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Alnylam Says Estimates of Damages in Tekmira Suit Could Reach $1.5B

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Alnylam Pharmaceuticals this week disclosed that a jury trial for its trade secret litigation with Tekmira Pharmaceuticals is expected to begin Nov. 14.

In the disclosure, which was made concurrent with the Alnylam's release of its third-quarter financial results, the RNAi drug shop noted that its 2012 financial guidance of roughly $280 million in year-end cash, cash equivalents, and marketable securities does not include the impact of payments that could be made in connection with the resolution of the litigation.

In a filing with the US Securities and Exchange Commission, Alnylam provided some detail on what these payments could possibly look like.

In the filing, Alnylam stated that while it has “not recorded an estimate of the possible loss associated with [the] legal proceeding” since Tekmira has not specified the monetary damages it is seeking, it has served the court with an expert report estimating its damages under different theories. These include the “purported lost value of the plaintiffs’ trade secrets, calculated using two approaches, as well as [Alnylam's] alleged unjust enrichment resulting from the purported misappropriation of [Tekmira's] trade secrets.”

These theories estimate Tekmira's damages could be in range of approximately $61 million to $234 million. If aggregated, the “theories of monetary recovery included in [Tekmira's] most recent expert report … would result in damages within a range of approximately $310 million to $484 million,” Alnylam said in the SEC filing.

“In addition, under one of the plaintiffs’ claims, any compensatory damage award sum could be subject to doubling or trebling, which could increase the potential damages up to approximately $1.5 billion, and the plaintiffs would also be entitled to recover their reasonable attorneys’ fees,” which were reported to be $12.5 million as of June 30 and are likely to now be “significantly higher.”

The plaintiffs are also seeking prejudgment interest, Alnylam noted.

Alnylam said that it believes these estimates to be “grossly overstated and based on faulty reasoning,” and that one of its own expert reports pegs Alnylam's liability, should it receive an unfavorable court decision, to be less than $4.4 million, although this figure could be subject to doubling or trebling, plus Tekmira's attorneys' fees.

“However, notwithstanding [Alnylam's] expert report, damages would be much greater if the case is tried to a verdict, and the jury finds the company liable and also accepts the plaintiffs’ theories of monetary damages,” it added in the filing.

Alnylam said that it is pursuing all reasonable approaches available to resolve the dispute, including settlement negotiations. However, it does not believe that a settlement is probable.

Stolen Technology?

The dispute between the companies began in early 2011 when Tekmira sued Alnylam for allegedly stealing trade secrets related to its proprietary lipid nanoparticle delivery technology – the litigation for which Alnylam made its projections of financial damages (GSN 3/17/2011). The suit was later expanded to include Alnylam collaborator AlCana Technologies.

Specifically, Tekmira said that Alnylam misappropriated confidential information provided to it under a deal that gives Alnylam the right to use Tekmira's lipid delivery technology with its own drug candidates in order to develop its own delivery vehicles.

“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,” Tekmira President and CEO Mark Murray said during a conference call held at the time.

The legal wrangling became more complicated in January, when Alnylam and Isis Pharmaceuticals sued Tekmira for patent infringement, alleging that it provided lipid nanoparticle-formulated siRNAs to collaborator Bristol-Myers Squibb in violation of a number of patents to which Alnylam claims exclusive rights (GSN 1/19/2012).

More recently, Alnylam filed a separate patent-infringement complaint against Tekmira in Canada (GSN 10/4/2012).

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