In about a year's time, Moderna went from an ambitious company with unproven technology to one of the world's most highly valued drug developers. Now, Flagship Pioneering, the biotech incubator that founded Moderna, hopes a similar story plays out for another startup built on the potential of RNA-based medicines.
Just a few months out of stealth mode, the startup known as Laronde has caught the attention of well-known investors like Fidelity, T. Rowe Price Associates and Invus. And they, along with Flagship and several other firms, have each contributed to what's become a $440 million financing round that Laronde unveiled Monday.
"Their response was overwhelming," said Diego Miralles, who serves as Laronde's CEO and a partner at Flagship. "Usually when you do this, you go out and talk to investors, and a few invest. But their support was almost universal. I would say 95% of the investors we talked to invested in the round, which was incredible."
Like Moderna, Laronde's research centers around RNA, the single-stranded genetic information that tells cells what proteins to make. However, where Moderna focuses on messenger RNA, which is linear, Laronde is trying to develop medicines from a synthetic, circular counterpart that it calls "endless RNA," or eRNA.
Laronde, which, fittingly, is named after the French word for round, says the key advantage of eRNA is its circular shape. Often, linear RNA doesn't last very long because cells, as a way to protect and maintain themselves, use enzymes to dispose of unused pieces of genetic material. Usually that disposal process starts at one end of the molecule. But a loop structure means eRNA doesn't have ends for enzymes to latch onto, which means it could, Laronde estimates, spur protein expression for much longer, up to weeks or months.
Also like Moderna, Laronde is receiving tons of cash early on to support lofty goals. Its leaders want to build manufacturing facilities, hire more than 200 people in the next two years, and produce as many as 100 eRNA medicines throughout the next decade. Few biotechs hit such milestones so quickly, and none but the largest pharmaceutical companies can boast of having brought forward 100 drug candidates.
But Miralles maintains that the company has already made significant progress since its launch. He said Laronde, which has hired more than 20 people and expects another 12 to start in the coming weeks, is on track to have north of 100 employees by the end of the year. Construction of the manufacturing suites is on schedule, as is a move to Flagship's new lab space in Somerville, Massachusetts, early in the fourth quarter.
The science, too, has been advancing. Miralles said the Laronde team has improved the design of its RNA constructs and is now able to express many additional proteins and do so more effectively. The company is looking to have enough infrastructure to make 1,000 genetic templates in a month, he said, and to go from conceptualizing one to testing it within a two-month timeframe.
Whether any of these constructs will ever lead to approved medicines won't be known for a while. Laronde plans to ask the Food and Drug Administration to clear multiple eRNA drugs for human testing in 2023. Details about those drugs, such as what diseases they'll attempt to treat, have yet to be disclosed, though Miralles has noted that eRNA's ability to be redosed could make it a valuable option for chronic diseases. Laronde claims a lengthy list of therapeutic areas, from oncology and neurology to genetic and metabolic diseases, could be targeted with its technology.
So far, the company has over a year's worth of data from mice studies testing multiple proteins, Miralles said, as well as preliminary data showing how eRNA vaccines could work.
Miralles believes the amount of data Laronde has collected was one reason for the influx of new investors. But another, he reasons, was the precedent set by the speedy development of messenger RNA vaccines.
Indeed, companies like Moderna and BioNTech have watched their stock prices soar as investors buzzed over what they could make next. As of Friday, Moderna was worth $153 billion, more than Sanofi, GlaxoSmithKline, Bristol Myers and many other large pharmaceutical companies with decades of experience and long lists of approved medicines.
For Laronde and its technology, that excitement comes at an opportune time. The company claims eRNA medicines could have advantages over mRNA — a prospect that has enticed investors, as evidenced by Laronde's $440 million haul, which is far larger than the typical Series B fundraising round.
In fact, if the round were an initial public offering, it would be the sixth largest biotech IPO since 2018, according to a database compiled by BioPharma Dive. Since 2018, only about a half dozen biotech companies have raised more than $400 million in a single venture-backed funding round, including Moderna.
"We're fortunate that we're standing on the shoulders of giants — those being the messenger RNA companies," Miralles said. "Because what they did is they validated the concept that translatable RNA is a safe, effective approach."
Looking ahead, the new influx of cash allows Laronde to scale up and fund the development of more programs.
But perhaps just as importantly, deep pockets can insulate young biotech companies from early challenges and setbacks, alleviating, at least in the short term, the need to secure more funding through partnering with big pharma or via an IPO.
To Miralles, that means his team can stay focused on deals where the partner provides infrastructure, biological knowledge or other relative expertise, rather than just money.
"We will be thinking about strategic partnerships moving forward in ways that are very different than we would have needed to think about them if it was simply about raising capital," he said.
Laronde launched in May, started talking to investors by June, and has now closed its series B round. As for future financing, Miralles says that will come "when the time is right."