Alnylam Pharmaceuticals this week announced that it has acquired the RNAi therapeutics assets of Merck, substantiating speculation that the big pharma had decided to end its involvement with the gene-silencing technology as part of a company-wide restructuring late last year.
The transaction also represents a denouement of sorts for Alnylam and Merck, which acquired Alnylam's one-time chief rival Sirna Therapeutics for $1.1 billion in 2007. The two had also at one time been embroiled in a bitter legal dispute over the rights to Alnylam's core intellectual property and eventually agreed to a settlement that gave Merck access to that IP.
According to Alnylam, it will pick up from Merck assets that include preclinical drug candidates, as well as siRNA conjugate and delivery technologies. In exchange, Alnylam will pay Merck a total of $175 million upfront — $25 million in cash and $150 million in stock.
Merck is also eligible to receive up to $105 million in development and sales milestones, as well as single-digit royalties, on its existing preclinical candidates. The company also stands to receive $10 million in milestones and single-digit royalties on any Alnylam products covered by Sirna IP.
Additional terms were not disclosed.
Merck had long maintained an interest in RNAi as a drug modality and became the first big pharma to embrace the technology through a 2003 drug-development arrangement with Alnylam. The next year, the companies inked another deal focused on ocular diseases.
However, that partnership began to sour as Alnylam racked up partnerships with other pharmaceutical players such as Novartis, and by 2006 they had revised their alliances to drop work in eye diseases and allow Merck to step in earlier in the research and development process.
Just a few months later, Merck said it was buying Sirna, and the next year the Merck and Alnylam disclosed that they had ended their landmark partnership. However, the acrimony between the two continued amid a legal battle over the rights to key IP that Alnylam had at one time touted as critical to anyone developing RNAi-based drugs.
Alnylam's core IP position was originally built around a patent estate known as Tuschl-1. Named for RNAi pioneer Thomas Tuschl, the IP covered the use of siRNAs, 21 to 23 nucleotides in length, to target specific mRNA degradation in mammals.
The IP is held by four institutions — Max Planck Institute, the Whitehead Institute for Biomedical Research, the Massachusetts Institute of Technology, and the University of Massachusetts — and the first three licensed their stakes to Alnylam and a German startup called Ribopharma that Alnylam acquired in 2003. UMass, however, chose to license its interest in the IP to Sirna, which in turn agreed to make the technology available through sublicenses.
Alnylam, and much of the rest of the RNAi drug field, eventually began focusing on siRNA structures that featured 3' overhangs, which were covered by another IP estate known as Tuschl-II that was exclusively held by Alnylam and Max Planck.
However, in 2009, Alnylam and Max Planck sued Whitehead, MIT, and UMass, alleging that these institutions had been including aspects of the Tuschl-II IP into Tuschl-I patent applications, which would give Sirna and any of its sublicensees access to technology Alnylam claimed as its own.
The legal row continued until 2011, when the parties agreed to a settlement that allowed Sirna — which by then had been acquired by Merck — access to both the Tuschl-I and Tuschl-II IP, which essentially gave Alnylam's biggest competitor the right to develop drugs based on a key aspect of its technology.
Since that time, Merck had been pushing ahead with its RNAi drug programs. The company did so relatively quietly, however, providing few public details about its efforts other than occasional publications in peer-reviewed journals such as a paper last year describing a new polyconjugate delivery approach and a 2012 report on siRNA modifications.
Jeremy Caldwell, Merck's vice president of RNA therapeutics, also exclusively told Gene Silencing News in 2011 that the company anticipated having an RNAi drug in phase I testing by 2013.
Instead, 2013 proved to be the year that Merck decided to end its internal work with the technology, disclosing in October a downsizing that would cut about 8,500 jobs and include a reduction in focus on platform technologies including RNAi. Last year also saw the departure of Peter Kim, head of Merck Research Laboratories, who had long championed RNAi at the firm.
Though many in the nucleic acids drug field had held out hope that Merck would continue to forge ahead as the big pharma leader in RNAi, the decision to step away from the field came as little surprise after similar moves by Roche and Pfizer in 2010 and 2011.
Miragen Therapeutics CEO William Marshall noted in an interview late last year that big pharmas are under pressure to grow earnings, leading them to focus on programs that are more likely to payoff in the near term. "It's all a question of how soon these things are going to deliver," he said.
Yet the "divestiture of internal research efforts does not mean abandonment of interest," he added, noting that many of these companies are pursuing RNA technologies through strategic transactions rather than in-house programs.
For instance, shortly after Pfizer closed down its oligonucleotide therapeutic unit, the company bought antisense drug firm Excaliard Pharmaceuticals. And in 2013, AstraZeneca, which has partnerships with Silence Therapeutics and microRNA firm Regulus Therapeutics, made a $240 million investment in messenger RNA drug firm Moderna Therapeutics.
"This is not unique to nucleic acid therapeutics; you're seeing it everywhere," Marshall said. "It's a sort of realignment in the way big pharma is spending cash."