million of its common shares on the Nasdaq exchange at between $12 and $14 a share (see RNAi News, 6/7/2007). Had it gone public at $13 a share, and had the underwriters of the offering exercised an over-allotment option to buy another 750,000 shares, Quark would have netted $67.3 million through the transaction.
Despite interest in the US and abroad, however, at the time the IPO was planned “there was not an overwhelming kind of commitment” from the investment community, Zurr said.
“We didn’t want to lower the price … so we decided we would postpone” the IPO, he said, adding that the company is “financially sound” and therefore didn’t feel rushed to tap the public market.
As of March 31, Quark had cash and cash equivalents totaling $26.8 million, according to documents the company filed with the US Securities and Exchange Commission as part of the firm’s failed IPO bid. The company said in the filing that it also expects to pull in $50 million in research and development funding and milestones from existing collaborators over the next two years.
The second IPO attempt will most likely happen during the first half of 2008, “hopefully at a higher valuation,” Zurr said.
“We always want money, but we don’t want to part with a lot of equity” to get it, he added.
Though it is impossible to predict exactly what the market conditions will be when Quark re-files its IPO, Zurr said that company expects to be better prepared to woo investors in the coming year since it will have some efficacy data from ongoing clinical trials.
Currently, Quark is conducting a phase I/IIa trial of a wet age-related macular degeneration treatment called RTP801i-14 in up to 42 patients with the AMD hallmark choroidal neovascularization. The trial is set to conclude by year-end, and is designed to determine the drug’s safety and tolerability, as well as changes in visual acuity.
Last year, Quark licensed RTP801i-14 to Pfizer for all ophthalmic and non-ophthalmic indications (see RNAi News, 9/28/2006).
“Since we are treating patients [as opposed to healthy volunteers], we will start seeing some efficacy results,” Zurr said of the AMD study. “Of course, they will not be statistically significant because this is … not a full phase II [trial], but we will see some results.”
Additional efficacy data will come from Quark’s phase I drug candidate AKIi-5, which is being developed for acute renal failure in patients undergoing major cardiovascular surgery. The company is currently enrolling up to 16 patients undergoing cardiac surgery in this dose-escalating trial.
The renal failure study is also slated to end this year, and “again, we expect to see some anecdotal [efficacy] results,” Zurr said. Quark expects to begin phase II testing of AKIi-5 “early next year,” he added.
Elsewhere in Quark’s pipeline is AHLi-11, which is being developed for acute hearing loss associated with acoustic trauma or ototoxic drugs such as aminoglycoside antibiotics. Quark expects to file this year an investigational new drug application to begin a phase I/II study of this drug candidate.
Novelty Act
Quark is also developing an siRNA-based treatment for glaucoma that Zurr said is expected to be the company’s first entirely proprietary RNAi drug.
RTP801i-14, AKIi-5, and AHLi-11 all incorporate structural features covered under intellectual property held by Alnylam Pharmaceuticals and Silence Therapeutics. The composition of matter, production methods, and gene targets associated with these three therapeutic candidates, however, are covered by IP held by Quark, he said.

“We always want money, but we don’t want to part with a lot of equity” to get it.

Zurr noted that Quark has already licensed from both Alnylam and Silence the necessary IP to develop RTP801i-14, AKIi-5, and AHLi-11.
But the glaucoma drug, he said, is expected to be entirely novel, meaning Quark would not need to in-license other companies’ IP to develop it — or pay out a share of the profits if it is commercialized.
Zurr declined to provide specific details about the glaucoma therapy, but noted that it is designed to treat the damage to the neural tissue that characterizes the disease, rather than intraocular pressure, which is a risk factor.
Looking the Part
As it advances development of proprietary RNAi molecules, Quark is also taking steps to build a corporate image.
Up until recently, “we have done almost nothing as far as [public relations] is concerned,” Zurr said. “One of the things we learned from our attempt to go public is that we should create an image for the company.”
Part of this effort includes the hiring of an investor relations firm. Additionally, Quark recently changed its name from Quark Biotech to Quark Pharmaceuticals.
“Once you have a product in the clinic … you are an evolving pharmaceutical company,” Zurr explained. As such, “we thought it was more appropriate to use [the new] name.”
With a higher profile, Quark also expects it will be easier to woo partners for certain of its drug programs — namely the ones that would require a large sales force. Drugs that don’t require heavy marketing, such as those sold directly to hospitals, will likely be kept in-house, Zurr noted.
Additionally, “when you have [a product for] an unmet medical need, it may be easier to sell it alone or create an arrangement for co-promotion,” rather than hand off all commercialization rights to a larger partner, as in the case with Pfizer, he said.
Under the terms of their deal for RTP801i-14, the big pharma will take over all development and commercialization responsibilities for the drug at the conclusion of phase I testing.

“Both the acute renal failure and the loss of hearing [drugs] … are truly unmet medical needs,” Zurr added.“Both the acute renal failure and the loss of hearing [drugs] … are truly unmet medical needs,” Zurr added.


“Both the acute renal failure and the loss of hearing [drugs] … are truly unmet medical needs,” Zurr added.

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