Benitec aims to clear dark clouds over Sunnivale

Former Benitec CEO John McKinley appears to have been a casualty of continuing adverse publicity surrounding the Brisbane gene-therapy company's ongoing battle with Pennsylvania rival Nucleonics over ownership of key patents to RNA-induced (RNAi) gene-silencing technology.

While refusing to comment on the reasons for McKinley's ouster, Benitec's new acting CEO, Sarah Cunningham, indicated that the company was concerned that its dogfight with Nucleonics is distracting investors and harming their confidence, at a time when Benitec (ASX:BLT) is gearing up for the first human trial of its RNAi therapy for HIV-AIDS.

Cunningham, who was appointed chief operating officer of Benitec when it acquired Sunnivale (California) RNAi therapeutics pioneer Avocel in May last year, told Australian Biotechnology News, "The difficulty has been that we don't believe investors really understand what we are doing.

"We're a really cool company, with top-notch scientists and great facilities. We've grown tremendously from the acquisition of Avocel and our projects are moving on extremely well, but it's being completely overshadowed by the litigation."

Cunningham said she could not comment on Benitec's current case against Nucleonics in the US District Court of Delaware. But she did comment on Nucleonics' actions in requesting the Australian and US patent offices to review key RNAi patents held jointly by Benitec and CSIRO, saying, "A lot of it is PR".

"The litigation and re-examinations are two separate issues," she said. "We feel very strongly that our patents will survive the re-examination. "We've looked at what has been presented [by Nucleonics] and we feel very confident."

Of the company's immediate future, Cunningham said, "We have a fantastic group here, that is entirely drug-development focussed. We want to do an investor presentation, so people can see what we're working on here - it's a tremendously exciting company."

Cunningham co-founded Avocel, and was its VP for intellectual property and business development before Benitec bought Silicon Valley company last year. In the process, Benitec acquired two RNAi therapeutics projects close to being taken into human clinical trials -- one for chronic hepatitis C virus (HCV) infections, the other for HIV/AIDS -- and a strategic base in one of the world's largest biotech precincts.

Asked if her appointment presaged a move by Benitec to shift its headquarters from Brisbane to Silicon Valley, Cunningham said, "Certainly the US is the primary market for all pharma biotechs -- not only the primary market for sales, but for the infrastructure that allows biotechs to grow.

"My experience with Australia is that the technology from basic through to translational is fantastic, but commercialisation is a problem. And that's where Benitec is at the moment -- all the early drug-discovery work was fostered from Australia, but we need more capital underpinning to get into the market.

"That being said, Benitec has established a lot of valuable ties in Australia. We've established collaborations with several entities in Australia that will secure a second wave of projects for our development pipeline. We'll tell everyone about them when they're done, but we're not going to under-promise and over-deliver."

"There's no doubt that RNAi is absolutely revolutionary. The power of the technology is amazing. Is it proven in a clinical setting? Not yet. We feel the approach we are taking is very good and well thought-out, but over-hyping it won't do any good."

Cunningham said Benitec -- along with its collaborators at San Francisco's City of Hope -- was in the final stages of GMP (good manufacturing practice) tests on its lentivirus vector for an RNAi treatment for AIDS patients. The trial involves using the virus to insert a package of DNA sequences, copied from target genes in the AIDS virus, into blood stem cells purified from the patient's own bloodstream, rather than from bone marrow.

The genetically modified cells will be re-infused and will migrate back into the patient's bone marrow. If the procedure works, they will establish a self-renewing pool of blood stem cells -- the progenitors for all the specialised cells of the blood and immune system.

The stem cells will repopulate the patient's system with macrophages and helper-inducer T-cells whose new RNAi gene 'cassette' will render them immune to infection by the AIDS virus.

The progressive loss of HIV-infected helper-inducer T-cells, which coordinate the immune response, results in the collapse of the immune system, while macrophages -- another primary host for the virus -- serve as reservoirs of infection.

"Other clinical studies at the City of Hope have made us very confident there will be no issues with lentiviral infection, and that the [modified stem] cells will differentiate as they are supposed to," Cunningham said.

"We don't expect any issues with the cells engrafting and getting back into the bone marrow. We've written the protocols for the Phase I [safety and tolerability] trial, and as long as we see a strong safety profile we'll move into Phase II efficacy trials."

Cunningham said Benitec would conduct its clinical trials for both the HIV and HCV therapies entirely in the US, because the approval from the US Food and Drug is the key to their deployment worldwide.

"Our goal is to find a commercial partner, but the further you take it, the more you own it. We have to be able to afford to take it further. "That's why we're probably not going to do multiple, simultaneous clinical trials. We need [human] clinical data. There's currently no RNAi drug in Phase II trials -- it was only in 2002 that RNAi was shown to work in mammals."