Last June, I posted about the long and winding history of Fremont, Calif.-based Quark Pharmaceuticals, a biotech developing drugs based on a new gene-silencing technology called RNA interference, or RNAi. At the time, I labeled the company a biotech chameleon — a term I used to describe biotechs that reinvent themselves, often abruptly and without looking back.
In that sense, Quark is still a chameleon, by which I don’t mean anything pejorative — biotechs turn on a dime all the time, often for very good reasons (failed clinical trials, for instance, being a prime example). Some biotechs, however, reinvent themselves for less admirable ends, such as shifting gears to catch rising investor enthusiasm for a sexy new technology or drug-development strategy. In that earlier post, I raised the possibility that Quark had done exactly that by licensing its experimental RNAi drugs from another company and then rushing to declare itself a pioneer in RNAi therapy.
That part, however, turns out not to be true. I’ll lay out the whole story below the fold for anyone interested, but the short version is that Quark has been ill-served by earlier public statements made by its partner Silence Therapeutics that incorrectly implied that Silence had originally discovered what are now Quark’s leading RNAi drug candidates. These are the statements I alluded to in an earlier post, in which I quoted Quark CEO Danny Zurr saying that Silence had been “deceiving the public” by inaccurately describing the two companies’ relationship.
After looking into the Silence-Quark partnership more deeply, my current understanding is that Quark developed both its leading RNAi candidates with help from Silence, but only licensed certain nucleic-acid chemistry from its partner, not the RNAi molecules (or sequences) themselves. The bottom line is that Quark appears much more justified in its claim to be a leader in RNAi therapeutic development than I originally thought.
Before getting into all that, a quick update on Quark’s recent funding efforts. Gavin Samuels, the company’s VP for business development and investor relations, says Quark has lined up a syndicate of investors who have pledged roughly $20 million of the company’s intended $30 million funding round. The final $10 million may be provided by new investors who join that syndicate, although Samuels said Quark may also simply wait another three months or so to raise those funds. One factor weighing on the company is a pending “milestone” payment Quark is expecting soon from Pfizer, and whether that will be enough to carry the company into mid-2009 without the need to raise another $10 million. (Biotechs love such milestone payments, which are typically “non-dilutive” cash infusions that don’t shrink startup founders’ ownership stakes or require other existing investors to pony up in order to maintain their stake in a company.)
Samuels also told me that Quark’s abortive IPO last year foundered for both internal and external reasons, including market jitters following the huge Blackstone Group IPO last June that hit right as Quark was hoping to price its offering. The company itself, however, wasn’t blameless, he says. For instance, Quark may have jumped the gun by trying to go public when it only had one drug in early-stage human testing; in addition, Samuels says, the startup hadn’t done enough to make its case with journalists and market analysts.
Anyway, on to the convoluted history of Quark and Silence after the jump.
