Will RNA help AstraZeneca Plc (NYSE:AZN) to produce new drugs - RGLS, ISIS

Northern, WI 03/28/2013 (avauncer) - AstraZeneca Plc (NYSE:AZN) (Current $50.01, Up by 1.61%) has been a laggard amongst the largest pharmaceutical companies in the U.S. due to its inability to produce and develop blockbuster drugs in the recent times. Further, AZN’s blockbuster drug Crestor is set to go off patent in 2016. Drugs which were contributed 40% to AZN net revenues of $33.6 Billion in 2011 would be expiring soon. To overcome, the sluggishness in its performance, AZN has now resorted to RNA (ribonucleic acid) to help it discover new therapies.

RNA is an acid which produces proteins after decoding the genetic information supplied by DNA. Thus, drugmakers are experiment with methods to manipulate and modify the protein produced by RNA. If this becomes possible either RNA could be stopped from producing proteins which leads to diabetes or cancer or the proteins produced could be infused with the missing molecules deficiency of which causes these deadly symptoms.

Pascal Soriot, the Chief Executive Officer of AZN has partnered with many small firms to pursue his aim of discovering therapies through RNA. AZN announced three strategic alliances in the last seven months with Regulus Therapeutics Inc. (NASDAQ:RGLS) (Current $7.75, up by 1.04%) and Isis Pharmaceuticals Inc. (NASDAQ:ISIS) (Current $17.26, Down by 0.26%) and the latest being Moderna Therapeutics Inc. However, uncertainty surrounds the performance of Moderna as it’s a new firm studying RNA. Otello Stampacchia described this as an aggressive move and said AZN is trying to get piece of the pie before other pharmaceutical firms. Otello Stampacchia has done his doctoral thesis on RNA technology and has also founded Omega Funds, a venture-capital firm.

AZN is the cheapest company amongst its competitors with the lowest enterprise value (EV). The company also has the second lowest P/E (price-to-earnings) ratio of 9.2. AZN’s surged 15.0% in the past year and had a market capitalization of $61 Billion. The Bloomberg Europe Pharmaceutical Index (BEPHARM) comprising 18 companies has surged 24.0% during the same period.