Arrakis Therapeutics and Roche have signed on to a non-COVID-19 partnership that has investors feeling optimistic about the ability to get deals done amidst the complications of a pandemic.
Arrakis announced a partnership  with Roche to develop RNA-targeting small molecules; the startup will receive $190 million up front, with a total deal value in the billions. No specific targets or indications were shared as a focus of the partnership, though Arrakis CEO Michael Gilman wrote that Roche scientists have assembled candidate targets across all of the pharma's disease areas.
Roche already has a vested interest in RNA targeting; the splicing modifier risdiplam is under FDA review to treat spinal muscular atrophy, and it already has an agreement in place with Skyhawk Therapeutics for similar technology. (See ViewPoints: Skyhawk scores a quick fire hat-trick as Big Pharma catches the RNA splicing bug )
Why it matters
The COVID-19 pandemic is already making its mark on biopharma, with impacts ranging across product sales, clinical development and new product approvals. New drug launches- like Esperion Therapeutics' Nexletol (bempedoic acid) or Amarin's Vascepa (icosapent ethyl)- will be conducted by hamstrung sales teams, while patient compliance and monitoring in ongoing clinical trials is widely expected to drop. (See Physician Views: Pharma sales reps may struggle to engage with doctors due to COVID-19 pandemic, poll suggests )
However, other aspects of the biopharma sphere have proven more conducive to trucking along in the age of social distancing- namely, financings and deal-making. Early April saw a series of venture funds commit to large capital raises, including Deerfield's new $840 million Healthcare Innovations Fund . A week prior, ARCH Venture Partners  said it brought in $1.5 billion to support early stage biotech across two new funds, and Flagship Pioneering  closed on $1.1 billion in capital.
Flagship's fundraising includes a line item for "the launching of an initiative focused on Health Security, which is designed to create a range of products and therapies to improve societal health defences by treating pre-disease states before they escalate," while ARCH emphasised that "the healthcare revolution will be accelerated by the changes that are happening now."
Even Gilead Sciences, presumably quite distracted with its expanding clinical programme for COVID-19 therapeutic candidate remdesivir, managed to sign a biomarker deal  for inflammatory diseases this week.
In the case of Arrakis, Gilman wrote that COVID-19 restrictions and social distancing didn't ultimately impact the deal, saying that "it brought unexpected intimacy to a process that would otherwise play out in lavish but sterile law-firm conference rooms…Not that I recommend pandemic negotiation as a strategy, but I truly believe the circumstances helped us see one another as people and helped get this deal done."
The bigger picture
It will take more than a few weeks of successful deal-making to satisfy the jangled nerves of investors, who may have already taken one on the chin in plummeting public markets. And for smaller companies in particular, the lifeline of an upfront payment from a new partnership will be important as they see their runway needs stretch to accommodate lengthening time intervals between now-delayed catalysts.
Atlas Ventures' Bruce Booth blogged  about his conviction for the long-term health of the space, emphasising that at least when it comes to venture capital, playing the long game remains paramount.
"I’ve not heard of a single financing that has fallen apart in the private biotech ecosystem due to concerns about COVID," Booth wrote.
There are even numbers to back up the anecdote, with Booth noting that the first quarter of 2020 marked the single largest for biopharma venture funding in the US- also hitting the milestone of carrying the largest average fund size at $32 million.
In the case of Arrakis, the company is facing the challenge of trying to get work done with its new cash while its labs are offline and scientists at home. In what's likely to become a trend as global dynamics shift around COVID-19, Gilman says that the company's research burden has instead moved to an already recovering China, where drug discovery from its clinical research organisations (CROs) is proceeding "at a pre-pandemic pace."