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After rocky road, Aussie firm Benitec gets new life via Nantworks deal

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By Tamra Sami
Staff Writer

PERTH, Australia – After signing a deal with Nantworks Inc. that expands its pipeline into oncology, Australian gene silencing company Benitec Biopharma Ltd. appears to be on the road to recovery after a few harrowing years that sent the stock into a nosedive.

Under the deal with Nantventures – the private investment arm of Nantworks – Benitec has taken control of the clinical development of BB-401, a recombinant DNA construct that produces an antisense RNA that targets EGFR. The phase II/III trial in head and neck cancer is expected to begin in the fourth quarter, Benitec CEO Greg West told BioWorld Today.

Benitec has initiated a parallel discovery program using its DNA-directed RNA interference (ddRNAi) technology platform to develop follow-on anti-EGFR strategies.

In exchange for the oncology asset, Benitec placed about 29.3 million of its ordinary shares (priced at $0.0895) in Nant Capital, giving Nant Capital a 17 percent stake in the company. Valued at roughly $2.6 million, the deal gave Nantventures' chief investment officer, Jerel Banks, a seat on Benitec's board.

A TUMULTUOUS HISTORY

Sydney-based Benitec has had a tumultuous history. It listed on the Australian Stock Exchange (ASX:BLT) in early 2000 at a time when gene therapy was new and not well understood. The company then opened a research facility in the U.S. and got embroiled in a seven-year patent battle with Nucleonics Inc. over RNAi patents.

Although it came out with all of its claims supported by the U.S. Patent Office in 2011, Benitec had to restart its development program, because it had put the technology on the shelf while the litigation raged on.

Benitec listed on Nasdaq in August 2015, and it raised $14 million in its IPO by offering 1.5 million American depositary shares (ADSs) at $9.21 each. Each ADS was sold with one-third of a warrant to purchase an ADS at a $5.50 exercise price. It trades on Nasdaq under the ticker BNTC.

Shortly after the listing, Benitec announced in February 2016 that it was shuttering its lead clinical program in hepatitis C virus (HCV). Following that announcement, the stock fell 55 percent to close at $1.57. It saw a similar decline in its home market. (See BioWorld Today, Feb. 29, 2016.)

West said the TT-034 program was terminated, not because it wasn't successful, but because of the stiff competition in the HCV space. He said enrolling patients in the trial was difficult due to the increased availability of new HCV therapies, such as Gilead Sciences Inc.'s Sovaldi (sofosbuvir) and Harvoni (sofosbuvir/ledipasvir).

At the time, TT-034 was Benitec's only clinical-stage candidate and was intended to treat patients with genotype 1 HCV, the most common type of infection in the U.S. It represented what the company said would have been the first systemic administration of a ddRNAi therapeutic.

"The Australian market took the view that there wasn't a lot of opportunity in the stock," West said, "but then we did the transaction with Nant, and then we went to the J.P. Morgan Healthcare conference and we had a story to tell U.S. investors and analysts."

Shortly after that presentation, the stock shot up 90 percent to $3.75 per share on Feb. 2.

Although the HCV program didn't progress, it did provide the first proof of concept for Benitec's technology platform, and it showed a favorable safety profile. West said the data would be used to shape the clinical program in hepatitis B (BB-101 and BB-103), which is in preclinical development.

He said he was off to Shanghai to talk to big pharma about partnering opportunities for HBV, which is more prevalent in Asia.

In January, Benitec also received orphan drug designation in the EU for BB-301, a ddRNAi therapy for treating oculopharyngeal muscular dystrophy. The compound is also in preclinical development.

NEW OPPORTUNITIES

West, who was CFO at the time of the IPO, became the CEO in August 2016 and was instrumental in setting up a new management team.

"The transformation over the past 18 months is significant," West said, noting that closing the HCV trial "had pretty much closed us down to cash."

He said the transformation was partially a result of its Nasdaq listing, as well as the deal with Nant and internally focusing on its pipeline to build out capabilities.

The CEO said he has seen a steady share price improvement, which he views as a "restoration." He also said that the American investment community understands the technology better than the Australian market.

Benitec is the only listed gene therapy company in Australia, and a lot of the shareholders are retail investors, he added.

One of the criticisms of the market in Australia is that the investor market is immature and doesn't understand biotechnology and the long runway required for a successful exit. One huge reason for that is the lack of analysts in the sector to explain the technology to investors as is common practice in the U.S. and Europe.

"There are clearly opportunities for Australian biotechs in markets that understand them well," West said.

"Still, it may not be all that bad in Australia," he quipped. "The Australian biotech sector has been incredibly innovative, and when you overlay Australia's R&D grants, you can get some decent traction in developing your product."

UNDERSTANDING THE SILENCE

Benitec's approach to gene silencing overcomes many of the challenges of siRNA-based technology because of the way siRNA is introduced into the cell: ddRNAi causes the cell to produce siRNA itself, rather than introducing synthetic siRNA. And ddRNAi achieves that by producing a precursor molecule called short hairpin RNA (shRNA) in the nucleus, which enters the cytoplasm and is processed to siRNA by the cell's own machinery.

"When you put DNA into the cell, it accepts that as normal, so you get a steady state of delivery of the therapeutic and permanent gene silencing," West said, noting that most gene silencing is transient because RNAi is inserted into the cell, "but the cell ultimately realizes that it's not something of its own making and therefore neutralizes it."

Benitec also uses gene therapy vectors to deliver the DNA, West said, pointing to BB-201 in wet age-related macular degeneration (AMD). In nonhuman primates, gene therapy viral vectors successfully delivered the ddRNAi technology to the back of the eye via intravitreal injection.

If successful, BB-201 would have a competitive advantage over drugs like Roche Holdings AG's Lucentis (ranibizumab) because the "vectors would carry the payload to the back of the retina with a very high rate of transference and silence the production of the AMD-creating issue."

In addition, BB-201 targets not just VEGF-A, but VEGF-B and PIGF, and "it's a single injection compared to having to come back for multiple injections," said Georgina Kilfoil, Benitec's chief clinical and development operations officer.

"The DNA coming out of the nucleus to create the short hairpin RNA is continually expressed, which also leads to a lot less off-target effects," she said.

The route of administration is key, West said, noting that AMD would be the first indication for the technology, with other ocular indications to follow.

"The next stage is to partner to move into phase I/IIa with big pharma," West said.