CytRx Corp. last week said that it is spinning off its gene-silencing RNAi technology into a majority-owned subsidiary that will capitalize on what may become the Next Big Thing in drug development.
The Los Angeles company’s announcement came as biotech leaders and investors gathered in San Francisco for the JPMorgan Healthcare Conference, an annual industry kick-off event.
“This is a very astute move by CytRx at the right time,” said Ram Selvaraju, associate biotech analyst at Rodman & Renshaw LLC, noting that shares of CytRx jumped more than 15 percent to $2.08 on Jan. 9. “This is a move that really unlocks much more value for the CytRx shareholder.”
CytRx will own 85 percent of the subsidiary, to be called RXi Pharmaceuticals Corp., with the new company’s scientific advisory team holding the remaining 15 percent.
Heightening interest in the subsidiary is the participation of some respected industry figures. Its advisory team includes Craig C. Mello, who won the 2006 Nobel Prize in Medicine for his role in co-discovering RNAi.
CytRx has no products on the market but is in clinical trials on three traditional pill-administered small-molecule compounds, including a treatment for amyotrophic lateral sclerosis, or Lou Gehrig’s disease.
Its RNA interference program involves radically different technology, in partnership with the University of Massachusetts, that targets the gene at the root of a disease and attempts to switch it off without affecting other genes or cells. The approach could provide cancer treatments with fewer side effects than chemotherapy, though the product most likely to go to market first is also a Lou Gehrig’s treatment.
“We have a very vibrant RNAi business but it wasn’t commanding any value in the marketplace,” said Chief Executive Steven Kriegsman. “Having our own pure play, if all goes well, will really enhance the value of CytRx’s stock and whatever value RXi will develop down the road.”
CytRx’s stock barely budged a year ago when the company first began discussing a possibility of spin-off, but recent developments make this a strategic time for CytRx to highlight its assets in the sector, which could attract a pharmaceutical company with deeper pockets to develop the drugs.
Merck & Co. Inc.’s recent acquisition of San Francisco-based Sima Therapeutics for $1.1 billion leaves just one independent pure play in the sector, Cambridge, Mass.-based Alnylam Pharmaceuticals Inc., whose own stock has benefited from excitement over the Sima deal.
Co-Development Agreement
Cytrx’s announcement wasn’t the only local news coming out of the JPMorgan conference. Santa Monica drug developer Agensys Inc. announced a collaboration agreement with Seattle Genetics Inc., a rising biotech star.
The multi-year deal gives Agensys access to technology that will enable it to beef up its cancer-fighting monoclonal antibodies, synthesized versions of the basic human mechanism that fight off disease. Seattle Genetics’ has a technology called anti-body drug conjugate (ADC) therapy that allows cancer-fighting toxins to be delivered to solid tumors without damaging nearby healthy cells.
That should make the drugs derived from Agensys’ monoclonal antibodies more effective in killing advanced cancers of the lung and bladder. Under the agreement, Agensys will use ADC in developing four proprietary drug targets, with some co-funded and co-developed with Seattle Genetics. The first identified target is a prostate and colon treatment.
Privately held Agensys doesn’t have any products on the market yet, but is in clinical trials with a therapy to treat prostate, pancreatic and bladder cancers that it is co-developing with Merck. Seattle Genetics, based in Bothel, Wash., has a separate global licensing agreement with Genentech Inc. that was the big buzz of the conference.
Docs on Call
A group of 17 Los Angeles doctors fed up with self proclaimed medical experts seen on television have formed their own online experts bureau.
“There’d be times when we’d see a story on TV and the expert they were quoting really didn’t know the subject, or they weren’t media trained and weren’t being the most effective in getting their message across,” said Dr. Brian Boxer Wachler, one of the founders of Doctors Media Experts.
All members of Doctors Media Experts are active practitioners, Wachler said, with some having practices at Cedars-Sinai Medical Center and others faculty at UCLA. The Web site address is doctorsmediaexperts.com.
Staff reporter Deborah Crowe can be reached at (323) 549-5255, ext. 232, or at
[email protected]
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