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Like More Mature Reagent Space, RNAi Rx Sector Sees Its Own Wave of Acquisitions

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Though still in its adolescence, the RNAi drugs field has already experienced a wave of acquisitions that swept a handful of its players into bigger, more diversified biopharmaceutical companies, following a path already traveled by the more mature RNAi reagent sector.
 
And this trend is likely to continue as those big pharmas that have committed themselves to therapeutic RNAi look beyond their own labs for expertise, according to two industry insiders.
 
Technologies like RNAi “are [the kinds of] things that pharma wants in-house … and [those companies] will continue to do transactions to bring them in-house,” Douglas Fambrough, a general partner at Oxford Bioscience Partners, which was an early institutional investor in Sirna Therapeutics, told RNAi News last week.
 
At the same time, firms developing RNAi-enabling technologies are likely to see some action, as well, he said.
 
“If you made a corporate commitment to RNA interference, then you’ve made a corporate commitment to the delivery of RNAi,” noted Fambrough, who also co-founded RNAi drugs startup Dicerna Pharmaceuticals last year (see RNAi News, 11/8/2007). Given the challenge that delivery has thus far presented, “pharma is likely to follow the same path of wanting to bring [delivery] technology in-house,” he said.
 

“’Innovation’ and ‘manage’ can be polar opposites sometimes. If you want to keep that innovation going, you have to place bets on certain technologies and just let it go.”

Lou Renzetti, vice president and global head of RNA therapeutics at Roche, agreed, noting that while collaborations are always an option, his company has made a significant part of its push into the RNAi drugs space through acquisitions, namely its 2007 purchase of Alnylam Pharmaceutical’s Kulmbach, Germany-based subsidiary (see RNAi News, 7/12/2007) and its soon-to-be consummated deal for Mirus Bio (see RNAi News, 7/24/2008).
 
Although Roche could have tried to harness Alnylam and Mirus’ expertise through partnerships alone, by acquiring the businesses it gained access not just to technologies and intellectual property, but also to the people responsible for developing them — something Renzetti said will be key to getting the most value out of the acquisitions.
 
“If you want to get into the game, having the IP is obviously the driver,” he said. Still, “you can bring in IP, you can bring in technology, but if you don’t retain the people and their culture, you have a problem [in making the transaction] work.”
 
To Renzetti, big pharmas that acquire companies developing cutting-edge technologies need to tread the road to corporate integration carefully so as not to lose “the sort of know-how and capability that a lot of these [companies] have retained.”
 
Having held Alnylam’s German unit, now called Roche Kulmbach, for about a year, Renzetti said that “maintaining momentum has really meant maintaining [the operation’s] culture and spirit” by adopting a sort of laissez-faire approach to corporate management.
 
“’Innovation’ and ‘manage’ can be polar opposites sometimes,” he said. “If you want to keep that innovation going, you have to place bets on certain technologies and just let it go.”
 
Takeover Targets
 
Given the demonstrated success of RNAi as a research tool, it was only a matter of time before the top companies developing reagents based on the gene-silencing technology became takeover targets for bigger life science firms.
 
The trend began in 2003, when Invitrogen bought Sequitur (see RNAi News, 11/7/2003), followed a few months later by Fisher Scientific’s (now Thermo Fisher Scientific) purchase of Dharmacon for $80 million in cash (see RNAi News, 2/13/2004).
  
Next up was Proligo, which chemical firm Degussa sold to Sigma-Aldrich in 2005 (see RNAi News, 2/18/2005), and Ambion, which sold off its research products division to Applied Biosystems for $273 million in cash the following year (see RNAi News, 1/5/2006).
  
Most recently, Thermo Fisher Scientific in July bought private genomics research-tool maker Open Biosystems for an undisclosed price to extend its reach in the RNAi space (see RNAi News, 7/3/2008).
 
But RNAi buyouts have not been limited to research tool makers. In late 2006, Merck announced it would pay a groundbreaking $1.1 billion in cash to acquire Sirna (see RNAi News, 11/2/2006). Roche has been active, as well, acquiring Mirus and Alnylam Europe.
 
The spree wasn’t limited to big pharmas. Ophthalmic healthcare company Opko Health last year acquired Acuity Pharmaceuticals and its phase III, siRNA-based wet age-related macular degeneration therapy bevasiranib (see RNAi News, 3/29/2007).
 
And while Fambrough thinks that the future holds more acquisitions, he questioned just how many transactions are possible given the relatively short list of RNAi drug companies with novel technologies.
 
RNAi is “such an IP-constrained field” that there aren’t many good candidates for acquisition out there right now, he said.
 
“I’m not aware of IP that will allow a major new entrant to the field,” he noted, adding that this high barrier to entry is part of the reason why the price tags on all types of deals have been so high, as evidenced by Alnylam’s non-exclusive arrangement with Takeda Pharmaceutical, which could be worth $1 billion (see RNAi News, 5/29/2008).
 
There are “not very many companies to buy, and I think there is a big range in quality,” Fambrough noted. “I think you will see [additional] transactions, but there are just not that many transactions" that can occur.
 
Fambrough also sees the potential for at least a few pure-play RNAi drug companies to exist alongside the big biopharmaceutical shops that have made the technology just one part of their portfolios.
 
“I think the technology has the breadth and power to allow pure-play companies to grow and succeed around it,” he said, singling out Alnylam as a likely possibility, in part because of that firm’s publicly stated desire to remain independent and in part because of the extent to which licenses to its IP are being used by others.
 
“There are going to be successes [with RNAi drug programs], and Alnylam is likely to own some of those program successes,” he said. “So I think there will be at least one [successful pure-play] out there.”
 
Renzetti voiced similar sentiments. “Much like you have … protein therapeutics companies Biogen and Amgen, why wouldn’t [a pure-play RNAi shop] be a possibility?” he asked.

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