Just days before they were scheduled to go to trial, Alnylam Pharmaceuticals and Tekmira Pharmaceuticals announced that they have hammered out a settlement to their protracted patent-infringement and technology-misappropriation lawsuits.
And while the deal removes clouds of uncertainty that hung over both firms, the much-smaller Tekmira is the clear winner of the two, acquiring the rights to a disputed siRNA delivery technology, picking up access to Alnylam's intellectual property for a greater number of its own drug candidates, and a $65 million payment for the buyout of its contractual manufacturing rights.
In addition to settling all outstanding litigation, both in the US and Canada, the deal aims to keep the two companies out of court in the future. Alnylam and Tekmira have agreed not to sue each other in the future over the issues just resolved and to settle any future disputes that arise over the next three years with binding arbitration.
"Today's announcement provides assurances for our stakeholders that we accomplished what we set out to do when we initiated this litigation," Tekmira President and CEO Mark Murray said in a statement. “We now have clarity around the intellectual property that protects our lipid nanoparticle technology and a cash payment that will enable us to continue the execution of our business plan into 2015.”
“We believe that we have restructured our Tekmira relationship in a very favorable manner for Alnylam,” Alnylam CEO John Maraganore said during a conference call this week. “We also are pleased to put this legal matter behind us.”
Under the terms of the settlement, Alnylam has agreed to assign to Tekmira certain patents and patent applications, including ones related to the so-called MC3 lipid family, which is used in certain of its drug candidates including the phase II TTR-mediated amyloidosis treatment ALN-TTR02.
However, Alnylam retains the full rights to use the IP to bring drugs to market including ALN-TTR02, its phase I liver cancer drug ALN-VSP, and its cholesterol drug ALN-PCS, as well as to sublicense the IP on a product-by-product basis. Tekmira noted that it holds the exclusive rights to sublicense the technology on a platform basis.
Alnylam has also provided Tekmira with non-exclusive licenses to use its IP to develop five additional RNAi drugs, on top of the eight already included under their previous arrangements. Tekmira will pay Alnylam milestones and royalties on these candidates.
Alnylam has also given up its opt-in rights to Tekmira's phase I cancer drug TKM-PLK1, which is expected to enter phase II next year.
Alnylam has further agreed to buy out its obligation to use Tekmira as the sole manufacturer of its lipid nanoparticle drugs for a one-time payment of $30 million. Alnylam is now free to make the drugs itself or use a third-party manufacturer. It noted that it intends to use the manufacturing capabilities it has built up to advance ALN-TTR02 into phase III testing.
Alnylam has also agreed to buy down certain future potential milestones and royalties to Tekmira for its lipid nanoparticle-enabled drugs for a one-time payment of $35 million, freeing it from the milestone and royalty obligations under the companies' original deals.
However, Tekmira will still be eligible to receive an additional $10 million in contingent milestones — $5 million upon the initiation of phase III testing of ALN-TTR02 and $5 million upon Tekmira's enablement of the production ALN-VSP for use in clinical studies in Asia. Both milestones are expected to be achieved next year.
“Aside from obligations related to the new license agreement, we will have no relationship with Tekmira in the future,” Alnylam Chief Business Officer Laurence Reid added during the conference call.
In addition to settling the litigation between Alnylam and Tekmira, the deal ends any legal action against Alnylam collaborator AlCana Technologies. Tekmira noted that it expects to enter into a cross-licensing deal with AlCana that includes milestones and royalties, and that AlCana has agreed not to compete in the RNAi field for five years.
Alnylam and Tekmira have had a long and close relationship, collaborating with each other since as early as 2006 when Tekmira was known as Protiva Biotherapeutics, and expanding their joint activities a number of times since with IP licensing arrangements and a deal that made Tekmira the manufacturer of the lipid nanoparticles used in Alnylam's drug candidates.
But even early on, there were signs that all was not well between the firms. Despite their close collaboration, in 2006 Alnylam chose to strike a drug-delivery deal with Protiva parent Inex Pharmaceuticals despite questions about the ownership of the technology covered under the arrangement (GSN 3/30/2006).
That dispute was settled a couple of years later when Protiva and Inex, which changed its name to Tekmira, agreed to merge and put Protiva's management in control of the resultant company (GSN 4/3/2008). And even though that deal saw an even closer tie-up between Tekmira and Alnylam in the form of an equity investment, trouble persisted.
In 2009, Alnylam's Maraganore publicly questioned the value of the hypercholeserolemia drug target Tekmira was pursuing in one of its pipeline programs, apolipoprotein B, stating that it was less “compelling” than the one chosen by Alnylam — proprotein convertase subtilisn/kexin type 9 (GSN 5/14/2009).
He added at the time that Alnylam “could certainly have pursued [Tekmira's target] if we wanted to,” but that it passed it off to Tekmira as part of an agreement that gave it the right to develop certain drug candidates based on Alnylam's IP.
Rankled, Tekmira's Murray defended the choice of apolipoprotein B during a financial conference call later that year, and touted the robust knockdown achieved with his company's delivery technology (GSN 8/13/2009).
Notably, Tekmira has since halted development of its cholesterol drug amid safety concerns.
But it was behind the scenes, apparently, that the real problems lurked, and by early 2011, Tekmira had filed a lawsuit charging Alnylam with stealing trade secrets related to its lipid nanoparticles and using them to develop its own delivery technologies (GSN 3/17/2011).
“Alnylam abused its collaborator status and access to [the] confidential information by improperly using this information for its own internal purposes and to replicate a competing technology in ways that were unauthorized and without our consent,” Murray said during a conference call held at the time the suit was filed.
“Alnylam repeatedly went so far as to use our proprietary delivery technology to apply for patents based on our confidential information, claiming as its own the very technology that it stole,” he said. “This illegal activity continues today, as Alnylam continues to prosecute patent filings that use or are derived from our technology.”
Among the unauthorized lipid formulations developed from Tekmira's know-how, the suit charged, was the MC3 lipid.
A few months later, Alnylam countersued, calling the Tekmira lawsuit “meritless and unjustified,” and stating that Tekmira breached its contractual obligation to settle disputes in a confidential manner outside of the courts (GSN 4/7/2011).
Alnylam also pulled the curtain back on Tekmira's internal difficulties, telling the court that the company abruptly fired several employees originally employed by Inex and who had a key role in developing Tekmira's lipid technology. These scientists went on to form Alnylam's close collaborator AlCana Technologies.
Tekmira later expanded its lawsuit to include charges that AlCana employees “funneled Tekmira's … trade secrets” to Alnylam, and that Alnylam used the company as a means to acquire restricted technologies, including MC3 (GSN 6/9/2011).
Further muddying the legal waters was a patent-infringement suit Alnylam and Isis Pharmaceuticals filed against Tekmira in January, which included accusations that Tekmira violated its patent-licensing deal with Alnylam by providing lipid-formulated siRNAs covered by the IP to Bristol-Myers Squibb (GSN 1/19/2012).
Tekmira painted the charges as a bid to pressure the company as it moved forward with its own lawsuit, and said it remained committed to its court battle.