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Benitec: A Trip Down Memory Lane

|Includes: Benitec Biopharma Ltd (BNIKF), BTEBY

I thought that investors new to Benitec ($BKNIF, $OTCPK:BTEBY), or those thinking of investing, may be interested in a potted history of company. I have put together some of the key points in the company's operations over the last ten years so as to give an indication of the trials and tribulations encountered over that period. This outline also gives an indication of just how far the company has come in the development of ddRNAi.

The years are not calendar years, they are financial years and much of the material is obtained from various reports. Points in quotations are taken directly from reports or announcements. Some of my comments and observation appear but not in quotations. The number of shares on issue is a figure taken from annual reports but it could have varied during the year. The approximate market capitalisation figure is based on the shares on issue and an indicative share price for the year.

2005

"We expect to begin testing our Hepatitis C therapeutic on a small primate model this year, which positions us to file an IND for that potential blockbuster drug in late 2006."

"The consolidated loss of the economic entity after providing for income tax effects amounted to $14,562,565."

"The Company has consolidated its operations in the US, in Mountain View, California, and no longer has operations in Australia."

Total Number of Shares circa 152M. Market Cap circa $24M.

2006

"In June 2006 Benitec announced that it has shut down its US operations, terminating its remaining US employees."

"In mid October the company also announced that Benitec executed an RNAi licence deal with US Company Tacere Therapeutics Inc. Benitec has secured upfront payments, a scale of milestone payments and a potential future royalty stream by licensing its gene silencing technology for treating Hepatitis C. Benitec will also receive a 5 percent equity stake in Tacere."

Peter Francis appointed Chairman.

"Benitec's net loss for the 12 months to 30 June 2006 was $7,676,840 compared to a net loss of $14,187,432 for the previous financial year.

"Benitec's cash balance and debtors balance at 30 June 2006 was $2,285,384, with current liabilities of $2,222,746."

Number of shares on issue circa 172M. Market Cap circa $14M.

2007

"This has been a challenging but significant year for Benitec. Benitec's recovery from its nadir in July last year is a work in progress however already we have seen an improvement in shareholder value with the increase in the share price from 2 cents to 12 cents and a market capitalisation increase of $32 million."

Moved to low cost model of out-licensing and co-investment;

Reestablishment of the business in Australia and appointment of high calibre management team;

Recapitalisation of the Company with a Non Renounceable Rights Issue which raised $5.3 million and resulted in an improved register;

Sigma Aldrich Pfizer Research Use Only agreement to utilise Benitec technology - a commercial license opportunity in the future;

City of Hope project - IND filed in January 07 and first Human trial commenced in June 07;

CSIRO agreement terms renegotiated to make more equitable and to improve opportunities for collaboration moving forward;

Our relationship with Promega was strengthened;

Out-licensing of Hepatitis C project to Tacere Therapeutics, Inc. in the US;

Improved shareholder communication;

Improved share price from 2 cents to 12 cents - increased market cap from low of $4 million; and

Appointment of world class Scientific Advisory Board.

2008

5 Employees

"Nucleonics requests US Supreme Court to hear case against Benitec". Benitec wins in Supreme Court.

"A Pilot Study of the Safety and Feasibility of Stem Cell Therapy for AIDS Lymphoma using Stem Cells Treated with a Lentiviral Vector-encoding Multiple anti-HIV RNA's is still ongoing at the City of Hope in Duarte, California."

"Benitec is also involved in a collaboration with the City of Hope for a T cell HIV/AIDS project…

This program is a multi-project effort centred at COH to investigate HIV-based vector delivery of anti-HIV RNA (initially pHIV7-shI-TAR-CCR5RZ) to CD4+ peripheral blood T-cells (as opposed to the CD34+ stem cells targeted in the clinical pilot study above) as a clinical modality.

The IPCP Program is funded by a US$7 million National Institutes of Health (NYSE:USA) grant awarded specifically to fund development of this vector (pHIV7-shI-TAR-CCR5RZ). This funding will conclude in August 2008. The IND proposal is expected to be submitted in Q3 2008 and the trial to commence by Q1 2009."

"In January 2008, the Company's licensee Tacere Therapeutics, Inc. announced that it had entered into a collaboration and license agreement with pharmaceutical company Pfizer Inc to develop and commercialise its Hepatitis C virus (HCV) compound TT-033"

"Benitec's net loss for the year ended 30 June 2008 was $2,774,690"

Shares on issue circa 292M. Market cap circa $10.8M.

2009

"Financially, Benitec was able to reduce its net loss by 11% to $2.47 million with all expense categories showing significant reductions following the major cost reduction programme implemented in late 2008."

"The City of Hope Stem Cell HIV Lymphoma study completed enrolment and the interim results of this study were very encouraging, with safety and feasibility being confirmed."

"Benitec has also entered into an agreement with China based company Biomics Biotechnology to develop an RNAi treatment for Hepatitis B."

"One of the key issues for the Company remains the ongoing patent reexamination in the US. We understand the shareholders are concerned about the downward pressure this matter puts on the share price. However we would not be investing shareholders funds in this matter unless we thought there was the likelihood of a successful outcome."

Shares on issue circa 354M. Market Cap circa $13.5M.

2010

"• The USPTO Board of Appeals decision to reverse all rejections of the claims in the '099 Graham patent, clearing the way for this patent to be re-issued in the US later this year;

• several patents granted or allowed in a range of jurisdictions;

• the successful completion and publication of the results of our Clinical Study in HIV/AIDS-related lymphoma;

• the commencement of two landmark programs in Hepatitis B and lung cancer, both showing extremely promising results;

• the re-negotiation of the CSIRO agreement on much more favourable commercial terms which represents a win-win for both parties and removes the barriers to Benitec's commercial development;

• reconfiguration of the Board - the addition of Dr John Chiplin and Mr Iain Ross to the Board provides Benitec with significantly enhanced expertise in areas of RNA interference (Iain Ross is the former Chair of Silence Therapeutics, an siRNA-based company in the UK) and in capital markets (Dr Chiplin is the former CEO of Arana which was sold to Cephalon in July 2009, and heads the $300M ITI Life Sciences investment fund in the UK); and

• funding obtained - La Jolla Cove Investors, Inc. to provide up to USD$6 million, at $250,000 per month, in the form of a convertible note. This provides Benitec with some financial certainty whilst being able to assist the research program to the clinic and to partnering."

"We are excited about our decision to commence an R&D program to develop an expressed RNAi product for chronic intractable pain associated with diseases such as cancer and HIV"

Peter French appointed.

Operating loss of $4.6M.

Shares on issue circa 441M. Market Cap circa $10.2M.

2011

"Our research and development program, supported by our robust patent position, has advanced over the past 12 months. In hepatitis B, Benitec is working with China-based Biomics Biotechnologies Co. Ltd. (Biomics) on a project to develop a ddRNAi-based therapy for hepatitis B infection. The first stage of the collaboration aimed to identify target sequences on a gene critical for replication of the hepatitis B virus (HBV). The second stage of the project commenced in March 2011. A number of active siRNAs identified in the first stage are currently being tested as ddRNAi constructs."

"2010 also saw the continuation of Benitec's first cancer therapeutic program, in collaboration with the Children's Cancer Institute Australia, at the University of New South Wales. The collaboration is using ddRNAi to knock down a gene (beta III tubulin) associated with drug resistance in non small cell lung cancer (NSCLC) with the aim of taking this to a clinical trial. The first stage of the project confirmed that the vector-expressed RNAi (in the form of a multi-promoter multicassette vector) provide very high silencing of the βIII-tubulin gene and consequently renders the cancer cells sensitive to killing by chemotherapy drugs.

Our program to develop an expressed RNAi product for chronic neuropathic pain associated with cancer has progressed. Benitec's gene silencing technology has the potential to become the next major class of therapeutic drugs in this area, because of its potency and selectivity to knock down molecular targets known to be involved in chronic pain. We are conducting a dual strategy in this area - undertaking a program of moving the project through to the clinic, and at the same time seeking partners from within the pharmaceutical industry to assist us in the development of these products."

Operating loss $3.5M

Shares on issue circa 926M. Market Cap circa $13.8M

2012

Calimmune, Royal Holloway University London (RHUL) and Genable become partners

HBV: ddRNAi sequences targeting three sequences identified, designed, manufactured, tested, modified and finalised.

Pain program set for trial in 2012/2013

NSCLC: in vivo experiments to start soon.

Tacere expect TT-034 to be in clinic in 2013.

US Patent Office Board of Appeal reverses all claims against Graham patent.

Net loss $4.1M

Shares on issue circa 971M. Market cap circa $13.5M.

Carl Stubbings appointed into business development role.

2013

Tacere acquired

7 Employees

TT-034 expected to be in clinic late 2013. CRO appointed.

"Demonstrating the safety and efficacy of TT-034 should be a significant value inflection point in addition to "validating" ddRNAi as a transformational platform for targeting multiple diseases."

Calimmune commences clinical trial of Cal-1.

Stanford Uni contracted to do pre-clinical research for cancer pain program but program goes backwards. HBV program goes backwards. HBV program redesigned to benefit from HCV trial. NSCLC shows little progress.

AMD becomes a new pipeline program.

OPMD: Triple cassette designed, in vitro and in vivo experiments completed.

Collaboration with uniQure on Huntington's disease. Regen licensed for breast cancer.

IP challenged in Europe.

Share consolidation takes place.

Shares on issue circa 84M. Market cap circa $48M

2014

13 employees

TT-034 made it into the clinic

NSCLC increased survival rate confirmed by research. CEO says clinical trial will likely commence at the end of 2014.

$31.5M raised in private placements.

ADR vehicle announced for US market.

AMD: investigating suitable viral vector. Suitable animal model identified.

Pain program going nowhere.

HBV and OPMD jogging on the spot.

uniQure and Genable: No new information provided.

Regen cell experiments promising.

Calimmune cohort 2 being dosed.

Net loss $7.3M.

Shares on issue circa $115M. Market cap circa $132M.

2015

Additional clinical sites for TT-034 forecast to come on stream.

The CEO says Tribetarna (NSCLC) will likely commence clinical trial in early 2015. The date is then pushed out as biodistribution and toxicity studies are unlikely to be completed until the end of 2015.

Other ddRNAi HIV trials have commenced or are planned to commence: Another Calimmune trial, two trials at City of Hope, Fred Hutchinson Cancer Research Center, etc..

A Few Points To Note.

  • The company is now in the strongest financial position than it has ever been.
  • The science is complex and leading edge making pipeline forecasts completely unreliable.
  • Stanford probably could not duplicate the results of the Queensland and Chinese teams and so the neuropathic pain program went from the leading candidate to obscurity.
  • NSCLC tox and biodistribution studies requested by the FDA have probably detected TUBB3 shrna's in nerve or testis tissue, where it should not be. The vector has probably been redesigned to be more target specific. This takes repeated experiments as changes in design can affect molecular weight, charge etc., which could change the way the vector behaves.
  • Benitec has learnt its lesson from pursuing IP infringements and is now waiting for safe harbor provisions to finish before it pursues companies, such as Gradalis, which Benitec believes use its patented technology.
  • Being in a strong financial position gives the company breathing space in order to finalise a partnership deal with a big pharma.

Anyone can see that owning shares in Benitec has been a bumpy ride but with clinical trials under way and results just around the corner, hopefully the bumps are now all on a way up.

Disclosure: The author is long BNIKF, BTEBY.

Additional disclosure: This article is not intended to be investment advice.