Arrowhead Picks Up Where Roche Left Off, Jumps Ahead in RNAi
One of the big stories on the leading edge of drug development is unfolding at a small biotech company few people have heard of on the west side of Madison, WI.
Arrowhead Research (NASDAQ: ARWR) isn’t a household name in Madison, even in the local biotech community, as I discovered on a recent visit. But its profile has been rising in biotech industry circles and on Wall Street in the last year as a player to watch in the field of RNA interference drug development. The company is headquartered in Pasadena, CA, but the core R&D team of about 30 people work on Science Drive in Madison. Arrowhead’s Madison crew is composed of RNAi veterans who have worked together closely, who have been on a corporate roller coaster ride at previous companies (Mirus Bio and Roche), and who have spent years honing technology aimed at solving one of the tougher problems in biotech.
RNA interference, for those unfamiliar, electrified biomedical researchers about a decade ago with its potential to create a whole new class of drugs that work against biological targets that conventional small molecule or protein drugs can’t hit, or don’t hit well enough. The idea is to essentially silence disease-related genes before they can produce disease-related proteins. Pharma companies invested billions for a few years in the middle of the last decade before discovering that no one knew how to effectively deliver these drugs where they need to go inside cells, at least in a high enough concentration to mean anything in a therapeutic sense.
The delivery challenge still vexes companies across the field, and nobody has consistently shown that RNAi drugs can be effectively delivered anywhere but the liver. But the team at Arrowhead has gained increasing recognition through a series of encouraging trials in animals and people that suggest it has a viable polymer-based delivery system, says Michael Houston, a Seattle-based RNAi consultant. Arrowhead raised $100 million from investors to advance its technology in the past year, and saw its stock rise from a low of $1.65 to close at $9.39 yesterday, giving it a market valuation of almost $300 million. Investors are now watching the company closely to see if it can reach its goal of curing hepatitis B, a chronic infection of the liver, in a couple of mid-stage clinical trials in 2014.
“I think Arrowhead, which happens to be a partner of Alnylam, is a very promising company with a great team,” said John Maraganore, the CEO of Cambridge, MA-based Alnylam (NASDAQ: ALNY), the leading RNAi drug developer. “We’re encouraged by their pre-clinical data.” The next big step, he said, will be to pass the next safety study in people, and show signs that the drug is active. “Our fingers are crossed for them!”’
Arrowhead’s Madison group is led by David Lewis, the chief scientific officer, and David Rozema, the vice president of chemistry. These two, whom I met on a recent reporting trip in Madison, have worked together at Mirus/Roche and now Arrowhead dating all the way back to 2000. They regaled me with tales of corporate misdirection and confusion that sounded like something out of a mixture of the comic strips “Dilbert” and “The Far Side.”
The story really got interesting at Madison, WI-based Mirus Bio near the end of the RNAi frenzy in 2008, when it got acquired by Roche for $125 million. Roche, like Merck and a few other pharma giants, was hot for RNAi at the time. Roche paid more than $330 million in upfront cash to form a partnership with Alnylam, and it had internal RNAi research going in Kulmbach, Germany and Nutley, NJ. Then, in November 2010, Roche pulled the plug on RNAi. Investors were looking for it to pare down spending, the company had just made a monster investment in South San Francisco-based Genentech, and the higher-ups realized that RNAi wasn’t as close to entering clinical trials as many people believed.
For months, the Roche RNAi team in Madison had no idea what would happen to their jobs, Lewis and Rozema said. To make a long story short, Roche invested a lot of money in the Madison site, never figured out … Next Page »