It's been a remarkable month. . .and a remarkable year. . .for RNA. Companies focused on manipulating RNA messages—by RNA interference (RNAi), antisense, or other techniques—have been white hot in an already sizzling biotech sector.
The Nasdaq Biotechnology Index is up nearly 75 percent since the beginning of 2013. But, look at RNA companies like Alnylam over the same period (up 340 percent) or Isis Pharmaceuticals (up 355 percent). Even small, early stage companies, like Arrowhead Research, have gotten in on the action (up 443 percent) while Dicerna Pharmaceuticals hopes to ride the wave of enthusiasm by joining the club of public RNAi companies through a proposed $69 million IPO.
But this micro-sector of the biotech industry has also been hugely volatile. The slugfest between Sarepta Therapeutics and Prosensa and their efforts to bring a therapy for Duchenne muscular dystrophy (DMD) to market was one of the more captivating—if ultimately disappointing—stories of 2013.
That story had new wrinkles in the past month as GlaxoSmithKline dissolved its partnership with Prosensa, handing back rights to drisapersen and allowing the company to retain rights to five other compounds, including three in clinical trials. While Prosensa used its time at the recent JP Morgan Healthcare Conference to highlight a subset analysis that hinted at a benefit from drisapersen in younger patients—the company plans to make some data available to the scientific community in hopes of learning more about how the drug might work—it looks like this is now a one-product show.
Sarepta, which got crushed back in November when the FDA (not surprisingly) asked for more data on the company's antisense DMD drug eteplirsen, got a much-needed shot of good news this month. A phase 2b open-label extension study showed continued benefit in a 6-minute walk test 120 weeks after the start of treatment. That did something to ease worries that eteplirsen, which is similar to Prosensa's drug in mechanism, will suffer the same shortcomings as more time passes and more patients are treated. While Sarepta didn't soar like other RNA companies, the stock is essentially back where it began last year.
Meanwhile, Moderna Therapeutics inked a deal with Alexion Pharmaceuticals on messenger RNA (mRNA) drugs for rare disease. The company gets $100 million upfront in exchange for options on 10 compounds. Moderna was founded in 2010 and just came out of stealth mode in December 2012, but it has quickly become one very well-funded startup. It landed a $240 million upfront payment from AstraZeneca last March in a deal covering up to 40 drugs, and raised $110 million in private equity in November. With this latest deal, it has raised well over $500 million since inception—all without putting anything in the clinic. But those, who have had a chance to invest, have been very enthusiastic about the company's strategy of delivering synthetic mRNA directly to cells and manufacturing virtually any protein imaginable. In this latest deal, Alexion also made a $25 million equity investment in Moderna.
Still, that pales in comparison to the deal that kicked off this year's JP Morgan Healthcare Conference—the $700 million, 12% stake Sanofi just took in Alnylam as part of an expansion of their existing collaboration. Investors quickly decided that if Sanofi was going to value Alnylam at more than $5 billion, maybe they should, too. That was good for a one-day, 40 percent pop in the stock price earlier this month.
Alnylam also got another equity investor in Merck. That's because it decided to buy one-time competitor Sirna Therapeutics from Merck for $175 million, mostly in stock. That's not such a bad deal considering that Merck bought Sirna in 2006 for $1.1 billion cash. Obviously that acquisition didn't work out the way Merck had hoped, but this deal isn't just about Alnylam securing airtight patent protection around RNAi. The company says Merck has advanced the science and the deal includes terms for Sirna products that advance through the clinic.
But, Moderna is also taking another page from Alnylam's book. It recently created a spin-off company called Onkaido Therapeutics, which will focus on harnessing mRNA for oncology indications. One aspect of these RNA companies is that while their technology is largely commercially unproven, they have little problem coming up with drug candidates. Onkaido will start life with $20 million and 15 mRNA candidates for oncology indications. The strategy of spreading out assets and risk is reminiscent of Regulus Therapeutics, the joint venture between Isis and Alnylam.
So 2013 was a huge year for RNA, but could 2014 be even bigger? Alnylam now expects to have at least two programs in phase 3 trials by the end of the year, and to handily exceed its oft-stated “5x15” goal of having 5 programs in clinical trials by the end of 2015. Isis, meanwhile, should report results from several programs in its extensive pipeline. And, who knows what Moderna may have in store if the markets stay friendly?
Hey, we were getting bored of talking about small molecules and big proteins all the time anyway. Time for something new.