Biotech start-up raises $440m to develop ‘endless RNA’ drugs

A BIOTECH start-up backed by the venture capital firm that helped create Moderna, one of the Covid vaccine makers, has raised $440m (£320m) as the market for pharmaceutical assets continues to heat up.

Laronde is a Us-based biotech that was formed in 2017 and formally launched this year.

Despite having no products and unproven technology, the fledgling company was still able to raise millions of dollars from institutional investors including Canada Pension Plan Investment Board, Fidelity Investments, Blackrock and Flagship Pioneering. The venture capital firm helped establish Moderna, which was founded in 2010 as MODERNA Therapeutics.

The biotech is trying to develop a new class of drugs using what it calls “endless RNA” or ERNA. Like the messenger RNA technology behind Moderna and Pfizer’s Covid vaccines, ERNA can deliver instructions to cells to make proteins needed to treat or prevent disease.

What makes ERNA potentially different to other RNA therapies, however, is that its circular shape makes it more difficult for the body to break down. That allows it to repeat its instructions to the body many times to create a certain protein, leading to a longer-lasting and more stable treatment. The other benefit of ERNA is that it produces the proteins in the body, rather than making them synthetically in a tank in a lab.

Avak Kahvejian, Laronde’s founding chief executive and a general partner at Flagship Pioneering, said: “As we saw with the pandemic, by having the code of the protein you want to make, you can make an MRNA pretty quickly. With ERNA, we can do the same.”

Laronde will use the new funds to hire staff and build a factory. It still does not know which diseases it will target or whether its technology will work.

The sizeable fundraising reflects surging demand for biotech stocks from institutional investors and private equity firms. The pandemic has shone a light on the industry and shown how betting on science at the early stages can yield enormous investor returns.

Paul Mccracken, managing director at Canada Pension Plan Investment Board, said: “What struck me is that the opportunity set for ERNA is very large.”

Laronde was valued at $38m in 2019 but has not disclosed its current valuation. Moderna listed in 2018 at $23 but its shares are now worth $376, leaving it worth $152bn. Orna Therapeutics, a biotech based close to Laronde’s headquarters in Boston, is pursuing a similar technology, with backing from Gilead Sciences and Bristol Myers-squibb.