Nanotechnology company Arrowhead Research is selling its electronics subsidiary, Unidym, and boosting ownership in RNAi subsidiary, Calando Pharmaceuticals. The move focuses Arrowhead Research on the development of nanomedicines.
The company purchased approximately 60 million shares of preferred stock in Calando for $1 million in cash and the cancellation of $8 million in debt owed to Arrowhead by Calando. Arrowhead now owns approximately 79% of Calando’s outstanding equity.
Unidym was bought by Wisepower, a Seoul, Korea-based electronics company that paid $5 million in stock and convertible bonds. Unidym shareholders are also entitled to cash earn-out payments of up to $140 million based on cumulative sales and licensing milestones. Furthermore, Unidym shareholders will receive 40% of licensing revenue from certain patents.
Arrowhead notes that the transaction enables it to decrease its burn rate and retain significant upside exposure as Unidym penetrates its target markets with the help of an experienced partner in Wisepower. The Korean firm supplies Li-polymer batteries for mobile appliances in Asia as well as wireless charging systems for electronic applications and recently developed LED packages and solid-state lighting.
“Unidym has built significant value by identifying and developing a large set of market opportunities for carbon nanotube-based electronic products,” says Christopher Anzalone, Ph.D., Arrowhead’s CEO.
“Now that Unidym is pushing into the marketplace, Wisepower’s resources and market reach will be critical to its ability to grow revenues. The acquisition structure enables Arrowhead to potentially extract substantial value over time as Unidym’s technology is adopted on a wider scale and as revenue grows.”
With the sale of Unidym, Arrowhead will allocate its resources toward nanomedicine development. “We are able to further increase our operational efficiencies by building a team of professionals with a single industry focus and by enabling more synergies among our subsidiaries,” continues Dr. Anzalone. “This transition is also potentially beneficial to shareholder value from an outward-looking perspective.
“We now have a far simpler and more cohesive story to articulate to analysts and institutional investors, and I am confident that our value proposition will fit more neatly into investors’ established frameworks.
The ability to focus our resources, including cash flow from the Unidym sale, on continued investment in our current nanomedicine companies and strengthening our relationships with potential pharma partners should allow us to maximize each subsidiary’s success and, therefore, shareholder value.”
Dr. Anzalone identifies the Phase I trial with Calando’s lead RNAi candidate, CALAA-01, and identifying the best indication for a Phase II study as a priority. The drug is composed of an siRNA-targeting ribonucleotide reductase M2, considered a promising target for cell proliferative diseases, especially cancers.
CALAA-01 is based on Rondel technology, which comprises a three-part RNAi/oligonucleotide nanoparticle delivery system. It is based on the firm’s cyclodextrin-containing polymer, which reportedly protects siRNA from destruction due to nucleases in the bloodstream. By encapsulating the siRNA, Rondel also protects the body from the immune reactions caused by naked siRNA.
“We remain very excited about our clinical data and Calando’s ability to solve the most critical need of RNAi therapeutics: an effective and well-tolerated delivery method,” comments Dr. Anzalone. “As we work to complete the current trial, we remain confident that additional data will better serve our partnering goals given the continued appetite for systemic RNAi delivery supported by solid clinical data.”
Arrowhead’s nanomedicine business includes minority investments in two early-stage companies, Nanotope and Leonardo Biosystems. Nanotope is focused on regenerative medicine, and Leonardo Biosystems has a multistage delivery platform that has shown potential in animal models to be effective in delivery of siRNA and small molecule drugs.
A third subsidiary was established on December 20, 2010, by Arrowhead. Ablaris Therapeutics was formed from an exclusive, worldwide license on technology developed by Drs. Wadih Arap and Renata Pasqualini at the University of Texas M.D. Anderson Cancer Center for use in weight loss and obesity-related metabolic conditions.
An initial drug candidate is expected to enter the clinic this year. The compound is designed to specifically kill blood vessels feeding white fat tissue and is administered via subcutaneous injection. The primary mode of action is believed to be at the site of the fat tissue rather than the central nervous system.