August 19, 2003 Last Thursday, Genta announced it would acquire the private company Salus Therapeutics. The Salt Lake City-based Salus has expertise and intellectual property in the development of therapeutics using antisense and RNA interference (RNAi) technology. It also uses a technology called OptiSense for optimizing new drug leads. Genta will pay Salus $13 million in stock as well as up to $17 million tied to future milestones.
Although Genta has always been committed to the development of antisense and other nucleic acid therapeutics, Genasense is the only such drug in clinical development. The Salus acquisition shows that Genta will not stop at Genasense. Particularly interesting is Genta’s interest in RNAi technology, widely regarded as having significant advantages over antisense if technical limitations can be overcome. Along with a non-exclusive license to a key RNAi patent obtained from the Carnegie Institution and the University of Massachusetts, the Salus acquisition makes Genta a major player in the young but exciting field of RNAi-based drugs.
Other key players in RNAi are Sirna (NASDAQ: RNAI) and Alnylam (privately held). Along with Genta / Salus, the biggest hurdles these companies face are increasing the stability of double stranded RNA used for RNAi, and developing a way to efficiently deliver RNAi drugs to target cells. According to Genta, Salus has technology that addresses both of these challenges.
Genta plans to use Salus’s expertise to develop novel anti-cancer drugs, but one of the most interesting possibilities relating to the acquisition is the use of Salus technology to develop a “second-generation” Genasense drug that more efficiently inhibits Bcl-2. Whether or not Genasense is approved, we expect Genta to pursue second-generation constructs.
From a financial standpoint, the Salus purchase is minimally dilutive and of relatively low risk to Genta, in that Genta issued only 1.3% of its outstanding shares to accomplish this deal. Sirna, the closest public analog to Salus, currently has a market cap of $134 million and an enterprise value of approximately $90 million.
The next few months will be critical for Genta, with phase III results expected for Genasense in three different indications. Genta continues to promise results from the first of these trials “before the end of the summer.”
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