(Bloomberg) -- Merck & Co will spend as much as $3.75 billion to create vaccines, cancer therapies and infectious-disease drugs with Orna Therapeutics Inc, a closely held biotechnology company developing medicines using circular RNA.
Merck will make an upfront payment of $150 million to Orna in the third quarter, the companies said Tuesday in a statement. Orna could receive as much as $3.5 billion, depending on its progress, as well as royalties on any approved treatments that come from the partnership. Kenilworth, New Jersey-based Merck also invested $100 million of equity in Orna’s $221 million Series B financing.
RNA reads genetic instructions and tells the body how to make proteins. Drugmakers are rushing to use variations of RNA to create new medicines after the success of the Covid-19 vaccines from Pfizer Inc. and BioNTech SE, which use messenger RNA.
Read more: Scientists Are Bending RNA to Get From Vaccines to Cancer Drugs
Cambridge, Massachusetts-based Orna believes using circular RNA, which delivers instructions to cells using circles rather than strands, could provide a better therapeutic effect because it stays in the body longer. The company creates the shapes by programming linear RNA to split and repair itself into a circle, a process Orna says could also result in easier and cheaper manufacturing.
“Ultimately our thesis, that the circles last longer and they express higher, resonated with them,” Orna Chief Executive Officer Tom Barnes said of Merck. “And I think that is reflected in the scale of the deal they’ve done with us.”
Merck and Orna aren’t yet disclosing the specific conditions they’re targeting. They’re still in the phase of researching potential drug candidates, though Barnes said the companies are hopeful they can move quickly into human testing. If that happens, Merck will shepherd any potential drugs through clinical trials and through the regulatory process.
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