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With RNAi Technology On the Burner, CyGene Looks to Work Out Financial Kinks

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It’s like Nobel Laureate and Alnylam Pharmaceuticals co-founder Phillip Sharp once said: The biggest issues facing RNAi therapeutics right now are delivery, delivery, and delivery.

Each company in the sector is working on its own solution to the problem as a matter of survival. But one small development-stage diagnostics firm may have come up with an answer inadvertently, and if it can pull itself out of some financial dire straits, it just may succeed with it.

CyGene, based in Coral Springs, Fla., has been working on a technology termed “haystack processing,” which is designed to allow a researcher to identify specific nucleic acid sequences in “any relevant sized nucleic acid sample,” including a nanogram-sized sample, CyGene President and CEO Martin Munzer told RNAi News. “We call it haystack processing because in order to find the proverbial needle in the haystack, you need to be analyzing a haystack, not just a pinch of hay.”

The technology is covered by a US patent application entitled “Compositions and Methods of Synthesis and Use of Novel Nucleic Acid Structures.” The patent application, for which CyGene recently said it has been given a notice of allowance, states that the technology involves “binding or capturing a predetermined sequence on DNA or RNA by forming a triple helix that will be stable at neutral pH.

“The stability of the triple helix at neutral pH allows the use of … oligonucleotides [carrying modified nucleic acids] in conjunction with enzymatic reactions in order to enhance the discriminatory power of the modified oligonucleotides and the direct use of these oligonucleotides under physiological conditions,” the application, numbered 2003013504, adds.

Developing this technology for diagnostic applications proved to be challenging, Munzer said, “but as it turns out, all the challenges we encountered were kind of similar to what you had to deal with in the therapeutics area. What we ended up developing … were modified compositions of hairpin probes that allow us to … protect a region of interest, having the probe be enzymatically resistant.”

Munzer said that the probe is stable under a variety of physiological conditions and “up into high temperature ranges. We now have a probe structure that is stable throughout a broad range of pH conditions, even quite low pH conditions, which usually degrade or disassociate these probes.”

Seeing the technology’s potential in areas beyond diagnostics, CyGene has already conducted in vitro validation work for RNAi and antisense applications, and is planning on conducting additional tests in cell lines and eventually whole animals, Munzer said. While the company’s core focus remains in the diagnostics arena, “this probe structure is one of great interest [as a therapeutic technology] because we are starting to see a resurgence of interest in antisense and RNA interference,” he said. “We’re starting to see some promising data from a variety of different sources … [and that] raises the credibility of this application area and [improves] our ability to raise money to develop the technology.”

Money Matters

These days, raising money is key for CyGene. The company stated in an unaudited financial filing with the US Securities and Exchange Commission that for the year ended March 31 it had cash totaling $145,696 and operating expenses of about $2.3 million.

According to Munzer, the company has not yet filed its audited statements because its current accounting firm has determined that the company should be accounting on a development-stage basis, not an operating basis as its previous auditors had decided. As such, CyGene is undergoing an audit to inception, which has proven to be a time-consuming task.

“A nine-year audit: To do that in a couple of months without preparation is outrageous,” he said.

Munzer said that CyGene hopes to submit its audited financial statements to the SEC “shortly,” at which time the company could close an initial $1.25 million bridge loan financing with warrants, as well as a follow-on sale of $4 million and $6 million in series A preferred stock with warrants attached.

He said this money should be sufficient to allow the company to conduct additional tests of the haystack processing technology for RNAi applications, as well as pursue its other activities. CyGene would consider possible partnership opportunities, but Munzer said that he doesn’t expect to consummate a deal any time soon.

“We’re planning on doing [additional work ourselves] unless of course we find a partner that’s willing to give us a fair deal at an early stage, [and that’s] usually not the case,” he said.

As such, CyGene — which has six full-time employees and five part-time employees — is looking for a research institute to provide manpower for developing the technology, although “we may possibly go with a [contract research organization]. Because of the resurgence of interest in this field, we may want to accelerate that project and get data a lot quicker,” he said.

Munzer added that CyGene would like to start this work before the end of the year, but remains in a holding pattern until the audit and financing are completed.

— DM

 

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