By Marie Powers, News Editor (Source)

The up front is only $10 million, but Arcturus Therapeutics Inc. stands to collect up to $1.56 billion more from Ultragenyx Pharmaceutical Inc. in a rare disease research collaboration and license deal to discover and develop messenger RNA (mRNA) therapeutics using its unlocked nucleomonomer agent (UNA) oligomer chemistry and Lipid-enabled and Unlocked Nucleic Acid modified RNA (LUNAR) nanoparticle delivery platform.

The deal is a potential rocket shot for Arcturus, founded just two years ago as a tenant of Johnson & Johnson (J&J) Innovation with no assets, technology or pipeline in hand. In June 2013, the San Diego-based company raised $1.3 million in seed funding from high net worth investors from the U.S. and Canada. Four months later, the company tapped most of those investors again and added interests from Japan in a $5 million series A round. (See BioWorld Today, Nov. 20, 2014.)

This past June, Arcturus inked a global research collaboration and license agreement with J&J unit Janssen Pharmaceuticals Inc., facilitated by J&J Innovation, to develop and commercialize mRNA-based drug candidates to treat undisclosed disease targets, also using the UNA and LUNAR platforms. In return, Janssen agreed to make an undisclosed up-front payment along with preclinical, development and sales-based milestones and royalty payments on product sales. Janssen agreed to provide R&D support and assumed responsibility for development and commercialization costs associated with the program.

That arrangement set the tone for the larger Ultragenyx partnership.

During the initial phase of the new collaboration, Arcturus will design and optimize mRNA therapeutics for two undisclosed rare disease targets, and Ultragenyx has the option to add up to eight additional rare disease targets during the collaborative research period. Ultragenyx will oversee development and commercialization of any products emerging from the collaboration in return for preclinical, clinical, regulatory and sales milestone payments of up to $156 million for each target, plus reimbursement of research expenses and mid-single to low double-digit royalties on product sales.

Emil Kakkis, president and CEO of Ultragenyx, of Novato, Calif., said the collaboration will help the company to address a wider range of rare diseases than with other available approaches, potentially solving “some of the key issues associated with mRNA therapeutics.”

With four programs in the clinic, including pivotal studies for aceneuramic acid (UX001) in GNE myopathy and recombinant human beta-glucuronidase, or rhGUS (UX003), in mucopolysaccharidosis 7, Ultragenyx has advanced its pipeline at a steady pace. The company also has provided a win for investors since closing its IPO in February 2014, when it raised $121 million, priced at $21 per share (NASDAQ:RARE) and more than doubled on the first trading day to close at $42.25. Even with the market’s recent pullback, shares are trading at the high end of their 52-week range, closing Wednesday at $106.20. (See BioWorld Today, Feb. 3, 2014.)

In a research note last week in which Jefferies Group LLC initiated coverage of the company, analyst Gena Wang predicted a favorable risk/reward profile for shares ahead of key catalysts over the ensuing six months, including 40-week data from the phase II study of KRN23 in the bone disease X-linked hypophosphatemia and interim data for UX007 (triheptanoin) from a phase II study in glucose transporter type 1 deficiency syndrome.

“We continue to believe rare diseases are poised to benefit from favorable development paths even given current pricing pressure,” Wang wrote, setting a price target of $108 and a buy recommendation.

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