Applied DNA Sciences has completed the acquisition of Spindle Biotech, an early-stage biotech company specialising in the development of advanced RNA manufacturing technologies.

The acquisition allows Applied DNA Sciences to leverage its LinearDNA platform, which enables efficient chemical modification of DNA templates, along with Spindle’s proprietary high-performance RNA polymerase (RNAP).

The combined capabilities offer significant advantages over conventional plasmid DNA-based mRNA production, including enhanced yields of target mRNA by preventing or reducing double-stranded RNA (dsRNA) contamination, accelerated delivery of IVT templates in as little as 14 days for milligram scale and 30 days for gram scale, and simplified mRNA manufacturing processes.

The integration of Applied DNA’s linearDNA IVT templates and Spindle’s RNA polymerase results in the creation of an integrated platform known as LineaIVT. With this expanded offering, Applied DNA significantly strengthens its position in the mRNA value chain, estimating the coverage of over 20% of mRNA manufacturing costs of goods.

According to the stock purchase agreement, Applied DNA acquired all outstanding shares of Spindle, based in Toronto. The upfront purchase consideration includes $625,000 in cash, adjusted for debt and transaction expenses, as well as 750,000 restricted shares of Applied DNA’s common stock.

The agreement also includes future contingent consideration of up to 1.0 million shares of common stock, subject to the achievement of specific commercialization and revenue milestones.

Additionally, a 10-year revenue share arrangement is established based on net sales generated by the LineaIVT platform. Aaron Chung, co-founder and CEO of Spindle, has joined Applied DNA Sciences as the director of Nucleic Acid Platforms, bringing his expertise to the company.

Applied DNA president and CEO James Hayward said: “The acquisition of Spindle aligns us with the growing demand for mRNA therapeutics across an expanding range of diseases. mRNA supply, however, is challenged by the industry’s use of plasmid DNA and inherent limitations associated with conventional production methods for mRNA.

“Chief among these limitations is the generation of potentially hazardous dsRNA contaminants that is a significant challenge to quality control for CDMOs and therapy developers that can potentially delay development timelines and program costs and complicate regulatory approval processes.

“The issue of dsRNA is currently addressed through additional purification, specialized instrumentation, and cost, however, with the launch of our LineaIVT platform, we seek to solve these manufacturing issues and enable our customers to produce better mRNA faster.

“Having first partnered with Spindle in 2022, we deeply appreciate the complementary nature of its RNAP to our linearDNA IVT templates and the combined technologies’ ability to substantially reduce or eliminate dsRNA contamination without sacrificing production yields.

“With this acquisition, we have moved into a unique leadership position based on our combined offering, which we believe is the only platform to leverage the unique attributes of enzymatically produced IVT templates to empower a proprietary RNA polymerase. With the simultaneous launch of our LineaIVT platform early access program, we plan to engage mRNA stakeholders across the entirety of the value chain.”

The transaction between Applied DNA Sciences and Spindle Biotech is classified as an asset acquisition. Applied DNA will incorporate the acquired assets and the consideration paid as part of its financial reporting for the fiscal fourth quarter and full-year 2023, which will conclude on 30 September 2023. The details of the acquisition, including the assets acquired and the consideration paid, will be reflected in the company’s financial statements for that period.