Is the Tide Turning? Small Nucleic Acid Therapeutics See Surge in BD Deals, Financing, and Pipeline Growth at Start of 2024

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At the beginning of 2024, small nucleic acid drugs entered investors' view with two overseas BD deals.

On January 3, Ribo Life Science and its international R&D center announced a collaboration agreement with Boehringer Ingelheim to jointly develop innovative small nucleic acid therapies for the treatment of non-alcoholic or metabolic dysfunction-associated steatohepatitis (NASH/MASH), with a potential total transaction value exceeding 2 billion US dollars.

On January 7, Argo Biopharma signed two exclusive licenses with Novartis.(Golden Qilin Analyst)Under the cooperation agreement, Argo Biopharma has granted Novartis the overseas rights to a Phase 1/2a cardiovascular pipeline, the global rights to a Phase 1 cardiovascular pipeline, and options for no more than two additional cardiovascular pipelines targeting other indications. Argo Biopharma will receive an upfront payment of $185 million, potential milestone payments totaling up to $4.165 billion, and tiered royalties.

In recent years, investment in innovative drugs in China has cooled down, making cash flow particularly crucial for companies. An increasing number of innovative drug companies are choosing to transfer partial rights through License-out deals in the hope of achieving collaborative development. Typically, relevant licensing agreements include upfront payments and subsequent profit-sharing arrangements. Since upfront payments are usually one-time and non-refundable, the amount of the upfront payment relatively accurately reflects foreign companies' valuation of the pipeline.

If the collaboration between Ribo Life Science and Boehringer Ingelheim did not cause much of a stir, the BD agreement between Argo Biopharma and Novartis, with an upfront payment of $185 million, has officially pushed small nucleic acid drugs into the spotlight. Will the scene of multinational pharmaceutical giants like Merck, Bristol-Myers Squibb, and Pfizer collectively "sweeping up" China-produced ADC pipelines reoccur?

　　What are Small Nucleic Acid Drugs

Nucleic acid drugs are a type of therapy that regulates at the stage after gene transcription and before protein translation. Unlike traditional small molecules or monoclonal antibody drugs, their active components consist of nucleotides with specifically designed sequences, which can target various mRNAs upstream of protein synthesis. Small nucleic acid drugs are a category within this group, characterized by shorter lengths with fewer than 30 nucleotide bases.

Unlike mRNA vaccines that induce cells to produce the necessary proteins or antigens, triggering an immune response in the body, small nucleic acid drugs primarily function through the base-pairing principle by targeting mRNA within cells. By binding to a variety of RNA targets, they inhibit its translation or regulation, modulate protein expression, and thereby achieve therapeutic effects. Currently, the main categories of small nucleic acid drug products are ASOs and siRNAs.

Among them, ASO is a single-stranded oligonucleotide molecule that binds to the target mRNA after entering the cell, causing degradation of the mRNA and thereby inhibiting protein expression. SiRNA, also known as silencing RNA, is a class of double-stranded short RNA molecules that, after entering the human body, can unwind into two complementary ssRNAs and form an RNA-induced silencing complex by binding with a series of enzymes. After unwinding, one ssRNA will bind to endogenous mRNA and induce the silencing complex to cleave the endogenous mRNA into untranslated RNA fragments, thereby blocking the expression of the target protein and achieving the purpose of treating related diseases.

In contrast, the targets of small molecule drugs and antibody drugs are mostly proteins, including kinases, receptors, antigens, etc. According to available data, about 80% of disease-related pathogenic proteins in humans cannot be targeted by currently conventional small molecule drugs and biologics, and thus belong to the category of undruggable proteins.

At the same time, only 1.5% of the gene sequences in the human genome encode proteins, and disease-related proteins account for only 10-15% of these. However, small nucleic acid drugs act on target genes, thus achieving breakthroughs for protein targets that are difficult to drug, greatly expanding the range of target actions.

Moreover, unlike small molecule drug development which requires large-scale compound screening, small nucleic acid drugs only need to lock onto the pathogenic gene sequence, design based on that gene sequence, and synthesize the corresponding RNA fragments, followed by candidate compound screening and validation. Thus, they have the advantages of high specificity and a shorter R&D cycle.

Overall, small nucleic acid drugs can theoretically regulate RNA involved in all transcription processes, providing a completely new approach for disease treatment. Currently, nearly 19 small nucleic acid drugs have been approved globally. Indications mainly include Duchenne muscular dystrophy, hereditary transthyretin amyloidosis, spinal muscular atrophy, and primary hypercholesterolemia.

　　Is the Turning Point Approaching? Rapid Growth in Investment and Pipeline Numbers

From the above description, it is not difficult to see that the development of small nucleic acid drugs involves multiple disciplines and technical fields. In terms of R&D challenges, academic papers commonly point out that although the design of the drug itself is not complex, how to achieve in vivo stability and targeted delivery remains a key technological challenge that has long restricted its drug-like properties and clinical application development.

In recent years, with the gradual maturation of underlying technologies such as GalNac chemical modification, lipid nanoparticles (LNP), AAV, and adenovirus vectors, pharmaceutical and biotechnology companies in China and abroad have been actively investing in the research and development of small nucleic acid drugs. The热度 of investment and financing in China, as well as the number of clinical trial applications, have continued to rise.

According to the pharmaceutical investment and financing data from MedCube, in 2022, there were a total of 33 investment and financing events related to small nucleic acid drugs, with an amount close to 6 billion US dollars. The number of financing events and the amount related to small nucleic acid drugs remained high. In 2023, according to incomplete statistics, a total of 12 start-up companies completed financing, with the highest amount exceeding 500 million yuan.

In terms of clinical applications and acceptance, according to the Insight database, the number of small nucleic acid drug applications and acceptances has significantly increased since 2020, showing an accelerating growth trend. In 2023, the number of applications exceeded 180, with about 150 accepted for approval.

Source: Insight Database

From the commercial performance of foreign "external benchmarks," the leading small nucleic acid company Sarepta Therapeutics announced that its projected net product revenue for 2023 is expected to reach $1.145 billion. Among this, the sales of Elevidys (SRP-9001), an AAV gene therapy approved on June 22 for treating 4-5-year-old pediatric patients with Duchenne muscular dystrophy, reached $200.4 million, far exceeding expectations.

There are already commercially successful cases abroad, the underlying technology is becoming mature, investment and financing remain heated, and overseas BD has achieved a good start. Will the R&D of small nucleic acid drugs replicate the research and development boom of PD-1, GLP-1, and ADC drugs? Judging from the R&D layout of listed companies in China, Brii Biosciences,Hengrui MedicineInnovative pharmaceutical companies such as CSPC Group have already entered clinical trials, but most are still in the early stages, with indications mainly focused on cancer and chronic diseases.

Editor: Tian Lihaowen