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Novartis CEO eyeing RNA landscape for M&A to expand research 'gameboard'

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Novartis CEO eyeing RNA landscape for M&A to expand research 'gameboard'

Novartis AG CEO Vas Narasimhan is surveying RNA technologies as a possible new area of research for the Swiss pharmaceutical giant, a move that would expand the matrix of therapies and technologies at the core of his strategy.

While the CEO said his first goal is to build further depth and manufacturing capacity in existing areas of research including gene therapy, cell therapy and radio-ligand therapy — the "gameboard" he designed after taking the top job about 18 months ago Narasimhan told S&P Global Market Intelligence that he is closely watching the RNA space as research in the field matures.

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"There's been a lot of activity in RNA," he said in an interview. "I think now you're starting to see, sort of like gene therapy, a maturation of the entire RNA space. So that's certainly one example of an area we're closely watching."

RNA plays an essential role in the coding, decoding, regulation and expression of genetic information. Researchers have worked to harness RNA in different ways to treat a variety of diseases such as amyotrophic lateral sclerosis, dementia and cardiovascular disease.

One RNA-related medicine on the market, Biogen Inc.'s Spinraza, is an antisense oligonucleotide that binds to target RNA and regulates gene expression. Spinraza won U.S. approval in 2016 to treat a rare disorder known as spinal muscular atrophy, or SMA.

The U.S. approval of Alnylam Pharmaceuticals Inc.'s Onpattro in August 2018 was the first for a treatment based on an RNA interference, or RNAi. RNAi is a process by which disease-causing genes are switched off, or silenced, using bits of genetic material.

Onpattro's entry to the market gave a boost to other companies in the field such as Arrowhead Pharmaceuticals Inc. and Dicerna Pharmaceuticals Inc. Some of Novartis' biggest rivals, such as Pfizer Inc., and Amgen Inc., have partnered with smaller companies to explore RNAi medicines. More recently, in July, Mallinckrodt PLC agreed to pay $20 million up-front to Silence Therapeutics PLC for a license to an RNAi drug candidate.

Another approach involves using messenger RNA, or mRNA, which are essentially instructions for assembling proteins to prevent or fight disease. Companies studying mRNA treatments include Moderna Inc. and Arcturus Therapeutics Holdings Inc.

"We're still trying to decide how best to engage," the Novartis CEO said. "There are lots of things in preclinical research but nothing I can say is at the point where it's mature enough at the moment."

Narasimhan, who personally oversees Basel, Switzerland-based Novartis' M&A strategy, said he is constantly on the lookout for deals although he has so far this year spent a fraction of the approximately $10 billion set aside in any given year. He spent $15 billion in 2018, his first year in the role, snapping up AveXis to gain additional clout in gene therapies including newly launched Zolgensma for SMA, the same disease Spinraza treats and French nuclear medicine group AAA, which wove radio-ligand therapies into the R&D gameboard.

With AveXis, Novartis is building gene therapy capacity across the U.S. using a so-called AAV platform, to ensure that there is adequate supply for Zolgensma, but also for over five medicines that are expected to enter the clinic in the next year.

Global capacity is being built using oncology medicine Kymriah as a base for cell culture and cell processing in cell therapy, with manufacturing now in the U.S., Europe, China and Japan. The intention is to use the same capacity to process cells for medicines in other areas like hematology or metabolic diseases, Narasimhan said.

Novartis is in the midst of planning out a global expansion of its radio-ligand therapy, the CEO said. Complex preparation in Europe and the U.S. will be followed by Japan and Asia, for Lutathera, the first medicine of this type, and also for subsequent medicines if radio-ligand therapy succeeds. Once activated, nuclear-based medicines have only three days to get from the manufacturing site to the patient.

Narasimhan spoke to S&P Global Market Intelligence after the company reported better-than-forecast second-quarter results, driven by strong growth in China.

While the CEO said the approach taken thus far to Alzheimer's disease needs "a complete rethink," Novartis is exploring the use of gene therapy in specific subsets of dementia and there is a move to try to use gene therapies for diseases like Huntington's and Parkinson's, he said.

"I am more optimistic right now that some of the monogenic dementias could be targeted with gene therapy," he said. "We have a program these are of course much smaller patient populations but for something called fronto-temporal dementia, which is partially genetically driven. And some of those, there is a very clear understanding of the biology; if you hit the target, you can modulate the disease."

With 50 regulatory submissions planned for new medicines in the next four years, Novartis does not appear to need to engage in the large-scale M&A activity recently undertaken by some of its U.S. peers in order to bulk up dwindling pipelines.

"It's all based on the opportunities," Narasimhan said. "And if it fits in the strategy of bolt-ons in our core therapeutic areas or our core technology areas, and the valuation is right, then yes, we will strike."