Huge RNAi Breakthroughs!

– Once again, huge scientific news has disrupted my plans. Last week, I put off giving you additional news on the quest for an Alzheimer’s disease cure as well as some fascinating and related data on the health benefits of coffee. The reason, as you know, was that two companies in our portfolio announced truly historic breakthroughs in stem cell science.

Remarkably, the same basic thing has happened again. This last week, three major scientific developments were announced regarding progress in the field of RNA interference. Once again, some of the companies involved are in our portfolio. (I will refer to them as “Company X” and “Company Z.”)

As I’ve said many times, we know that RNA interference is one of the most important areas of scientific inquiry. The reason is that the RNAi mechanism offers us a means of controlling individual genes. This, in turn, offers the theoretical means of curing nearly every disease suffered by humans, animals or plants.

Though scientists were aware of some of the actions involved in RNAi, it was one article published in the critically important journal Nature that put all the pieces together. That was in 1998, and the article was titled, “Potent and Specific Genetic Interference by Double-stranded RNA in Caenorhabditis Elegans.” In 2006, two of the authors, Craig Mello and Andrew Fire, were awarded the Nobel Prize for that critical work.

This article rocked the scientific world. Allow me to characterize the big picture that emerged from that article.

Basically, the master genetic program in our cells, DNA, never willingly exposes itself to any outside influence. Rather, it operates behind biological fire walls that protect it from viruses and other invaders. It communicates, however, via messenger molecules. These are called messenger RNA or mRNA. The mRNA molecules, in turns, “encode” or synthesize proteins that actually spread the DNA’s commands.

RNA interference, as the name implies, is a natural means of disrupting that process. Our cells use a complex, but fascinating mechanism called RNA-induced silencing complex (RISC) for all kinds of natural functions. It can be thought of as part of the immune system, as it protects from viral invaders, but it is also part of our gene regulation system. It can also, however, be manipulated to accomplish other ends.

I find it useful to think of this process, simplistically of course, as a kind of computer virus-protection program. Computer programs such as Symantec’s Norton AntiVirus and Trend Micro’s PC-cillin have large databases of “evil code.” They scan your computer, incoming data and external drives looking for code sequences that are in the database of evil code. If it finds evil code, the security program attempts to block it from interacting with your computer.

Anti-virus software periodically updates by downloading new additions to its database of evil code. In a sense, RNAi offers scientists a way to hack those evil code updates and inject their own code sequences. It could be exploited to send RNA sequences that would provoke the body to block the operation of particular encoded proteins.

For example, there is a protein code that enables the capillary growth that causes blindness through wet macular degeneration or tumor growth. Scientists know what code sequence to add to the evil code database that will stop excess capillary growth. Eventually, I believe, we will know what code blocks Parkinson’s disease, glaucoma, kidney disease, autism and on and on and on. By introducing the right small RNA molecules, we can provoke the body to disrupt the chain of communication that results in those conditions. It is even possible to increase the production of proteins that increase health or reverse damage.

Hopefully, cell biologists in the audience will forgive my crude metaphors. Regardless, when that Nature article was published, scientists began the quest to figure out just how to use RNAi to cure diseases. Universally, they encountered one enormous obstacle. These small RNA sequences are exceptionally fragile. Under normal conditions, they are quickly destroyed by the immune system.

This is not dissimilar, by the way, to security and virus protection software. The ultimate goal of the “black hat” hacker is to penetrate and exploit the anti-virus security programs themselves. If a hacker could hijack the process by which these get information about new threats, the database updates, he would “own” the computer and could do anything he wanted. Consequently, your anti-virus program has a level of safeguards built into it that far exceeds those of normal programs.

Because the RNAi mechanism performs similar functions, such as scanning and blocking unwanted actions, that biological system offers similar controls over the system. It is, therefore, not only scientists who want to exploit the system. It is logical target of sophisticated microorganisms that evolve constantly in an effort to hijack your immune system. As a result, we have particularly strong defenses against interfering with the RNAi process.

It is extremely difficult to get small therapeutic RNA sequences past the immune system into the right cells to cure diseases. Some scientists believed that it might be possible to deliver RNA interfering sequences locally, by injection into a tumor, for example. The problems associated with developing a systemic delivery system that could be taken orally or injected but that would then act only on target cells seemed almost insurmountable. In fact, many scientists believed it was impossible in higher life-forms, particularly humans.

Last week, we learned definitively that it is not impossible. In a major scientific journal, “Company X’s” scientists presented peer-reviewed proof that they have done it.

Simply put, the anti-cancer drug that Company X tested is valuable. More valuable, however, is Company X’s proprietary platform that produced the successful RNAi delivery solution. With this successful test of a systemic RNAi cancer drug in humans, Company X’s ability to deliver other interfering sequences to target molecules will be attracting serious attention from Big Pharma.

Every big pharmaceutical company has an ongoing RNAi delivery research program. Merck has admitted that it has tested hundreds of methods unsuccessfully. Company X, however, was the first to prove it could make a systemic RNAi drug for humans. I would be astonished if Company X does not sign some sort of agreement with Big Pharma within the year.

While Company X has clearly scored a major coup, it is by no means alone in the quest for RNAi delivery methods. In fact, “Company Z” announced a successful delivery mechanism last week as well. Company Z tests involved local surgical delivery into the skin of rats, but the results indicate that it has found a way to beat the delivery problem. I spoke with the CEO of Company Z. He is clearly confident that further tests will show the systemic effect of this technology in humans.

I think that the events of the week emphasize several crucial aspects of the field of RNA interference. One, obviously, is that progress is being made very rapidly. After I interviewed Craig Mello a year and a half ago, I told you this. Still, it’s difficult even for insiders to keep up. This is the result partly of the fact that progress in so many related fields, such as human genomics, continues to accelerate.

Another characteristic of this field is that it appears there will be multiple winners. The delivery mechanisms used by Company X and Company Z are quite different, but both have demonstrated efficacy. It remains to be seen which will be more effective for which diseases. Personally, I believe there will be multiple winners.

In fact, as I was writing this column, two more important news stories broke concerning our other RNAi companies. Therefore, to say that developments are breaking quickly in RNA interference is an understatement. It is extremely meaningful that all this action on the RNAi front seems to be coming from aggressive small caps, not bureaucratic Big Pharma. Nobody knows, at this point, how everything will shake out in the next few years. The rational investment strategy, therefore, is to own a portfolio of the most promising of these entrepreneurial companies.

It’s possible that all these RNAi innovators in our portfolio will do well simply because the promise of RNA interference is so incredible. As one unnamed biotech CEO recently told me, “We’re not going to run out of sick people to treat. There is, unfortunately, no disease shortage.”

We now know with certainty, because of the week’s events, that RNAi can be delivered effectively. There are still details to be worked out, but this is truly great news.

Patrick Cox,

for The Daily Reckoning