MDRNA: RNAi Noses Out Nasal Delivery

When trying to avoid throwing the proverbial baby out with the bathwater, it helps to know which is which. And sometimes that takes a while to figure out.

Consider Nastech--as of today renamed MDRNA and re-focused on RNA interference. Back in November, Nastech announced it was in fact offloading its RNAi assets--which are built around IP licensed from LA's City of Hope Hospital. This so-called Dicer substrate IP--potentially a new doorway into the RNAi space that may avoid the significant patent estates amassed by the field's pioneers Alnylam and Sirna (now owned by Merck & Co.)--is also the basis of another newcomer to the RNAi field, Dicerna Pharmaceuticals.

The day Nastech announced it was spinning off that IP (which was developed by Dicerna co-founders John Rossi, PhD, from the City of Hope National Medical Center’s Beckman Research Institute and Mark Behlke, MD, PhD, from Integrated DNA Technologies) was coincidentally the day that Dicerna announced its $13 million Series A. Back then we reported:

Nastech chairman/pres/CEO Steven Quay, MD, PhD, said on today's conference call that the current plan was to seek a private investment in MDRNA from institutional investors or VCs, followed by a Nasdaq listing for the firm. Beyond the company's core IP and ongoing RNAi programs at Nastech that will be transferred to the newco, relatively little is known about MDRNA. Quay offered no details on who will manage the company, who will advise it and who will comprise the board--though "the boards are being built as we speak," he said.

A follow-up interview a few days later with the Nastech chief executive yielded zero additional insight save for this blogger's inkling that no details were forthcoming because no decisions had been made. The impulse to offload its Dicer-substrate IP and programs into a separate company was promped by a restructuring in the wake of a dissolved partnership with Proctor & Gamble on Nastech's nasal-delivery osteoporosis project. What was needed at the time was an immediate cost reduction program; RNAi wasn't core. It had to go.

Seven months later and the dust has settled; analysts have dropped Nastech coverage; the firm's market cap is an anemic $37 million. Nasal drug delivery, once-considered low-risk, instead crashed out; RNAi--the subject of some of the most impressively lucrative alliances and acquisitions of the past few years (see most recently Alnylam/Takeda)--has been the star performer.

And at Nastech MDRNA, now it's those nasal delivery programs that find themselves on the block. J. Michael French, formerly SVP corporate development at Sirna, is stepping in as MDRNA's CEO (Quay remains CSO and chairman as well as chairman of the firm's SAB). The firm is focused on its Dicer substrate and next-generation "meroduplex" technology (the latter appears to comprise at least three oligonucleotide strands--patent application here--but we don't pretend to understand it yet.)

The company even has a fancy new ticker, ditching NSTK for MRNA (those microRNA guys are gonna be pissed).

MDRNA isn't the first company to revamp itself as an RNAi player during extremely tough times. On the brink of bankruptcy in February 2003, a small, $3 million-market-cap biotech focused on ribosome science was rescued by a handful of VCs with a $48 million recapitalization. Not even four years later that company--rechristened Sirna--was bought for $1.1 billion.

image from flickr user davidbole used under a creative commons license