Mar. 27, 2009 (Investor's Business Daily) -- Like time, science marches on. The pace might have slowed with the dour economy, but many firms -- big and small biopharmas -- are funding promising technologies.
One of those technologies is ribonucleic acid, RNA, a cousin of DNA.
DNA contains the genetic instructions for living organisms, while RNA can turn off proteins that nourish diseases.
Making it do that is generally called RNA interference, or RNAi. It's a natural mechanism the body uses to stop nasty gene behavior.
When RNAi conks out, the body can fall prey to disease. Harness RNAi and you can create drugs against those illnesses. Experts give the science a thumbs up.
"We're past doubting it," said Piper Jaffray analyst Ted Tenthoff, who monitors firms leading the research.
The science has variations. One recent deal involves three firms pursing different avenues.
On March 4, Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals ( ISIS) each pitched in $10 million to Regulus Therapeutics.
Alnylam and Isis created Regulus in 2007 to develop a variant called microRNA. They gave Regulus 600 patents and 300 pending patents.
The presence or absence in cells of certain microRNAs is linked to cancer, viral infection, cardiovascular disease, metabolic disorders and immuno-inflammatory illness.
For its part, Alnylam is pursuing RNAi therapeutics to treat liver cancers, high cholesterol, Huntington's disease and TTR amyloidosis, for which a liver transplant is the only treatment.
Lucrative Deal
Isis is working on a technology called antisense. It hopes to treat cardiovascular and metabolic diseases. The firm has the first antisense drug on the market: Vitravene for a form of retinitis in AIDS patients. Its anti-cholesterol drug mipomersen is in phase three trials.
Just six months after Alnylam and Isis launched Regulus, the startup signed its first deal with a big pharma. GlaxoSmithKline (GSK) paid an initial $20 million for Regulus' science, with another $600 million possible with milestones.
Glaxo gets option rights to products for inflammatory illness, including rheumatoid arthritis and inflammatory bowel disease. Regulus will get double-digit royalties if its microRNA drugs reach the market.
The cash on hand will carry Regulus into 2012, says Chief Executive Kleanthis Xanthopoulis. He calls microRNA "gatekeepers of the normal function of a cell."
MicroRNA therapy would be used in combination with other drugs, he says. The idea is to "attack from multiple points and catch the disease in the crossfire."
One possible combination could be with Genentech's (DNA) Avastin to fight cancer. Genentech is being acquired outright by Roche (RHHBY).
Roche is also a partner with Alnylam. In 2007, Roche paid $331 million for a nonexclusive license for Alnylam's RNAi technology. Another $770 million in milestones are part of the deal. After that would come royalties.
'Rare Biotech'
Alnylam is known for big deals with Big Pharma, says Alan Carr, an analyst with Needham & Co. Last May it struck a deal with Japan's Takeda that gave Alnylam $150 million up front and up to $1 billion in milestone payments.
And in January, Cubist Pharmaceuticals (CBST) paid Alnylam $20 million -- with another $82 million possible -- to share in development of Alnylam's RNAi treatment for a type of respiratory virus.
Alnylam is a rare biotech, Carr says. It's cash-rich without a single product on the market. "That's what attracts investors to the stock."
But the firm still has a long ways to go, analysts say -- especially with no profits and less than five years as a publicly traded company.
"It's difficult to assign value at this early stage," said Jonas Alsenas, an analyst with Leerink Swann.
Alnylam will start clinical trials for three compounds by the end of the year.
Meanwhile, Isis signed a deal with Genzyme (GENZ) last year for a partnership on mipomersen. Total value, with milestones: $1.9 billion.
That eclipses Merck's (MRK) outright buy of Sirna, another RNA research firm, for $1.1 billion in 2006. All of Big Pharma has been interested in RNAi since that deal, Carr says.
At the other end of the partnering spectrum are smaller deals. MDRNA (MRNA) and Novartis (NVS) on March 23 announced a deal in which Novartis will pay MDRNA $7.5 million for a nonexclusive license for a technology variant it calls siRNA.
The transaction lets Novartis pay more to get more, but the companies kept the details secret. MDRNA's siRNA drug is aimed at liver and intestinal cancer.
Even that small amount means a lot to MDRNA, says Chief Executive J. Michael French, especially considering his firm has a market cap of only $12 million.
In February, MDRNA made a deal with Roche for a nonexclusive sublicense agreement. French would not reveal the details, saying only that "these nonexclusive deals are a validation of our technology."
The best validation will be regulatory approval. First to the finish line is likely to be Isis' mipomersen.
"Approval of mipomersen will be a defining event for the technology," Tenthoff said.
(Source: iStockAnalyst )
