Benitec Biopharma (BNTC, OTCPK:BNIKF, ASX:BLT) has never been able to sell the hype around RNAi. When big pharmaceutical companies such as Merck, Novartis, Roche, GSK, etc were ploughing lots of dollars into RNAi and promising billions more, unlike its competitors, Benitec did not see any of that capital flow into its coffers. Even the deal with Pfizer was done with Tacere before Benitec took over that company. It could be said that Benitec has been the black sheep of the RNAi family of companies. Even major, corporate investors have generally shied away from the company; witness the NASDAQ listing and IPO.
So what will an in-coming CEO need to do turn around this perception of the company?
Well, like all new CEO's he/she will quickly assess the current state of the company from the inside, then they will set a path towards the objectives they want to achieve and prioritise the tasks required to reach those objectives. But what does all this mean in real terms for Benitec?
Benitec is a small biotech company. Its business model is not too complex and so it should not take long for a competent CEO to work out what needs to be improved, abandoned or accelerated in order to make some headway. A good look at the technology and the scientists applying the technology should reveal that this part of the business is working well. (Being a biotech company, if the technology is not working well, then shareholders and the new CEO will be in a bit of trouble.) The new CEO will also examine the reasons why Benitec is the black sheep of the RNAi family. Hopefully, he/she will have some insight into this perception through previous experience. If they do not, then the right person should have the contacts to quickly find out why.
After all this, if partnering with big pharma is still a business objective, then the new CEO will have to work out what new messages need to be communicated, how these messages should be communicated and to whom. The same thinking will also have to be applied to messages for major investors.
Benitec has maintained that it needed to collect clinical data which confirmed the concept of ddRNAi gene silencing in order to pursue a beneficial partnership with big pharma. If this turns out to be the case, then the CEO will first have to determine exactly what data was being referred to. They will then have to turn to the scientists for that data. At this stage, the CEO may determine that the budget priorities may need to change. More spending in some areas may be required in order to obtain "the data" before the current capital dwindles too low and more needs to be raised. To avoid increasing the burn rate this would mean other areas of expenditure would have to slow down.
If clinical data is necessary to stir the interest of investors and potential partners alike, then the only data that matters is the data being produced from the trial of TT-034 for HCV (possibly the Calimmune Cal-1 trial but I doubt that). All the other programs are at the pre-clinical stage and so are yet to produce definitive evidence about the use of ddRNAi in humans. That said, many partnerships involving other RNAi companies have been formed based on pre-clinical data only.
So what data has been produced for the TT-034 trial and what else is required before the new CEO can go calling on big pharmas and potential investors? The answer to that is known only by the company and so all we can do is analysis what we data we have and speculate about the rest.
I have commented previously on the data released thus far for TT-034 but it is worth going over some of the points again, especially as the company has subsequently, 1) redefined what efficacy reporting means, and 2) released the AASLD poster presentation.
The data show some results for the first seven patients. No safety issues have arisen and, the dosing levels, up to and including cohort three, have not produced an immune system response (as detected by measuring ALT (alanine aminotransferase) in the blood). The data also show that transduction rates are inconsistent. Not only were transduction rates inconsistent within cohort two, but patient seven in cohort three had a transduction rate of less than the average of cohort two. It is also interesting to note that the ALT rate for the seventh patient was in the "normal" range even before the administration of TT-034 - in other words they are what used to be called a healthy HCV patient. On the other hand, patient six showed levels of transduction that the company was probably expecting to see in cohort four, 17.74 copies per cell producing levels of shrna's consistent with a pre-clinical therapeutic dose.
What has not been reported is the viral reduction data for TT-034. I have read that some people are saying that this is because SVR24 (twenty four weeks of sustained viral reduction) is the standard reporting benchmark and this data was not available for patients six and seven when Benitec posted the latest data. It is true that SVR24 is the real benchmark but it is not the only measure used for conventional HCV drugs. RVR, rapid viral reduction, is a measure showing undetectable viral load at four weeks after treatment. EVR, early viral response, is a measure showing at least a 99% viral load reduction after twelve weeks. However, the company may consider that these measures are not suitable benchmarks for a ddRNAi therapy and so they have decided not publish any viral load reduction data until the end of the trial. This means that the only true measure of TT-034's efficacy will not be known generally until more than twenty four weeks after the last patient in cohort five has been dosed.
The downside of this is that investors still have no way of knowing if the shrna's referred to in the trial data are actually functioning in humans in the same way observed in the HCV, pre-clinical replicon models. The fact that the company IPO'ed prior to any TT-034 data being released seems to have been interpreted by some investors as a sign that the company had concerns that TT-034 was not behaving in humans in the same manner as it did in the pre-clinical models. I have commented on the statistical insignificance of any data known at the time of the IPO and so I won't comment again on this matter except to say that the data released after the IPO and the company's refusal to publish viral reduction data before the end of the trial may serve to re-enforce the concerns of these investors.
On the other hand, some investors may think that it is inevitable the shrna's will work if produced in sufficient numbers. I would caution against such an assumption. From the data released to date, I would not draw a conclusion that TT-034 is certain to work consistently, even at the higher dose levels.
At this stage of the trial, there is simply insufficient data available to predict its outcomes. This being the case, any form of speculation is no less valid than any other. Investors will have to decide for themselves where the balance of probability lies. I remain optimistic.
Of course, the new CEO will have access to SVR24 data before the end of the trial and will, no doubt, present this to potential partners under the terms of confidentiality agreements. But what if this is not the data that these big pharmas have requested? Could it be that HCV is not the program of interest and it is HBV instead?
The HBV program, BB-HB-331, is almost a plug-and-play version of TT-034. The only difference is that BB-HB-331 produces anti-HBV shrna's and TT-034 produces anti-HCV shrna's. Clinical data from the TT-034 trial is therefore extremely important in assessing BB-HB-331 potential. This link between the two programs and the possible data requirements of big pharma does have some consequences.
Some people seem to think that TT-034 cohort four will prove to be therapeutic and that cohort five will be unnecessary. They speculate that this could shorten the TT-034 trial and produce reported results sooner than planned. Again, I would caution against this view. The BB-HB-331 data reported to-date shows that a therapeutic dosing level for BB-HB-331 is still to be determined and one cannot assume that this will be the same as for HCV. This being the case, cohort five of the TT-034 trial will have to be dosed in order to assess its safety and efficacy profiles so that these can be evaluated in relation to BB-HB-331. Unfortunately, the dosing level of cohort five is in a range that caused an immune reaction in some patients treated for haemophilia with the same vector. If patients (especially the first patient) in cohort five do display an immune response, then this may delay the reporting of the SVR24 TT-034 data as these patients are treated and observed.
It could be that the data that big pharmas are waiting for is the safety and efficacy profiles of TT-034 cohort five and the pre-clinical dosing levels for BB-HB-331? If this is the case, then it could be another twelve months or more before the new CEO has everything he/she needs in order to show that Benitec is not a black sheep but rather a wolf in sheep's clothing, ready to aggressively take on its competitors and the old fashioned business model that says repeat prescriptions are the only way to make money out of pharmaceuticals.
I expect to see more data on BB-HB-331 being released in the coming months. The key piece of this data will be the expected therapeutic dosing levels, which can then be related to the TT-034 safety and transduction rates.
In any case, the new CEO has his/her work cut out for them. The task of repositioning Benitec will not be easy. Good clinical data will be a great help but it will take more than that to restore the investor confidence that is necessary to send the share price in an upward trajectory. The new CEO will have to demonstrate that Benitec's team is a "can do" team and they will have just twelve months achieve this.
Disclosure: I am/we are long BNTC.
Additional disclosure: This article is not intended to be investment advice. Readers should do their own research.