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Friday, June 27, 2008
Is a Nobel Prize enough to make RXi stand out in a crowd of RNAi startups?
By Ryan McBride
In their own words: Tod Woolf, CEO, RXi Pharmaceuticals Corp.
RNA-interference startup RXi Pharmaceuticals Corp. has struck out on its own as an independent public company through its March carveout from CytRx Corp., and RXi chief executive Tod Woolf now aims to court major pharmas to form lucrative partnerships with his Worcester firm.
RXi rode a wave of publicity after announcing its existence in January 2007 — in part because of scientific cofounder and University of Massachusetts Medical School professor Craig Mello’s 2006 Nobel prize for his co-discovery of the RNA-interference (RNAi) science behind the company.
Despite the fanfare, the firm is now just one example of several RNAi startups — Dicerna Pharmaceuticals Inc. in Cambridge is another — in hot pursuit of and competition for deals with pharma partners. Such pacts have provided RNAi firms such as Alnylam Pharmaceuticals Inc. hundreds of millions of dollars in initial payments and potential fees in the billions.
This week RXi (Nasdaq: RXII) tapped the public markets through an $8.7 million private offering of its common stock, gathering resources to develop its pipeline of experimental RNAi treatments known as rxRNA molecules. The company plans to harness the gene-silencing power of the drugs to treat metabolic diseases such as Type 2 diabetes and neurological disorders such as Lou Gehrig’s disease, as well as developing treatments for inflammatory conditions and cancer.
“This year we’ll have rxRNAs optimized against eight (disease) targets,” Woolf said. “At the same time, we are looking to partner with pharmas.”
Cambridge-based Alnylam (Nasdaq: ALNY) has wooed the most pharmas among RNAi research firms — including deals with Switzerland-based industry giants Roche Holding AG and Novartis AG, as well as Takeda Pharmaceutical Co. Ltd. of Japan.
New Jersey drug powerhouse Merck & Co. Inc. shelled out $1.1 billion in 2006 for RNAi startup Sirna Therapeutics.
Woolf noted however that the majority of big pharmas — among them Pfizer, Eli Lilly, Wyeth and Sanofi-Aventis — have not hitched their RNAi hopes to Alnylam and remain free agents for partnerships with RXi. “Right now, pretty much everybody is looking to see what their RNAi strategy will be,” Woolf said.
For those unfamiliar with the science, RNAi drugs are intended to break messenger RNA (mRNA) molecules in cells before mRNAs activate genes linked to diseases. Though no RNAi therapies have been approved, gene-silencing drugs could become huge money-makers for pharmas starving for new products as old ones face competition from lower-priced generic drugs.
Yet recent launches of several RNAi startups have provided drug companies with their pick of the litter of potential partners, which include at least four companies in the Boston area as well as several on the West Coast and elsewhere.
“I think it’s a very good time to be looking for partnerships in RNAi,” said Douglas Fambrough, a general partner at Boston venture capital firm Oxford Bioscience Partners, which has invested in two RNAi startups.
Oxford backed Sirna of San Francisco and is behind Dicerna Pharmaceuticals. Dicerna says its brand of RNAi science relies on a wholly different approach than competitors such as Alnylam and RXi, providing it freedom from many of the RNAi patents controlled by Alnylam. Fambrough said Dicerna is also in “deep discussions” with potential pharma partners but declined to reveal names.
Fambrough, who acknowledges a bias because of his firm’s financial interest in Dicerna, said, “RXi has Craig Mello, which is a great thing for them, but I don’t think they’ve quite demonstrated that they’re ready for the top rank. (But) I’m a partisan: I like my guys best.”
RXi’s Woolf said his firm’s rxRNA molecules are more potent than competitors’ RNAi drugs. But the true potency of rxRNAs in humans is unknown; the firm has neither begun nor drawn results from human clinical trials.
Another strength of RXi’s, Woolf said, is the experience of its scientific founders and advisers. In addition to Mello and others, RXi founder Tariq Rana, a UMass Medical School professor, is a leading researcher in the RNAi field and served on a board of advisers for Sirna. This month UMass Medical School professor Victor Ambros, who discovered gene-regulating microRNA in 1993, joined RXi’s scientific board of advisers.
Alan Carr, a life sciences analyst for investment bank Needham & Co. LLC in New York, covers Alnylam’s stock and has studied Dicerna’s RNAi science, but was not familiar with RXi’s technology.
“I don’t think the technology has been proven,” Carr said of RNAi in general. “But I think this is something that Big Pharma doesn’t want to be left out of.”
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