Frankly I’d Prefer a BLT

I was having trouble getting to sleep tonight so I thought I would very briefly write about Benitec (ASX: BLT).

I have watched this company for a long time and, to me, it epitomises the very worst of what the ASX has to offer. BLT claims to have fundamental intellectual property ownership of gene silencing / RNAi but I find this really hard to believe given that there are plenty of companies developing RNAi drugs but nobody seems to be fazed by Benitec. Is Alnylam lining up to do a deal? No.  Also this kind of technology is not just about the molecule that is doing the “business” but also a delivery system that enables the therapeutic to ultimately be successful. It’s complicated and very tough to develop this sort of drug and there have been a lot of failures to date.

As an aside note, the CEO of the company is an impressive academic and an off-scale bright guy but not the sort of character you want to put in front of the camera for an investor presentation unless – like me – you also struggle to sleep at night. “Boring beyond compare” is what I have heard the analysts say. This also impacts my view of the company, I am ashamed to admit. I accept the fact that this comment is a bit superficial and petty, but it’s true. That’s life when you are an early-stage public company. The CEO is on show… salesman-in-chief and all that…

The truth is, I never thought this company would raise more money, but miraculously it did. Amazing! Mainly because the Hepatitis C space has been so frothy the last few years and if you want to raise money, “swim where the water flows”, right? But as I have mentioned in previous posts – I despise companies that can’t decide what they are. Is BLT a cancer company? An infectious disease company? An AMD company? What is it? Does anyone out there holding BLT stock realise that you can’t develop all of these markets and indications under one roof?

The stupidest thing about BLT is that we have plenty of new drugs in the Hep C space. We are not in the PEG-interferon or ribaviron world anymore, there are lots of exciting new drugs, even in Australia, and even under PBS. 9/10 patients with virtually any degree of severity/genotype of Hep C are able to be treated (= cured) and with the sheer amount of investment and progress in terms of new drug approvals in this space over the past 5 years, Benitec has simply missed the boat. Moreover, doing clinical trials for this indication are an absolute nightmare because of the revised standard of care.

I wouldn’t buy 10 shares of this company, mainly because I like crispy bacon with lettuce, tomato and wholemeal bread – and it costs about the same…

PS: What kind of a loser company reports to the public markets on a patient-by-patient basis??? Seriously!

10 thoughts on “Frankly I’d Prefer a BLT

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  2. wow!
    you clearly have no idea… every point you have made can be taken apart. i will take with your references to alnylam. they do have a cross licencing deal from years back, but your ignorance to the technology differences blinds you to the fact that benitec’s ddrnai utilises an up stream mechanism in comparison to alnylam’s approach. both approaches can achieve the desired effect but i would like to see you debate the advantages of a synthetic approach when long term, complete gene knockdown is the goal.
    i’m sure the rest of the above will be shot down, but i must say i am really enthused about the timing of your article. we are living in days where data is known from the ddRNAi compound in living people and i’m sure we are going to find out one way or the other quite soon.

    Liked by 1 person

    • I am starting to learn that the Benitec shareholder/advocate clan are a passionate lot! I guess you would have to be, you have been waiting for a decade for this to play out…

      I understand the science very well. Happy to elaborate further. In fact your feedback makes me realise that my last post was a bit overly flippant. I welcome the commentary on any of my points.

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  4. Ha, for someone who wouldn’t buy 10 shares of this company, it seems strange that it would be keeping you up at night. That’s the problem though isn’t it? Benitec MAY be onto something that completely transforms medicine as we know it and once an investor in this company, you are unlikely to not follow it because in the back of your mind, you know this too. However, the forums and blogs are full of previously burned investors just like you who just cannot let it go. The snail’s like pace of the clinical trial is typical of ALL gene therapy companies. You are right on one point though. Peter French is extremely boring to listen to. But you know what? All the puff talk from the likes of Nick Leschley of Bluebird that has managed to turn them into a multi-billion dollar company, is not going to make them any more likely to commercialise a drug.

    Liked by 1 person

    • Too funny.

      Trust me, I do this for relaxation. Also, I have never owned a share in Benitec, which – of course – means I have no skin in the game and so anyone reading my commentary is entitled to be skeptical on that basis alone. Nothing sharpens your attention to detail than economic loss, right?

      But conceptually I think you are right. In fact, I will go so far as to say Benitec’s (well, CSIRO) technology IS a game-changing technology. Well, WASS – in 2005. The problem is that the world is littered with companies that had great technology but didn’t really earn the right to benefit from it because they didn’t tackle the problem of commercialisation in a manner commensurate with the power of their technological gift. There are Harvard B-school case studies written about that sort of thing. That’s why, to a very large extent, I believe that intellectual property is only one dimension of a commercial strategy. Fonar didn’t own MRI, even though they had key patents, GE did. Because they were the RIGHT company to deliver. Affymetrix sat on probably the most game-changing personalized medicine technology portfolio and instead of developing phenomenal products they focused on suing everyone else. It barely has a $Bn market cap now. Immunogen tried to hold its ADC platform close and ultimately lost to Seattle Genetics, who partnered with anyone and everyone.

      This is the great risk of platform technology.

      Benitec had something big and they didn’t commercialise it effectively – and with the failure to understand that truthfully nobody gives a shit about platforms in biotech/pharma, what we care about are good medicines. That’s why Alnylam, Gradalis, even BlueBird and Kite, will ultimately enable gene therapy of one kind or another to hit primetime. Unfortunately, now Benitec’s technology is a bit long in the tooth and doesn’t represent the best way to deliver an RNAi strategy. It is also just too far behind in clinical development with not enough dry powerder to really make it over the hump to a convincing inflection point.

      Your comment regarding BlueBird is spot on. Indeed, it’s a very aptly named company. But they have my respect because they are able to articulate a big vision and bring people along for the ride. Same goes for Arie Belledegrun with Kite and even our own Silviu and Mesoblast. In many respects, Mesoblast is a mediocre company but what makes it successful – in no small part – is the evangelism and brilliance of it’s CEO. I actually don’t much like Silviu but I GREATLY admire him for what he has done and his capacity to drive his business. He’s larger than life. Australia’s biotech scene could use a few more like him – and a few less serial con-artists.

      Peter French is someone I do like. I don’t really know him well – but I have a detailed appreciation of the public domain product of his efforts. I believe he is a man of high integrity and intelligence and I don’t believe Benitec would be alive today without him. He (rightly) believes that Benitec’s technology can impact medicine. But he isn’t going to be someone that elevates the status of Benitec to that of its notional peers, and I don’t think he (or his zero-diversity board) is strategic enough to make Benitec rock, especially given that it is technologically on a back foot. I like Nick Leschley but I also agree there is “puff”. But if faking it until you make it weren’t a viable strategy in biotech, we’d never have Genentech, Seattle Genetics or Genzyme. Right?

      The only thing I don’t agree with above is the “snail pace” comment regarding gene therapy. It really just depends on what you mean by gene therapy. Remember, most cell therapy strategies are really gene therapies. They are just ex-vivo manipulated (and going gang-busters at the moment). I also think that chemistry-based approaches like GalNAc have really demonstrated that clinical development can prove pretty quickly for a well-defined target.

      Thanks for reading!

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  5. “Unfortunately, now Benitec’s technology is a bit long in the tooth and doesn’t represent the best way to deliver an RNAi strategy. ”

    It’s statements like this that make me question your obviously knowledgable understanding of this specific technology. you seem to have a good grip on the different methods on administering siRNA, but i still would like to hear why a synthetic approach would produce more desired results when complete gene expression knock down is concerned.

    if you are implying that benitec are running too far behind the advances in siRNAi delivery, again blt’s sequences are alive and kicking in people right now right where they need to be. why wouldn’t you just wait a short while, and the speculation will no longer be needed.

    as far as this indication (hep c) being a waste of time to go after, i couldn’t give a shit whether it was male pattern baldness, cancer, or any of your earlier list. validation is what it’s all about, and it’s pretty cool they can show multiple gene impact with one administration. oh yeah wait…. i see your point about them being outdated.

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    • Hi Daynepaul,

      I don’t consider myself to be an expert on RNAi the way that, say, Dirk Haussecker is. I am a generalist, not a specialist. But yes, I consider myself to be reasonably versed and I have also (in a previous life) had a crack at commercialising, including cGMP manufacture, of an engineered vector not too dissimilar from some of the Benitec constructs. They are quite challenging to manufacture.

      In my opinion, a carbohydrate delivery system will be superior for several reasons:

      1) It is vastly cheaper to make and develop because it is chemistry and not “biotech” (I mean that in the classic sense of a cell-based manufacturing process).

      2) Particles/lipids/viruses are excellent vectors for delivering things to the liver because they are above the threshold of first-pass renal clearance (i.e. they are high molecular weight) and this is where they intrinsically end up. Therefore if the goal is deliver a gene to hepatocyte, then great. But if the goal is to deliver a gene to PBMCs then, notwithstanding a reasonably long circulation time (slower Pk), I don’t think this is the most effective strategy.

      3) Dosing of a small molecular weight delivery vehicle is likely to deliver a far higher number of gene copies than a virus. Viral delivery strategies, unsurprisingly, tend to have a very strong dose-immunogenicity relationship. A smaller construct will also have much better tissue penetration.

      4) Speaking of immunogenicity, a “small-molecule” approach like GalNAc is far more likely to be amenable to a repeat dosing strategy. This very unlikely to be the case with an AdV approach. Experience in animal models and patients with a range of viral delivery strategies (adeno, lenti) suggests that a single dose might be capable of 80-90% silencing, but not 100%. Repeat dosing would likely be necessary for a durable result but this is tough because of the immunogenicity of these particles. Even lipids are preferable in this context.

      5) Even the AAV8 technology that Benitec is using for the TT-034 program isn’t the “latest greatest” and if someone really wanted to go down this pathway with a better construct (e.g. based on either the JHU or the Stanford work) they could do so and would be, perhaps, a year behind. I do think that there is a reasonable amount of momentum around this technology area and there is a LOT of commercial interest. I just don’t think it is the technology that is going to win. That’s my opinion.

      6) You have to separate the interest in understanding gene silencing as an academic exercise from the commercial development of a drug. Many cutting-edge research groups are using Benitec-like technology PRECISELY because it has been around for about 10-15 years. This is not the same research objective as a drug company trying to make a best-in-class product.

      My position is that it’s not whether or not the technology works or not. It’s whether 1) the technology is going to win and 2) whether or not it is going to effectively displace a really incredibly congested and efficacious HCV market. You do realize that almost nobody is doing deals in HCV anymore because it is “drugged-out.” You seem like a sophisticated guy – spending $100m to build a better mouse trap may simply not be worth it, especially if the profit margins aren’t there for a more complex manufacturing process relative to the pricing bloodbath that is going to happen over the next few years. The new standard of care is an EXTREMELY high bar.

      Here is also a crazy thought for you. What if the current drug landscape, along with a bit of a public policy re-think, actually eradicated Hep C in G20 countries? There is a growing public health opinion that this is possible within a decade (I’d be happy to email you some references if you like). If that’s the case, then there is a lot of money to be made in the short term but by the time Benitec gets a drug out there, it isn’t going to be at the crest of the wave anymore. If Benitec’s only market opportunity in, say, 7-10 years is the emerging market arena (where, for example, Gilead has committed to <$1,000 course), is that something you really want to invest in?

      I have two other comments I would like to make in response to your email:

      1) You should care about what the indication is. This is not 1980 anymore where a "proof of concept" means a stratospheric valuation. Indication is everything, reimbursement is everything and the goal of a public biotech company should be to make a commercially and clinically competitive medicine. We already know Benitec's technology probably works and this is baked into their current share price as far as I am concered. As an investor you should be caring about their next value inflection point and it does not come from dosing 20 patients. This is one of the very big reasons why the Australian biotech industry is immature – guys like you think you deserve a 10x for not killing a few patients in a safety study.

      2) I think you misunderstand the purpose of this blog. I am not here to talk a believer out of his/her position. If you have made the decision to invest in this company, that's your prerogative and you have my respect. You certainly seem to be an informed investor and therefore you are entitled to make your own judgement, of course. My goal is to provide a counterweight opinion where there is no neutrality of information available on a security. This doesn't always mean a negative perspective (indeed I have been positive about several securities, contrary to market sentiment) but I hate the bullshit and over-optimism associated with the Australian biotech industry that is mostly designed to suck Mum and Dad investors into thinking they are riding the cure for cancer when in reality a very specific number of individuals and firms are mostly interested in a "pump and dump". In my view, Benitec is an example of a company that is vastly overoptimistic in the way it is positioned, and the behavior of the management team with respect to the dissemination of clinical data is not responsible, and not consistent with best practice.

      In my opinion.

      Good luck with your investing. Please don't think of my response to your communication as "having the last word." My wife often criticises me for taking an aggressive back-stop. I have tagged your username as an "automatic approval" and if you want to add something further to this dialogue, feel free. I don't really have anything much further to say.

      My very best wishes,

      Chris

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