WORCESTER, Mass.—RXi Pharmaceuticals Corp., a leader in RNAi-based therapeutic discovery and development, and Apthera Inc., a private biotechnology company developing a pipeline of treatments of HER2-positive breast and other cancers, ended March by announcing a merger agreement under which RXi will acquire Apthera.
Under the terms of the agreement, Apthera shareholders will initially receive approximately 4.8 million shares of RXi's common stock. Apthera's stockholders will also be entitled to contingent payments based on the achievement of certain development and commercial milestones relating to Apthera's NeuVax, a candidate for the adjuvant treatment of early stage, HER2/neu-positive breast cancer, as well as up to $32 million in milestones related to NeuVax. A public offering of just fewer than 12 million shares in the combined company was recently completed.
The RXi-Apthera merger represents a turning point in which RXi is advancing from being a technology platform company to a late-stage product development company aimed at blockbuster therapeutic markets. The acquisition also marks a turning point in RXi's leadership. Dr. Mark J. Ahn, a member of RXi's board of directors, will succeed Noah D. Beerman as president and CEO of RXi and will lead the combined company, which will operate out of RXi's current headquarters. Ahn has more than 20 years of experience in the biopharmaceutical industry. Beerman will serve as a consultant to the company.
"Acquiring Apthera's cancer vaccine product candidates builds upon the promising RNAi- based preclinical work related to cancer vaccines that RXi has been doing," says Ahn. "RXi has reviewed licensing and merger opportunities for the past year."
Ahn says the quest to redefine the company's direction began to gain steam approximately six months ago, when the RXi's board of directors decided to undertake a strategic review of the company.
"Many of our RNAi competitors were experiencing a cooling market as many experienced setbacks and significant market value reductions," Ahn says. "Large pharmaceutical alliances seemed more distant as they waited for someone to solve the delivery problem. RXi believes RXI-109 connective tissue growth factor based on the company's proprietary platform, the self-delivering sd-rxRNAi, is a promising approach to delivery and will enter early stage human clinical trials in the first quarter of 2012."
After looking at dozens of business development opportunities, Ahn continues, RXi made a strategic decision to advance from a research platform reliant upon large pharmaceutical firms to provide alliances to a product development company reliant upon RXi's operational capacity to advance its product pipeline.
"The recent acquisition of NeuVax is a perfect fit which leverages RXi's knowledge of new biology, provides breast cancer patients promise for providing a novel approach to a completely unmet need, and allows the company to control RXi's destiny on the back of progress it can control," he says.
The acquisition provides RXi with a late-stage product candidate in NeuVax, which is a peptide-based immunotherapy for low to intermediate HER2-positive breast cancer patients who aren't eligible to receive the breast cancer drug Herceptin. In Phase II studies, NeuVax met its primary endpoint of disease-free survival. It is currently being developed as an adjuvant therapy, given after standard care for HER2/neu-positive breast and prostate cancer patients. It is expected to enter Phase III clinical trials in the first half of 2012. The combined company's first RNAi product, RXI-109 for anti-scarring, remains on track for an investigational new drug application filing this year.
NeuVax is designed to recruit killer T-cells to target tumors through a peptide called E75, which is derived from HER2/neu. The killer T-cells become activated to target HER2-expressing tumor cells with the E75 epitope bound to HLA. The T-cells expand and proliferate, and as they circulate through the body, they identify and destroy HER2 positive cancer cells. Two-thirds of patients diagnosed with HER-positive breast cancer are ineligible for Herceptin because their genetic test results show that they have low-to-intermediate HER2 expression or less than 2 million copies of the HER2 receptor per cell.
Discovered at and licensed from the M.D. Anderson Cancer Center, NeuVax is given as an intradermal injection once a month for six months, followed by a booster injection once every six months. Based on a successful Phase II trial, the FDA granted NeuVax a Special Protocol Assessment for a Phase III clinical trial in women with low-to-intermediate HER2+ status.
Dr. Mark W. Schwartz, formerly president of Apthera, has become RXi's executive vice president and chief operating officer under the deal. In an interview, Schwartz is clearly enthusiastic about the future of the redirected RXi.
"RXI has a great track record of moving good products forward," Schwartz says. "Apthera is looking at recurrence of cancer setting, rather than metastic cancer. Our data so far looks promising. I believe the combination of Apthera's late-stage breast cancer candidate and RXi's experience will accelerate the progress of NeuVax into the clinic. The combined companies will accelerate the development of the compound for the benefit of patients and physicians in treating this significant disease."
In addition to Schwartz and Apthera co-founder and CFO Robert Kennedy, scientific founder of Apthera Dr. George Peoples, who has guided NeuVax from the research labs at M.D. Anderson Cancer Center to more than 200 patients in multiple trials, is now senior medical advisor for RXi.
RXi Pharmaceuticals also currently has on the table development of clinical candidate RXI-109, a self-delivering RNAi compound for the reduction of dermal scarring in planned surgeries. RXI-109 is designed to reduce the expression of connective tissue growth factor a critical regulator of several biological pathways involved in fibrosis, including scar formation in the skin.
"With this transition through acquisition, RXi now has the products, people and resources to build sustainable value and the best is yet to come for the patients and shareholders the company serves," says Ahn.