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Government Desire for Drugs to Fight Flu Pandemic Helped Define Latest Deal Between Alnylam, Novartis


Alnylam Pharmaceuticals announced this week that it has found a partner for its pandemic influenza program in Novartis Pharmaceuticals, marking the latest in a series of developments that are bringing the two companies closer together.

Terms of the deal include research funding and profit-sharing, but for the most part remain undisclosed. However, Alnylam President and CEO John Maraganore said during a conference call this week that the arrangement -- which fulfills Alnylam's recently disclosed goal of securing new funding for its flu program in the first quarter of the year -- was structured in a way that takes into account his company's strategy of marketing the drug to governments for strategic stockpiling in the event of an avian flu outbreak in humans.

Alnylam first publicly expressed interest in flu last May when it unveiled a collaboration with researchers from the University of Georgia to "discover and develop a directly administered RNAi-based drug for the prevention and treatment of respiratory infection from newly emerging, highly pathogenic strains of influenza virus" (see RNAi News, 5/27/2005).

However, the flu program did not officially enter Alnylam's formal drug-development pipeline until December, about four months after it had established a three-year RNAi drug discovery and development agreement with Novartis. Under the terms of that deal, valued at as much as $700 million, Novartis took a 19.9-percent stake in Alnylam (see RNAi News, 9/9/2005).

"The various elements and economics of this new collaboration are different from the first alliance [and] have been structured to reflect the very unique development and distribution features of this program."

When Alnylam added pandemic flu to its pipeline, it was filling a gap left after the company stopped developing an RNAi-based therapy for age-related macular degeneration. While AMD is a lucrative market, Alnylam dropped its program, citing increased competition by other drugs under development. One of those competing drugs is Lucentis, which is to be marketed in North America by Novartis under a deal with Genentech.

Having removed itself from direct competition with its key collaborator and having freed up resources, Alnylam began focusing on flu, and set the second half of 2006 as its target for filing an investigational new drug application in the indication. Last year, the company also secured $240,000 in funding for its flu program from the US Department of Defense's Defense Advanced Research Projects Agency and established an siRNA manufacturing relationship with Dowpharma.

The latest Novartis deal therefore enables Alnylam to expand "the network that already supports our [pandemic flu] program, which includes the Department of Defense DARPA from the public sector … researchers at the University of Georgia … from the academic sector, and Dowpharma as a private sector domestic manufacturer," Maraganore said during the conference call.

It also "dramatically expands our capabilities and global reach to better address the potentially enormous threat to public health from a flu pandemic … [and] provides significant funding for this program while preserving significant downstream value for Alnylam through the sharing of profits," he said.

Maraganore said that the pandemic flu program would be overseen by a joint steering committee composed of representatives from both Alnylam and Novartis, and that while both companies "will jointly advance RNAi therapeutics, … Novartis will lead execution outside of the US."

Maraganore declined to provide specific financial details of the arrangement, but noted that it provides his company with "significant funding" from Novartis, and that Alnylam will "maintain a significant share of profits." He said that Alnylam has not made any changes to its 2006 financial guidance.

Although the flu deal is Alnylam's second partnership with Novartis, "the various elements and economics of this new … collaboration are different from the first alliance [and] … have been structured to reflect the very unique development and distribution features of this program," he explained.

Those unique development and distribution features center on Alnylam's plan to market its pandemic flu drug primarily to governments seeking to stockpile flu treatments in case a strain of the H5N1 avian flu that is easily transmitted between humans emerges.

"The possibility that a newly mutated H5N1 variant could emerge that is readily transmitted between humans is a great concern to world health authorities and governments," Maraganore said during the conference call. "We believe that RNAi therapeutics can play a vital role in preparing for and responding to … [the] threat and could be used by governments across the world as part of their strategic stockpiling efforts."

The deal "was structured as a sharing-of-profits-type structure, and really reflects the unique feature of this type of sales and marketing effort when you're selling to the government.

As such, the latest Novartis deal "was structured as a sharing-of-profits-type structure, and really reflects the unique feature of this type of sales and marketing effort when you're selling to the government," he said. "That weighed very significantly in our considerations of how we would structure this deal and how Alnylam would appreciate the benefits of working with Novartis."

According to Maraganore, exactly how the companies will sell an RNAi-based drug for pandemic flu will depend on upcoming meetings with the US Food and Drug Administration "on the data package that will be required for stockpiling this type of therapeutic."

In one scenario, "this type of drug, like any drug, would require conventional development through phase I, phase II, phase III clinical trials, and a demonstration of safety and efficacy in humans," he said. "Clearly, to be labeled for pandemic flu in that scenario, one would have to do studies looking at low-pathogen flu strains."

On the opposite end of the spectrum, "this potential pandemic is of the scale and significance where there may be merit in stockpiling under provisions of the FDA that include either emergency-use provisions where drugs can be used under an IND or under the Bioterrorism Act of 2002, where drugs that have demonstrated efficacy in animal models and safety in human testing can be labeled and approved for specific high-risk pathogen type situations," he noted.

"When we have … discussions [with the FDA] we will get better clearance and guidance of which of those two approaches would best apply here."

Regardless of how the FDA discussions turn out, Maraganore said that Alnylam is confident that it will be able to develop a drug that could be stockpiled and remain effective against any flu strain that may emerge.

"We can generate a single siRNA that's active against multiple … flu strains. [We believe our drug] would be ... active against an emerging H5N1 virus, even one that has yet to mutate into a form that is transmissible from human to human," he said. "For [that] reason, we believe we can effectively provide a drug today that could be used for stockpiling for an emerging virus in the future."

Maraganore noted that although the "near-term objectives with Novartis are focused on the pandemic opportunity," the companies see opportunities in seasonal flu, as well

"The objectives here … are having a broadly acting antiviral that would target key regions of the viral genome and therefore be useful across multiple flu strains including the H5N1, amongst other flu variants," he said. "Clearly, this same approach could then be adapted for addressing the opportunities for seasonal flu."

-- Doug Macron ([email protected])

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