National Editor

With its shares trading at under a half dollar, Ribozyme Pharmaceuticals Inc. pulled off an agreement for $48 million in financing, the keystone in a deal that gives investors control of the company and changes its direction to focus on RNA interference.

Howard Robin, president and CEO of Boulder, Colo.-based RPI, said a decade of research into RNA chemistry and pharmacology has given the firm "tremendous expertise that is almost 100 percent translatable into one of the most exciting fields in medical science."

High-caliber investors apparently think so, too. The agreement is for the sale of $48 million in RPI stock and warrants to The Sprout Group, of New York; Venrock Associates, of New York; Oxford Bioscience Partners, of Boston; Techno Venture Management, of Munich, Germany; and Granite Global Ventures, of Menlo Park, Calif.

The cash "takes us through the end of 2005, and that includes getting into the clinic to a Phase I study," Robin said.

RPI's stock (NASDAQ:RZYM) closed Wednesday at 33 cents, up 4 cents.

Under the terms of the deal, the investors will have the right to appoint four designees to RPI's board, which, along with the stock ownership, will give them a controlling interest. RPI shareholders must approve the plan, along with a reverse stock split, and are expected to do so by "mid- to late April," Robin said. The remainder of the board will consist of Robin and two others yet to be named.

RNA interference, known as RNAi, "silences" gene expression by deploying small interfering RNA, called siRNA, to degrade messenger RNA, which is the link between DNA and proteins. The journal Science recently voted the discovery of small RNA molecules and their role in RNA interference the 2002 scientific breakthrough of the year.

The method, which gained more attention this week at a San Diego scientific conference solely devoted to applications of RNAi, was recently patented and has been widely licensed.

"We've spent the last 18 months working actively in the field," Robin said, noting RPI has filed 50 patents in RNAi, with 30 issued for the chemistry, stabilization and synthesis necessary to use the approach for therapeutics.

RNAi dates back to 1997, when a team headed by Andrew Fire of the Carnegie Institution of Washington and Craig Mello of the University of Massachusetts Medical School discovered that, by specially designing RNA with two strands, they could silence targeted genes. (See BioWorld Today, May 5, 1999.)

Nassim Usman, chief scientific officer and vice president of R&D for RPI, said the Carnegie patent "covered very long double-stranded RNA molecules and could be applied only to worms and plants. That's not a practical way to approach making a drug for humans."

RPI has programs in hepatitis C and macular degeneration, with targets also in diabetes, obesity, oncology and central nervous system disorders such as stroke.

"As best we can tell, that puts us in the clear lead position in RNAi," Robin told BioWorld Today.

Meanwhile, RPI has the Phase II anti-angiogenesis drug Angiozyme for metastatic colorectal cancer in development with partner Chiron Corp., of Emeryville, Calif. Last spring, Ribozyme reported that its Phase II trial with Angiozyme against metastatic breast cancer failed to achieve a clinically significant response rate. RPI and Chiron share costs 50-50 in the deal entered in August 1994. (See BioWorld Today, Aug. 5, 1994.)

Robin said the RNAi funding doesn't affect Angiozyme, data regarding which have been submitted to the American Society of Clinical Oncology for presentation during its May meeting. RPI is "in discussions" with Chiron regarding how to proceed. Robin declined to comment further.

At the same time that RPI disclosed the Angiozyme breast cancer news, the company said it had stopped dosing in a Phase II trial of Heptazyme, another ribozyme-based drug, after an animal from a preclinical study lost its vision. The Heptazyme Phase II trial had begun the previous October and involved about 40 patients with chronic hepatitis C. Ribozyme's stock dropped 32.4 percent, or 67 cents, to close at $1.40 on the news. (See BioWorld Today, May 1, 2002.)

In August, RPI said it was replacing its original formulation of Heptazyme with a second-generation version, then expected to enter clinical trials in 2004. That was also when the company said it was restructuring to focus more on the RNAi program, decreasing staff from 120 to 90 and bringing new management aboard. (See BioWorld Today, Aug. 16, 2002.)

"At this point, we're not going to pursue basic research in ribozymes," Robin said. Asked whether the trials with the new Heptazyme would go forward, he said, "I don't think so."