Merck & Co. has apparently gotten excited again about pushing the frontier with new RNA-based therapies.

MRL Ventures, Merck’s early-stage biotech investment arm, has agreed to join The Baupost Group in leading a $55 million Series B venture investment in Cambridge, Mass.-based RaNA Therapeutics. The round included a handful of “crossover” investors that usually focus on public companies—Rock Springs Capital Management, Brookside Capital, and Leerink Partners. Earlier investors such as Atlas Venture, GlaxoSmithKline’s SR One group, Pfizer Venture Investments, and Monsanto all doubled down after they participated in the company’s $20.7 million Series A round in January 2012.

RaNA Therapeutics (pronounced RAH-nuh) plans to use the cash to further develop technology that targets long stretches of RNA that don’t contain code for making proteins, but which do contain codes that regulate how disease-related proteins are expressed. While many RNA-based therapies in development involve turning off disease-related proteins through what’s called RNA interference (an area where Merck didn’t get very far), RaNA takes the opposite tack. It seeks to dial up the transcription of RNA that produces certain desirable proteins. GlaxoSmithKline recently showed interest in this less-explored biological territory, which some call the “dark matter” of the genome, through a $95 million investment in a nonprofit research institute called the Altius Institute for Biomedical Sciences. While that work made headlines, big drugmakers have shown interest in the ‘non-coding’ RNA regions for a few years.

“I am extremely excited about RaNA and the progress it has made since we seeded it,” said Brian Gallagher, Jr., a partner with GlaxoSmithKline’s SR One venture group. “It is extremely innovative technology with enormous potential to treat diseases utilizing their novel gain of function approach.”  

While RaNA is one of only a couple companies thought to be actively developing drugs that operate against long non-coding stretches of RNA (see this detailed rundown in Timmerman Report), that’s not its only big idea. RaNA has expanded its repertoire by developing technology for stabilizing messenger RNA molecules in the bloodstream so they can become drugs themselves. The idea of injecting mRNAs into the body so they can act like little protein-producing drug factories, or selectively elevate expression of certain proteins, has captivated the imagination of drug developers, including Merck. Before joining today’s round in RaNA, it invested $100 million in Moderna Therapeutics in January.

One of the big challenges is to make mRNAs so they can get translated into proteins that can perform a biological function before getting blown to smithereens by the immune system. This work is still in early stages of R&D, meaning it’s a long way from being tested in human beings. RaNA, which has about 25 employees, is working to optimize its drug candidates so they can be ready for the types of animal studies necessary to pave the way for clinical trials.

But human studies are within sight. The company’s initial focus is on developing drugs for spinal muscular atrophy (a genetic muscle control disease) and Friedreich’s ataxia (a genetic neurodegenerative disease). RaNA’s goal is to bring two new drug candidates into clinical trials in 2017, said CEO Ron Renaud.

During its early days, RaNA has concentrated on a few specific regulatory regions, most notably the polycomb repressive complex 2, or PRC2. By creating a short, synthetic oligonucleotide molecule to block the repressive activity of PRC2, RaNA hopes it can increase the amount of RNA transcribed from a related gene called SMN2. If enough RNA gets transcribed from that gene, and enough functional copies of the SMN2 protein get made, then researchers believe they can reduce the symptoms of spinal muscular atrophy (see a RaNA summary of this work from the American Society of Human Genetics conference in 2013). Other researchers have published work on the role the PRC2 complex plays in the spread of cancer.   

Patients with Freidreich’s ataxia have gene mutations that limit their ability to produce frataxin, a protein that helps to move iron and functions in the mitochondria, the energy factories, of the cell. RaNA’s belief is that it can stabilize the mRNA for frataxin, at least enough so that enough of the essential protein gets produced, and that it doesn’t get degraded too rapidly.

The company has quite a bit more going on which it doesn’t discuss publicly. It has been keeping its intellectual property attorneys busy, filing 120 patent applications covering specific nucleic acid sequences, as well as technological methods and compositions of matter for drug candidates. More than 70 different target genes are covered by its intellectual property claims—more than it can practically develop at one time, especially without any Big Pharma collaborators to help. Even $55 million isn’t enough to move forward simultaneously on all those fronts. “We’ve got to prioritize,” Renaud said.

Plenty of competitors have other ideas on how to approach both diseases, and many are further along in testing. Biogen and Isis Pharmaceuticals have a program for spinal muscular atrophy in clinical trials, as do Roche and PTC Therapeutics, plus Novartis. Edison Pharmaceuticals has a drug candidate in mid-stage trials for Freidreich’s ataxia.

Even while biotech is in go-go boom times, attracting a flood of newcomers, it is still a small world, built on long-term relationships. Renaud, who previously served as CEO of Idenix Pharmaceuticals, knows the Merck team quite well – he sold Idenix to Merck last year for $3.9 billion. The other co-lead investor in this Series B financing, Baupost, was a large investor in Idenix. Rock Springs’s Kris Jenner, and Brookside, are certainly familiar with the other players in RaNA’s arena.

“You see names here that have been involved in other RNA therapeutics companies, other gene therapy plays, other early stage biotechnology companies,” Renaud said.

Renaud joined the company in December. One early decision, when the company was crying out for more lab space, was to commit to a long-term lease on space formerly occupied by Vertex Pharmaceuticals. It was quadruple the size of RaNA’s previous current labs.

That commitment, made in a red-hot market for biotech real estate around Cambridge’s Kendall Square, was made before RaNA pinned down this $55 million financing. Renaud said he wasn’t worried, he was confident he’d raise the money during these boom times. The Nasdaq Biotech Index outperformed the broader Nasdaq again in the first six months of 2015, many biotech venture capital firms have reloaded with new funds, and “crossover” investors like the ones mentioned above have turned to private companies like RaNA in the search for bargains that they can buy today and sell later when they go public. The upswing in the financing environment has allowed little companies like RaNA to stretch themselves beyond doing just one technology, or a single drug candidate.

“There’s a lot of benefit in building a small biotech company in a very positive environment,” Renaud said.

Luke Timmerman is the founder and editor of Timmerman Report, a subscription publication for biotech insiders.

Source: Forbes