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Alnylam Inks License, RNAi Rx-Discovery Deal With Roche Worth Up to $1 Billion

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Alnylam Pharmaceuticals this week announced that it has signed an agreement under which it will provide Roche with a non-exclusive license to use its fundamental RNAi intellectual property to develop therapeutics in oncology, respiratory diseases, metabolic diseases, and certain liver diseases.
 
Also under the deal, which could be worth as much as $1 billion to Alnylam, the RNAi drugs firm has sold Roche its German subsidiary, Alnylam Europe, which has been a financial thorn in Alnylam’s side. The companies have further agreed to collaborate in the future on the discovery of RNAi drugs against one or more disease targets within the therapeutic areas covered under the arrangement.
 
“We’re very excited to announce this alliance with Roche, one that we believe is the largest drug-discovery alliance in biotech history and certainly our most significant alliance to date,” Alnylam President and CEO John Maraganore said this week during a conference call to discuss the deal.
 
“For Alnylam, this is a truly transformative alliance,” he added. “Specifically, this adds significant non-dilutive capital to Alnylam’s efforts in building a leading biopharmaceutical company based on the development and commercialization of our own proprietary pipeline.”
 
For Roche, the deal with Alnylam allows the company to establish a significant presence in a field it has been eyeing for some time. Although the Swiss drug and diagnostics giant has conducted some RNAi work in-house, these efforts have been limited, Peter Sandbach, a Roche spokesman, told RNAi News this week.
 
“This opportunity [with Alnylam] came along and was quite attractive for us.”
 
While he said that Roche considered acquiring Alnylam, the RNAi shop has long maintained that it intends to remain an independent biopharmaceutical firm. In the end, though, “the deal as it stands is pretty good for us,” Sandbach said.
 
Sandbach added that the acquisition of Alnylam Europe, which with its 40 employees will become Roche’s Center of Excellence for RNAi therapeutics discovery, was particularly appealing as it provides the company with a ready-made team of RNAi specialists.
 
Under the terms of the deal, Alnylam will receive an upfront cash payment of about $274 million in exchange for the IP license, which includes chemistry and delivery know-how, plus $15 million in cash for Alnylam Europe.
 
Additionally, Roche has agreed to pay roughly $42 million to buy 1.95 million shares of newly issued Alnylam stock at $21.50 per share, bringing the total upfront value of the deal to approximately $331 million.
 
Alnylam noted that it will be required to pay about $30 million to partners, primarily Isis Pharmaceuticals, from which it has licensed IP covered under the Roche deal.
 
After the close of the transaction, Roche will hold an almost 5-percent stake in Alnylam. According to Patricia Allen, Alnylam’s vice president of finance, Roche has agreed not to sell any Alnylam stock for two years and will not take steps to acquire Alnylam for three years.
 
Alnylam and Roche expect their deal to close within about 30 days.
 
The deal with Roche “provides Alnylam with substantial financial flexibility as we move forward with our [research and development] efforts, erasing the need to raise additional capital for years to come,” Maraganore noted. “To be clear, even with the positive market reaction to today’s news, we have no intention of doing any financing in the near future.”
 
On Monday, the day the alliance was announced, shares of Alnylam surged more than 50 percent to $23.07. By midday Thursday, the stock had risen to $24.21.
 
Alnylam also stands to receive product-development milestones, royalties, and fees if Roche exercises its option to extend the disease areas in which its license to Alnylam’s IP applies.
 
According to Maraganore, disease areas not currently covered by the Roche agreement include virology and infectious disease, cardiovascular disease, autoimmune disease, and central nervous system disorders.
 
While Roche is free to develop RNAi drugs for any diseases within its four therapeutic areas, it is barred from pursuing targets that have already been exclusively licensed to Alnylam partners.
 
If Roche wants to pursue influenza, for instance, it would be prevented from doing so in light of Alnylam’s deal with Novartis (see RNAi News, 2/23/2006), in addition to the fact that its license excludes virology, Maraganore explained.
 
Further, Roche’s license does not include target-specific or microRNA-related IP.
 
Under its deal with Roche, Alnylam is free to develop RNAi-based drugs against any target in any therapeutic area and is not precluded from signing similar non-exclusive licensing deals with other companies.
 
“We maintain the right to non-exclusively license our IP to additional partners in future potential agreements, thereby creating the opportunity for additional value creation from our IP estate,” Maraganore said during the conference call. “Our deal with Roche … represents a significant monetization of our IP, and since it is non-exclusive and does not restrict us in any way, it is reproducible on these or … even better terms with other third parties.”
 
Novartis currently holds an option to non-exclusively license Alnylam’s fundamental IP in all indications pursuant to the firms’ 2005 alliance (see RNAi News, 9/9/2005), but that option has not been exercised.
 
Auf Wiedersehen
 
Through its deal with Roche, Alnylam not only has added one of the top pharmaceutical firms to its partnership roster, but found a buyer for overseas operations that have long been a drag on its financial performance.
 

Our deal with Roche … represents a significant monetization of our IP, and since it is non-exclusive and does not restrict us in any way, it is reproducible on these or … even better terms with other third parties.”

In December 2002, Alnylam struck a deal with Garching Innovation — the technology-transfer organization of the Max-Planck Society — for the worldwide rights to use and sublicense certain patented technology, namely the Tuschl-1 and Tuschl-2 IP.
The terms of that deal called for Alnylam to establish a research and development presence in Germany comparable to its capabilities in the United States. To satisfy this requirement, Alnylam acquired Ribopharma, which was later renamed Alnylam Europe.
 
By mid-2005, the cost of maintaining its German subsidiary had grown to the point where Alnylam re-negotiated its deal with Garching to relax its obligations (see RNAi News, 6/17/2005).
 
Still, Maraganore noted during the conference call that there were some redundancies between its operations in Germany and those in Cambridge, Mass., principally “front-end drug discovery” such as high-throughput siRNA synthesis and design.
 
As such, with the transfer of Alnylam Europe to Roche and the consolidation of Alnylam’s operations into a single site, “we expect … significant improvement in operating efficiencies in the mid- to long-term,” he said.
 
 

 
Rosetta President Weighs In on Impact
Of Roche, Alnylam Deal for miRNA Field
 
Although the alliances between Alnylam and Roche, as well as AstraZeneca and Silence Therapeutics (see related story, this issue), indicate that big pharma is no longer taking a wait-and-see stance on RNAi, microRNA technology is distinct enough from RNAi that it may be some time before similar deals are stuck with miRNA firms, according to Michael French, president of microRNA shop Rosetta Genomics.
 
The partnerships between AstraZeneca and Silence Therapeutics and Alnylam and Roche “points to the fact that pharma understands the potential impact of this space,” French, who was formerly senior vice president of corporate development at Sirna Therapeutics, said during a corporate presentation at the CE Unterberg, Towbin Emerging Growth conference in New York this week.
 
“I don’t think pharma is jumping off the cliff” when it forms these kinds of collaborations, he noted. “I think pharma understands that there is a lot of work to be done” before RNAi can translate into therapeutics.
 
Despite this understanding, the RNAi and miRNA therapeutic fields are different enough that broad deals between miRNA drug developers and large pharmaceutical firms might not be forthcoming any time soon, French suggested.
 
“You take a Rosetta Genomics and you take an Alnylam — the companies are different,” he said. In using RNAi against disease-associated genes, Alnylam knows its target. “They have to find the appropriate sequence [and] they have to find the appropriate conserved regions of the gene. There are some challenges with that, but they know what they are going after,” French said. In contrast, Rosetta is “still trying to figure out what microRNAs control.”
 
Importantly, the deal between Roche and Alnylam does not include any miRNA-related IP, French pointed out. “I think that if you look at it in that context, that deal was about chemistry,” he said. “We don’t have, today, in-house chemistry.
 
“We are a target company from a therapeutic standpoint,” and as such could be categorized as “therapeutic agnostic,” he said. Although Rosetta is exploring the use of antisense agents to target miRNAs, “we may find that a small-molecule approach is more appropriate.
 
“We’ll be able to utilize a broad spectrum of therapeutic approaches to go after diseases because it’s likely that not one therapeutic approach is going to work in every case,” French said, adding that oligonucleotide therapies are not likely to always be the answer for targeting miRNAs because of delivery challenges.

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