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Quark Still Sees IPO as a Possibility as Phase II Trials Near Completion

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By Doug Macron

Despite having dropped IPO plans for the second time just a few months ago, Quark Pharmaceuticals is continuing to keep its eye on the public markets and hopes positive outcomes in a series of studies will give it enough traction to eventually float its shares.

“In order to go [public] in today's environment, you have to have a product [that has completed] successful phase II [development] — that is almost a prerequisite,” Quark President and CEO Daniel Zurr told Gene Silencing News this week. “If you have such a product … then you are certainly eligible to go public.”

Quark expects to have data from four phase II studies by the end of 2012, and “if we have successful results, it will renew our interest to go public,” he said.

Quark first filed for an initial public offering in 2007, but pulled the plug on that effort later in the year citing unfavorable market conditions (GSN 8/2/2007).

Then, in 2010, it refiled with the US Securities and Exchange Commission to go public, only to scuttle the plan a year later, stating that the “terms currently obtainable in the public marketplace are not sufficiently attractive … to warrant proceeding with the public offering at this time” (GSN 9/20/2011).

Despite the setbacks, Zurr said that a future IPO for Quark is “not off the table.” But whether it occurs any time soon will depend on the company's ongoing clinical studies.

One of Quark's most developed drug candidates is the ocular disease therapy PFE-655, which comprises siRNAs designed to inhibit a proprietary gene target called RTP-801. In 2006, Pfizer acquired the rights to the target and the drug for certain diseases including diabetic macular edema and wet age-related macular degeneration (GSN 9/28/2006).

A phase II trial of the drug in wet age-related macular degeneration was recently completed, although results have yet to be released. However, in early 2011, Quark announced that a phase II trial in DME was prematurely halted after Pfizer determined that the drug was unlikely to produce a therapeutic effect superior to the current standard of care — Roche's antibody drug Lucentis.

As a result, the companies amended their arrangement to shift to Quark responsibility for a phase IIb study examining a higher dose of the drug (GSN 3/24/2011). Pfizer was also granted the right to withdraw from the deal depending on the results of that study.

In the phase II trial, PFE-655 produced “a very nice dose response … and [the effect of] the highest dose was somewhat similar to Lucentis,” Zurr explained. “But Pfizer was looking for a superior drug.”

Because the study did not examine the maximum tolerated dose, Quark decided to push forward with the phase IIb trial to test whether increasing the drug could boost its therapeutic effect. Additionally, it is also examining the potential synergy between PFE-655 and Lucentis based on animal data that suggested adding a vascular endothelial growth factor inhibitor such as Roche's drug could further improve the effects of the RNAi molecule.

According to Zurr, results from the phase IIb are due by the end of 2012.

Meanwhile, phase II development of Quark's p53 inhibitor QPI-1002 continues in two indications: the prevention of ischemia-reperfusion-induced kidney injury in patients removed from a cardiopulmonary bypass pump, and the treatment of delayed graft function in patients whose blood flow is re-established to a transplanted kidney.

Both of these studies are slated to wrap up this year. Based on those results, Quark could not only increase its visibility for an IPO but land its biggest pharmaceutical partner in Novartis, which holds an option to the drug in all indications.

“Based on the [phase II] results, Novartis will make a decision,” Zurr said.

Poised to enter mid-stage human testing is Quark's siRNA-based ocular neuroprotectant QPI-1007, which inhibits the pro-apoptotic gene caspase 2. Although Quark aimed to market the drug for glaucoma from the start, it initiated phase I testing in a related condition called non-arteritic anterior ischemic optic neuropathy, or NAION, in order to accelerate its development.

“The hallmark of [NAION] is a massive death of retinal ganglion cells; this is also what happens in glaucoma,” Zurr said. “Because it is an acute form of [glaucoma], it is easier to run a clinical study” since therapeutic effect can be judged more quickly.

Last month, Quark announced interim results from that phase I study suggesting that QPI-1007 could improve the vision of treated patients (GSN 1/12/2012).

“Now that we have positive results [in NAION], we are going for glaucoma” in the next clinical study, he noted, adding that the phase I trial is expected to wrap up in a few months.

Quark, he said, could begin phase II testing in glaucoma before then, but because of the costs associated with running the study, the company would prefer to find a bigger partner before doing so.

“We are running several clinical studies now,” and are working to file an investigational new drug application to begin phase I testing of a hearing loss treatment before the end of the year, Zurr said. “We are a small company … so we will try to find a partner.”

Nevertheless, a partnership is not “absolutely required” for Quark to meet its near-term objectives, he noted.

“We have enough money from our existing investors to complete the phase II studies that we are doing now,” Zurr said. “There is no slowdown because of the [withdrawn] IPO.”

He declined to provide specific details on Quark's financial situation, but in last year's IPO filings with US regulators, the company indicated that it would need more than $54 million to run its planned phase I and phase II studies, including nearly $40 million for QPI-1002 alone (GSN 1/27/2011).

“Fortunately, we have loyal investors who make sure things move forward … [and] are very careful in our costs,” Zurr said.


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