Dermal scarring regularly occurs after the more than 42 million surgeries each year in the United States. But despite the wide scope of the problem, there is no FDA-approved prescription medication specifically labeled for scar prevention or reduction. The result is a wide-open market that could be worth as much as $4 billion, with potential third-party reimbursements if the treatments are adopted as a “standard of care” in the future.
Several companies are attempting to capitalize on this niche, taking a variety of different approaches to reduce dermal scarring. In this article, we’ll take a look at Alnylam Pharmaceutical Inc.’s (NASDAQ:ALNY) ALN-TTR, Pfizer’s (NYSE:PFE) EXC-001, and RXi Pharmaceuticals Corporation (OTCQX:RXII) RXI-109, and which of these compounds may represent the best bet for biotech investors over the coming quarters.
Alnylam Targets TTR-Mediated Amyloidosis
Alnylam Pharmaceuticals’ ALN-TTR02 gets compared to Pfizer’s EXC-001 and RXi Pharmaceuticals’ RXI-109 regularly, but there are a number of major differences between the compounds. Most significantly, ALN-TTR02 is targeting a mutation on the TTR gene that’s expressed predominantly in the liver and targets complete suppression of the gene expression, while Pfizer and RXi Pharmaceuticals are targeting a modest inhibition of genes involved with scar formation.
After demonstrating safety and tolerability in its March 2012 Phase I clinical trials, the company’s June 2013 Phase II clinical trials demonstrated rapid, dose-dependent, and durable knockdown of serum TTR protein levels of up to 93 percent. Evidence from other trials suggests that just a 50 percent reduction of the disease-causing protein can result in disease improvement or stabilization, which suggests that these Phase II results have more than sufficient efficacy.
Alnylam’s stock has reacted appropriately, jumping more than 83 percent over the past three months. Looking ahead, the company plans to initiate a Phase III pivotal trial of ALN-TTR02 in ATTR patients with FAP by the end of 2013, the results of which could be a significant catalyst.
Pfizer’s AntiSense Approach to Scar Reduction
Pfizer’s EXC-001 is similar to RXi Pharma’s RXI-109 in that both treatments are targeting the same patient demographic and CTGF growth factor. However, there are a number of theoretical and technical reasons that make Pfizer’s antisense therapy different from RXi Pharmaceuticals’ RNAi approach. As opposed to using RNAi, Pfizer’s approach involves synthesizing a strand of nucleic acid and binds to mRNA produced by a gene and inactivating it.
In January of 2011, Excaliard Pharmaceuticals — EXC-001’s former owner — reported successful results from three Phase II clinical trials. The treatment demonstrated a rapid onset to scar improvement and a sustained reduction in severity when evaluated by physicians, subjects, and an expert panel. According to comments made by RXi Pharmaceuticals’ CEO in a recent analyst conference, the treatment reduced mRNA expression by 30 percent to 40 percent in their latest trials.
Unfortunately for investors, Pfizer faces a number of headwinds as a company that could inhibit the success of EXC-001. The expiration of several blockbuster drugs over the coming years has put pressure on management to identify new drugs to replace them, which has resulted in higher capital expenditures on acquisitions. These same dynamics have made smaller biotech companies more desirable, as they have become acquisition targets themselves.
RXi Pharmaceuticals Demonstrates the Best Efficacy
In contrast to many other RNAi-focused biotech companies, RXi Pharmaceuticals is focused on solving delivery issues instead of quickly moving into clinical trials. The company’s clinical programs may be a little earlier stage than the competition as a result, but those trials have shown a very robust efficacy. For instance, RXI-109 achieved 40%+ reductions in RNAi expression at a lower dose than Pfizer’s EXC-001, which reduced mRNA expression by only 30 percent to 40 percent.
The company’s latest two Phase I clinical trials confirmed that the drug works through the highly selective and specific RNAi mechanism and is long-acting with specific dose dependent reduction even three months after a single dose. Moreover, the studies confirmed that the reduction in CTFG is preceded by a dose-dependent reduction in mRNA levels, which suggests a durable mechanism of action that ultimately increases the odds of successful Phase II efficacy.
RXi Pharma represents a unique opportunity within this group of three companies listed due to its small size and licensing potential. Since it has taken the time to fully develop its proprietary sd-rxRNA® delivery mechanism, the same technology could be applied to numerous market verticals. Success in reducing the expression of CTFG could result in greater interest on the part of other biotech companies looking to license its compound for other indications.
In contrast to Alnylam and Pfizer, RXi is an early-stage, micro cap company. Small company stocks may be sensitive to changing economic conditions and market downturns. In addition, stocks of early stage companies may be illiquid and potentially more volatile and speculative than the securities of larger companies.
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