Washington Editor

Investors warmed to Nastech Pharmaceutical Co. Inc.’s buyout of the RNAi intellectual property estate of Galenea Corp., along with other related technologies, driving shares in Nastech to a six-year high.

The move clearly illustrates the Bothell, Wash.-based company’s further expansion into the popular new drug class, and its stock (NASDAQ:NSTK) gained $1.65 on Thursday, or 8.8 percent, to close at $20.32.

"This acquisition effectively expands Nastech’s existing RNAi therapeutics development program," Steven Quay, the company’s chairman, president and CEO, said during a conference call. Though financial terms were not disclosed, the deal is not expected to have a material impact on Nastech’s projected burn rate.

The patent portfolio from Galenea, of Cambridge, Mass., includes certain intellectual property licensed from the Massachusetts Institute of Technology for the development of RNAi therapeutics against respiratory viral infections such as influenza, rhinovirus and other diseases. Already Nastech has a TNF-alpha RNAi program targeting inflammation.

Now targeting the influenza virus through an RNAi therapeutics program is "a high priority," Quay said, especially in light of ongoing fears of a near-term flu pandemic. Galenea’s lead RNAi product, G00101, has demonstrated animal efficacy against multiple flu strains, including the notorious bird flu H5N1. Specifically, in vitro and in vivo studies have shown that these RNAi sequences provide broad-spectrum influenza protection and have reduced the potential of drug resistance.

G00101 works by preventing viral replication and transcription in the airway epithelium, where it is delivered by way of inhalation. Notably, the product’s long-term stability is positive in light of stockpiling needs.

Nastech plans to work closely with government agencies to accelerate its development going forward. The company did not detail a specific timeline for advancing the product further, although G00101 still needs to be tested in toxicology studies to enable an investigational new drug application.

The intellectual property acquired from Galenea includes patent applications licensed from MIT that have early priority dates in the antiviral RNAi field, "an important aspect" of the portfolio, Quay said. "It is our understanding that the MIT patent applications represent some of the earliest patent applications in the area of RNAi directed against influenza and respiratory diseases."

Nastech also acquired Galenea’s research and intellectual property relating to pulmonary drug delivery technologies, which Quay called "essential" to administering G00101 and other potential therapeutics for additional respiratory diseases. Additionally, Nastech assumes Galenea’s pending grant applications from the National Institute of Allergy and Infectious Diseases, a division of the National Institutes of Health, and the Department of Defense to support the development of RNAi-based antiviral drugs.

Jianzhu Chen, an MIT professor of immunology who developed the RNAi antiviral technology, will become a consultant to Nastech. In addition, certain employees from Galenea’s RNAi group have been offered positions at Nastech.

"The acquisition of this program from Galenea provides a key addition to Nastech’s growing intellectual property estate and technologies in RNAi delivery and therapeutic development," Quay said. The company first accessed the technology two years ago through a nonexclusive license from the Carnegie Institute in Pittsburgh, and last year entered a deal on its TNF-alpha RNAi program with Alnylam Pharmaceuticals Inc. (See BioWorld Today, Feb. 3, 2004, and July 21, 2005.)

Earlier this week, Cambridge, Mass.-based Alnylam entered an RNAi deal for antiviral flu products with Novartis AG, of Basel, Switzerland. (See BioWorld Today, Feb. 22, 2006.)

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