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Arrowhead Acquires RNAi Assets of Novartis


NEW YORK (GenomeWeb) – Arrowhead Research announced this week that it has acquired the RNAi drug assets of Novartis, giving the firm access to a portfolio of technologies, intellectual property, and drug candidates developed by the pharmaceutical giant over the past 10 years.

The deal also marks the second time Arrowhead has snapped up the RNAi assets of a big pharma that spent considerable time and money on transforming the gene-silencing technology into a therapeutic modality, only to later drop out amid corporate reorganizations.

In 2005, Novartis jumped into the RNAi drugs space through a broad alliance with Alnylam Pharmaceuticals, paying nearly $57 million in cash and equity investments to gain the rights to use Alnylam's technology and IP against 30 undisclosed drug targets.

Since that time, Novartis forged ahead with its RNAi efforts, pressing forward even as peers such as Pfizer, Roche, and Merck ended their involvement with the technology. However, early last year Novartis followed suit and announced that it was significantly reducing its in-house RNA therapeutics efforts.

At the time, the company said that it was maintaining a small group to continue working on RNAi, but it now appears that this was only part of Novartis' efforts to fully wind down its work in the field while it looked to offload related assets.

Last month, Arrowhead disclosed that it had paid $7 million to obtain an exclusive option to purchase RNAi technologies and IP from an undisclosed firm. During a conference call held today, Arrowhead President and CEO Christopher Anzalone disclosed that this option — which has now been exercised — was related to the Novartis assets.

Under the deal, Arrowhead has specifically picked up IP related to novel and proprietary RNAi trigger designs and modifications.

Novartis "went through what appears to be an exhaustive process of creating various novel RNAi trigger structures that fall outside of key patents controlled by competitors," Anzalone said during the call. "The result is some very interesting and novel structures that have produced impressive results.

"Importantly, these structures are covered by new patents and patent applications, making them proprietary and providing what we believe is freedom to operate across all targets and all indications," he added.

Arrowhead has also gained the rights to a series of intracellular targeting ligands for RNAi molecules that Anzalone said seem to work by enhancing the binding of these agents to RISC and boosting their stability once that binding has occurred, which could result in higher levels of gene knockdown and longer durations of effect.

Notably, Novartis has also assigned Arrowhead the rights to the 30 targets enabled by Alnylam IP. Although the nature of those targets has not been disclosed, Anzalone noted that they include oncology-related ones.

He added that while Arrowhead may choose to pursue some of these targets on its own, the company has the rights to sublicense them to partners.

"These targets were selected by Novartis, so we view them as the type of targets that would be of interest to other large companies, as well," he said. "As such, we believe there will be interest from other companies in working together on targets we do not develop alone."

Finally, the deal with Novartis gives Arrowhead access to three preclinical RNAi candidates, as well as all associated study reports and data.

"These three candidates are at various stages of development, but all have gone through a rigorous Novartis vetting process in order to advance them as candidates," Anzalone said. Arrowhead is beginning to evaluate these three programs, he added, and more details will be provided as that process advances.

In exchange for the Novartis assets, Arrowhead agreed to pay $10 million in cash plus $25 million in stock. With the $7 million it paid for the licensing option creditable to the transaction, the company will provide Novartis with the remaining $3 million plus the equity in the next 30 days.

Novartis also stands to receive milestones and single-digit royalties on the sale of products related to the agreement.

Déjà vu?

Arrowhead's purchase of Novartis' RNAi assets comes a little more than three years after it struck a similar deal with Roche.

In late 2011, Arrowhead announced that it had bought the RNA drug assets of Roche, as well as its 40-person operations in Wisconsin, for 10 percent of its stock and potential late-stage milestones.

Like Novartis, Roche had previously paid millions to gain access to Alnylam IP, and later bought RNAi delivery technology firm Mirus Bio for $125 million.

Through that arrangement, Arrowhead picked up its lead drug candidate, the Phase II hepatitis B therapy ARC-520.