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Quark SEC Filing Provides New Details on Company Pipeline, Financials

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By Doug Macron

Quark Pharmaceuticals late last month filed a preliminary prospectus with the US Securities and Exchange Commission for its planned initial public offering on the Nasdaq, providing new details on its product pipeline that includes its intention to file two investigational new drug applications in 2012.

Quark also disclosed its financial results for the first half of this year, and said that its US IPO, which is expected to occur around the same time the Israeli company floats its shares on the Tel Aviv Stock Exchange, will put it in a position to fund its operations for about three years.

According to the SEC filing, Quark plans to use the proceeds of the US stock offering to advance through the clinic its p53 inhibitor QPI-1002 and its ocular neuroprotectant QPI-1007, as well as conduct work on preclinical drug candidates.

QPI-1002 is being developed as a preventative of acute kidney injury in patients undergoing cardiovascular surgery. The drug is designed to temporarily block p53, a stress-response gene associated with apoptosis induction, in order to prevent ischemia-reperfusion-induced kidney injury in patients removed from a cardiopulmonary bypass pump, or in patients whose blood flow is re-established to a transplanted kidney.

According to Quark's SEC filing, the company expects to initiate a phase II trial in the first half of 2011 to evaluate a single intravenous dose of the drug. The first part of the trial will enroll 60 cardiovascular surgery patients who have been deemed at high risk for acute kidney injury as determined by blood and urine biomarkers.

The biomarkers will be evaluated in this initial portion of the study, Quark said, and if it is successful, an additional 140 patients will be enrolled.

"We estimate that completion of dosing and first interpretable results will not occur before the end of 2012," the company stated. This summer, Novartis optioned QPI-1002 for all indications worldwide, and Quark said that it stands to receive a payment from the big pharma if the phase II data meet undisclosed success criteria.

QPI-1002 is also under development to prevent delayed graft function after deceased donor kidney transplantation. Quark is currently conducting the second part of a phase II trial designed to demonstrate the agent's biological activity.

The study, the company said, has an "adaptive design with … interim analysis points," specifically after 130 and 196 of the study's planned 326 patients have been dosed, which allows modifications to be made to the study's protocols based on the analysis of data.

"We expect the 196-patient interim results, the first analysis point that we believe could yield statistically meaningful results, by early 2012," Quark said. The achievement of pre-defined success milestones in this study would also trigger a payment from Novartis.

QPI-1007 is an siRNA designed to inhibit the pro-apoptotic gene caspase 2. Earlier this year, Quark began a phase I trial of the drug in patients with non-arteritic anterior ischemic optic neuropathy, or NAION, a rare condition that can lead to permanent blindness (GSN 3/4/2010).

According to the SEC filing, that trial includes two parts, the first of which is designed to evaluate increasing intravitreally administered doses of the drug in four cohorts of patients who are legally blind secondary to chronic optic nerve atrophy or retinal degeneration. Enrollment in this portion of the study was completed in July, and preliminary results are expected in the first quarter of next year.

The second part, which will further evaluate QPI-1007's safety and potential clinical activity, will enroll two dose cohorts of patients with NAION. Dosing is expected to wrap up in the first half of 2011.

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Because of the limited market for NAION, Quark aims to ultimately develop QPI-1007 as a treatment for glaucoma. The company said it will decide whether to launch a phase II trial in acute glaucoma patients and/or in NAION patients.

Preclinical Pipeline

Besides its clinical candidates, Quark has a number of preclinical programs underway, one of which is focused on central nervous system diseases, as well as diseases of the eye and ear where neuroprotection and axon regeneration is important.

The primary drug candidate from this work is an siRNA that inhibits RhoA, a small GTPase that "controls cellular functions including motility, growth, differentiation, and apoptosis, and is a key effector of inhibitory signals for outgrowth of neuronal processes," Quark said.

The company has also demonstrated in preclinical studies that the siRNA can improve neurological functions and reduce neuropathic pain in a rat spinal cord injury model, and is currently evaluating the agent in animal models of other diseases, including spinal cord injury and optic nerve regeneration.

Elsewhere in its pipeline, Quark is developing siRNAs that inhibit Toll-like receptors 2 and 4, which play key roles in the immune system and in inflammatory processes.

"We have demonstrated potential efficacy in preventing primary graft dysfunction caused by ischemia-reperfusion injury in a mouse model of lung transplantation," the company said in the SEC filing. Proof-of-concept work is ongoing.

Lastly, Quark is evaluating its RNAi technology in a variety of chronic indications for which systemic administration is optimal, including cancer and chronic kidney disease.

The company said in the regulatory filing that it anticipates submitting an IND from one of these early-stage programs to US regulators in 2012. But it also expects its fibrotic disease collaboration with Nitto Denko, announced in July (GSN 7/15/2010), will yield an IND that year, as well.

The Financials

In its preliminary prospectus, Quark also offered a glimpse at its books, reporting that it generated $1.2 million in revenues during the first six months of 2010. The revenue came primarily from research and development services provided to pharmaceutical customers, R&D cost reimbursements, and upfront payments and milestones from collaborations and licensing deals.

Included in the revenue figures was $1 million received from Pfizer, which holds the rights to Quark's phase II wet age-related macular degeneration and diabetic macular edema drug PF-655.

Quark's R&D spending in the first half of 2010 was $7.8 million, down from $9 million in the year-ago period, while general and administrative costs edged up slightly to $2.9 million from $2.6 million.

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The company's net loss for the six-month period ended June 30 dipped to $10.1 million from $11.1 million the year before. At the end of the first half of the year, Quark had cash and cash equivalents totaling $12.4 million.

IPO Retry

Quark first filed to go public in the US about three years ago, planning to sell its shares for between $12 and $14 apiece. A few months later, however, the company pulled the plug on the IPO due to unfavorable market conditions and an unwillingness to cut its proposed share price (GSN 8/2/2007).

The company never entirely dismissed the idea of an IPO, however, and this summer Quark CEO Daniel Zurr told Gene Silencing News that the firm was planning to sell its stock on the Tel Aviv Stock Exchange sometime this year with an eye toward raising around $40 million since "the market is really strong now in Israel, especially compared to the US."

The move would also be a prelude to an eventual dual listing on the Nasdaq, he added.

At the time, Zurr was noncommittal about a US float, but based on Quark's SEC filing, it appears that the company may be getting ready to move sooner rather than later.

The preliminary prospectus, however, only states that the proposed US IPO would occur "as soon as practicable" after the effective date of the filing, and it did not provide any indication of how Quark expects to price its shares. Company officials were not available for comment since Quark is "observing [a] quiet period communications protocol," according to a company spokesman.

Should the company begin selling its shares sometime soon, it will likely be the first RNAi firm to pull off an IPO since Alnylam Pharmaceuticals did so in 2004 (GSN 6/4/21004).

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