3 Potential Game Changers In The Biotech Industry

Includes: ALNY, ARWR, RXII
by: Biotech Pick List

RNAi biotechs have had a rough past, because of delivery issues. Many of these early RNAi companies attempted to treat diseases by just using naked siRNA molecules with no success. A lot of big pharmaceutical companies were prone to trying to acquire these RNAi biotechs to enrich their pipelines, but with no success.

It seems though that things are turning around greatly for these RNAi biotechs, because they are showing nothing but positive results in clinical trials. There are three RNAi biotechs that hold huge promise for the future of medicine.

RXi Pharmaceuticals (NASDAQ:RXII)

Rxi is working on a lead drug candidate known as RXI-109 for anti scarring. There are going to be some Phase 2a trials starting this quarter, and the other ones are set to start in Q1 2014. The three Phase 2a trials will assess patients with lower abdomen scars, keloids, and breast scars respectively. There are 42 million surgical procedures done each year, so a majority of patients will want a drug that will reduce scars on their bodies. The expected market opportunity for an anti scarring drug like RXI-109 would be around $5 billion. To handle the delivery issue the company has generated a "self delivery" technology known as sd-rxRNA. This is coined as a self-delivery vehicle, because the siRNA molecule is converted into a drug. This conversion allows RXI-109 to target CTGF (Connective Tissue Growth Factor), without needing any type of delivery vehicle. This allows for greater cellular uptake of the siRNA molecule into the cells. So far the company has reported positive Phase 1 results in RXI-109 multi dose study. The multi dose study tested 3 doses of the drug on patients with scars, to see whether efficacy could be increased. The company is now expected in November to release updated Phase 1 multi dose results. In this study, Rxi added 2 new cohorts to add more doses/spread out doses over a longer time period to see if efficacy could be improved. With all the trials ongoing the company has $15.8 million in cash, burning about $1.5 million per quarter. The cash of Rxi is expected to last until Q2 2015.

Alnylam Pharmaceuticals (NASDAQ:ALNY)

Alnylam is working on a lead drug candidate known as ALN-TTR02 to treat TTR-Amyloidosis. The company is currently in Phase 2 testing for patients with TTR-Amyloidosis, and is expected to possibly begin a Phase 3 by the end of the year. The expected market opportunity for a drug like ALN-TTR02 would be around $1 billion. Alnylam didn't solve the RNAi delivery problem themselves, they had received licenses to use Tekmira's (TKMR) LNP technology, which stands for "lipid nanoparticle." The lipid nanoparticle is able to carry naked siRNA molecules to their desired target, without any systemic toxicity. Alnylam has shown positive Phase 2 results for ALN TTR-Amyloidosis, and is expected to begin Phase 3 testing possibly by the end of the year. TTR-Amyloidosis is a very terrible disease that patients have to deal with, and left untreated can be responsible for a lot of deaths. People with this disease, have a mutation occur in the TTR-gene, thus causing an excessive buildup of amyloid proteins in organs of the body. This excessive buildup is responsible for the damage of organs and tissue in the body. Alnylam as of August 8, 2013 had around $380 million of cash on hand. The company expects to end the year with at least $320 million cash on hand. Alnylam has shown great clinical results lately, and its valuation shows as it has a $3.6 billion market cap.

Arrowhead Research Corp. (NASDAQ:ARWR)

Arrowhead Research Corp. is working on its lead drug known as ARC-520 targeting patients with Hepatitis B. The company has finished enrolling patients in a Phase 1 study, and results should be expected sometime in 2014. Arrowhead then expects to start enrolling patients into a Phase 2a study to assess patients with the chronic Hepatitis B infection. There are around $350 million people worldwide affected with Hepatitis B. The market opportunity for a drug to treat/cure Hepatitis B could be worth as much as $1 billion in potential revenue. Hepatitis B is a severe disease, because as much as 600,000 deaths are reported per year. More recently Arrowhead reported news that ARC-520 was not only able to provide antibodies to the Hepatitis B disease, but that it could also stimulate the immune system into clearing it completely. Think of the possibility for a possible cure for Hepatitis B, and how much that drug could be worth years from now on the market upon FDA approval. Arrowhead has developed its own delivery system for its siRNA molecule known as Dynamic Polyconjugates (DPC). This technology was derived to mimic the ability that viruses have. That is the ability to be small, yet effective by delivering the payload to the intended target. The DPC construct protects the siRNA payload allowing it to flow freely through the blood, without producing toxicity for the patient. The company has $34 million cash on hand to run their clinical trials, and thus won't have to dilute shareholders in the near term.

Risk Factors

RNAi is still fairly new technology, thus there are potential setbacks not yet seen in these clinical trials. RNAi saw some setbacks in the past with no delivery vehicles for the siRNA compounds. The trials that are being run are still at the early to mid stage level so whether results are favorable or not in a late Phase 3 trial remains to be seen. With the past failures there is no guarantee that RNAi therapeutics will produce products on the market within the next few years. Investors should be cautioned, but at the same time remain optimistic after all the positive developments in the RNAi field.

Disclosure: I am long RXII. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no positions in ALNY, TKMR, ARWR

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