Arrakis Therapeutics Inc.’s CEO, Michael Gilman, knew his 3-year-old company had a partnering tiger by the tail just by the amount of interest from companies who wanted to partner. He sat back and waited until the right offer came along and went with Roche Holding AG. The result is a massive collaboration and license agreement that could stretch into the billions of dollars.

“We very deliberately stayed out of partnering discussions for the first couple years,” Gilman told BioWorld. “It took a while to figure out how to do this. We wanted to understand what we had before selling off parts of it.”

Gilman said the company had a lot of inbound interest from pharma companies over that two- or three-year period, knew who was interested and could calibrate their level of interest “by how much they pinged us.”

Arrakis’ deal with Roche, less than a year after Arrakis pulled down its $75 million series B, is to discover RNA-targeted small-molecule (rSM) drugs against targets stretching across all of Roche’s R&D disease therapeutics areas.

Arrakis gets $190 million cash up front but said it could earn “multibillion-dollar future payments” for hitting preclinical, clinical, commercial and sales milestones for products the deal produces. The aggregate value of those payments could exceed “several billion dollars,” the company said, but it did not disclose more specific figures.

Michael Gilman, CEO, Arrakis

Arrakis will lead discovery and research for each target up to a defined point, at which time Roche has the option to exclusively continue preclinical and clinical development activities.

“It was clear their interest in RNA was substantial and strategic and important to their long-range plan,” Gilman said. “I realized right away they’d be a great partner.”

He added that he’s still tending to the company’s internal programs, having not sold them all away.

“We’ll push them ahead and continue to screen targets on our own,” he said.

Arrakis has development programs for oncology, dyslipidemia, rare disease diseases and neurology. Its platform allows Arrakis to predict and validate RNA target structure, find druggable pockets and identify drug-like hits. The series A and B fundings were used to build a pipeline of rSMs the company hopes will lead to the clinic. That means going after the undruggable targets, ones in which current therapeutic approaches don't work.

“We’ve now screened over two dozen human RNA targets and we’ve found hits for all of them. And we’re getting more expert at it all the time,” said Gilman. “We are bringing more sophisticated tools to bear on target identification – in particular, spotting segments of RNA where structure meets function. Our library improves with every screen, as we eliminate confounding binders, of which there are many in conventional compound collections, and enrich with RNA-friendly scaffolds.”

COVID-19 played a role in the agreement’s inception and continues to impact its launch. The deal was being discussed as late as mid-March when the two companies decided to conclude negotiations by video.

“People are resilient and clever,” he said. “They can figure out how to get stuff done.”

Arrakis’ labs and offices are shut down by the pandemic, but Gilman said work can continue even with dormant labs.

“Our Chinese CROs are back online and doing synthetic chemistry at a pre-pandemic pace,” he said. “We have transferred some cell assays to China, so that, ironically, some things are actually going faster now. Previously, compounds were shipped here, in at least two steps, for assay. Now they’re being tested in the same facility in which they’re made. Much of our work is computational and that, of course, continues at full speed.”

Gilman said the Roche deal means hiring and doing it quickly. He expects to double the company headcount in the coming year to accommodate the expansion. In the past few weeks, he said, Arrakis ventured into conducting video interviews, hired half a dozen new scientists and just completed its first virtual onboarding.

“The hard part is the soft stuff: how to keep people together, how to build culture. That’s the part that’s going to be weird for new employees,” Gilman said.

The company name comes from the series of Dune books by Frank Herbert. Arrakis is the desert planet where the fictional drug called spice is harvested, and "we view our company's pursuit of RNA-targeted small molecules as a new cosmos for drug discovery," Gilman told BioWorld.