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AstraZeneca CEO Chases Multiple Strands in RNA Drug Quest

March 28, 2013

AstraZeneca CEO Pursues Multiple Strands in RNA Drug Quest

By manipulating RNA, drugmakers aim either to stop cells from producing proteins that can cause diseases such as cancer and diabetes, or make needed molecules that are missing. Photographer: Thomas Deerinck/Visuals Unlimited

AstraZeneca Plc (AZN), whose setbacks in drug development have made the stock the cheapest among the largest pharmaceutical companies, is turning to RNA technology to boost its chances of discovering new therapies.

By manipulating RNA, drugmakers aim either to stop cells from producing proteins that can cause diseases such as cancer and diabetes, or make needed molecules that are missing. RNA, or ribonucleic acid, helps create proteins within a cell based on genetic information encoded in DNA.

AstraZeneca Chief Executive Officer Pascal Soriot expanded the company’s efforts in the RNA field last week by joining up with Moderna Therapeutics Inc., a biotechnology company in Cambridge, Massachusetts. The deal gives the London-based drugmaker a third approach to developing RNA-targeting medicines, following partnerships in the last seven months with Regulus Therapeutics Inc. (RGLS) and Isis Pharmaceuticals Inc. (ISIS)

“This is not betting the farm on Moderna but it’s a bold move as this is very new,” said Otello Stampacchia, founder of venture-capital firm Omega Funds, who wrote his doctoral thesis on RNA technology. “He’s saying, let’s try to get a piece of the table before everybody else sits at the table.”

Soriot, who took over as CEO on Oct. 1, is trying to revive the U.K.’s second-largest pharmaceutical company after drug development setbacks including the failure of experimental antidepressant TC-5214 in two late-stage trials. Patents on drugs that account for 40 percent of AstraZeneca’s peak revenue in 2011 of $33.6 billion are expiring, including for its bestseller Crestor in 2016.

Cheap Stock

AstraZeneca were little changed at 3,247.50 at 9:38 a.m. in London. It is the cheapest large pharmaceutical stock and has the second-lowest price-to-earnings ratio of 9.2. It also has the lowest enterprise value, a ratio that acquirers use to estimate the value of a company. Before today, the shares had gained 15 percent in the last year, giving the company a market value of 40.5 billion pounds ($61 billion). The Bloomberg Europe Pharmaceutical Index (BEPHARM) of 18 companies has risen 24 percent in the same period.

AstraZeneca has dabbled in RNA-based therapies since at least 2007, when it formed a partnership with Silence Therapeutics Plc. (SLN) The focus was on RNA interference, or RNAi, which works by shutting down production of proteins that cause disease. That field of research intensified after Merck & Co. bought Sirna Therapeutics Inc. for $1.1 billion in 2007, and then cooled as companies including Roche Holding AG (ROG) and Novartis AG ended collaborations with Alnylam Pharmaceuticals Inc. (ALNY:US), an RNAi company founded by Nobel laureate Phillip Sharp.

RNAi Technology

There are no marketed drugs that use RNAi technology, according to Samir Devani, an analyst at Nomura Holdings Inc. Alnylam, based in Cambridge, Massachusetts, said in January that it plans to start late-stage testing this year of ALN-TTR02 for amyloidosis, a condition in which abnormal proteins accumulate in and damage body organs and tissue.

While AstraZeneca still has rights to three RNAi programs through its agreement with Silence Therapeutics, that collaboration has ended, Christoph Pittius, AstraZeneca’s vice president of business development, said in an interview.

“This is a very complicated and rapidly developing area,” Tim Freeborn, finance director at London-based Silence Therapeutics, said in an interview. “It’s very interesting to see AstraZeneca” aligning with Moderna.

Messenger RNA is a different approach that can “make any cell a factory to produce the protein that’s missing,” Moderna Therapeutics CEO Stephane Bancel said in an interview.

Moderna’s Approach

Moderna’s technology may have an advantage over other RNA methods given the speed with which it can be tested on multiple targets simultaneously, Stampacchia said. With messenger RNA, the goal is to produce healing proteins, which are more easily observed than the blocking action of RNA interference, he said.

Moderna was relatively unknown after its founding in November 2010 and that’s how Bancel wanted it. After becoming CEO in July 2011, he operated in “stealth mode,” concentrating on filing 155 patents and 6,000 claims, he said.

The company was brought to Soriot’s attention by AstraZeneca’s former research and development head Martin Mackay, Bancel said.

“I could see in his eyes that he really understood the science,” he said, recalling an hour-long breakfast meeting with Soriot in Philadelphia. “At the end of the meeting, he shook my hand and said we should do something really big.”

‘New Energy’

The deal was structured so that AstraZeneca could “play with” a target, drop it if it doesn’t perform, and move on to other targets, Bancel said. The $240 million upfront payment AstraZeneca agreed to make was the eighth-biggest in the sector in 13 years according to Bloomberg Industries.

“He’s putting a new energy into Astra,” Bancel said. “You can see with Moderna he’s willing to take a calculated risk.”

AstraZeneca is also working on so-called antisense therapies, which destroy the RNA involved in making proteins that cause disease. The company teamed up with Carlsbad, California-based Isis in December to develop antisense drugs including an exclusive license for ISIS-STAT3, which is in early-stage clinical trials for advanced lymphomas. STAT-3 is a protein linked to cancer growth.

Soriot’s Philosophy

The U.K. drugmaker’s alliance with Regulus, announced in August, centers on the development of microRNA therapeutics for three targets in cardiovascular and metabolic disease and cancer that are in pre-clinical testing. MicroRNAs are tiny RNA molecules that regulate genes and are altered in many diseases. Modifying them can be therapeutic, the companies said. Regulus, based in San Diego, is a joint venture between Isis and Alnylam.

The antisense, microRNA and messenger RNA technologies AstraZeneca has licensed complement each other, Pittius said. AstraZeneca had looked at two other companies developing messenger RNA technology: RNA Rx, a small startup based in Pennsylvania, and Ethris GmbH of Martinsried, Germany, he said.

“This is not just a one-off,” Shaun Grady, vice president of strategic partnering and business development at AstraZeneca, said in an interview. “Moderna validates Pascal’s philosophy of re-establishing AstraZeneca’s scientific leadership.”

To contact the reporters on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net; Makiko Kitamura in London at mkitamura1@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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