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For Novartis, Alnylam Deal Fulfills Long-Term Plan to Partner on RNAi Drug Development

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Alnylam Pharmaceuticals' recent RNAi drug-discovery and -development deal with Swiss pharmaceuticals giant Novartis marked the latest -- and the biggest -- step forward in the RNAi drug maker's ongoing effort to establish collaborations that would help advance its R&D programs.

For Novartis, however, the deal fulfills a goal the company has had for years -- to find a collaborator with which to explore the RNAi drugs area -- according to Jeremy Levin, global head of strategic alliances for the Novartis Institutes for BioMedical Research.

Last week, Alnylam announced that it had formed a three-year alliance with Novartis to collaborate on the optimization of RNAi drug candidates in therapeutic areas identified by Novartis (see RNAi News, 9/9/2005). The deal calls for Novartis to pay Alnylam roughly $56.8 million in cash and stock purchases, and take a 19.9-percent stake in the company.

"Novartis' interest in the [RNAi] area stretches back several significant years," Levin told RNAi News this week. "Novartis has been involved in RNAi as a research tool for some considerable period of time, and if you were to look at some of the more recent publications associated with Novartis and RNAi, you'd see that we've done some extensive work in animals as well."


Novartis "looked at [the technology] hard, made a decision that, scientifically, this was a very important area, and that we needed to explore it and evaluate it fully" as a therapeutic modality."

As an example, he pointed to a March 2004 paper in Nucleic Acids Research entitled "siRNA Relieves Chronic Neuropathic Pain." In that paper, NIBR researchers described how siRNAs could be used to block a "pathophysiological pain response and provide relief from neuropathic pain in a rat disease model by down regulating an endogenous, neuronally expressed gene."

"So this is not a new area at all for us," he said. "We looked at [the technology] hard, made a decision that, scientifically, this was a very important area, and that we needed to explore it and evaluate it fully" as a therapeutic modality.

That process of exploration and evaluation, Levin noted, involves what he described as an evolution in thinking. "You watch the literature, you understand where things are going, and try to truly understand all of the issues, then you decide [if] its worthwhile to seriously explore it, and if we do seriously explore it, what is the best way of doing that," he said.

Ultimately, Levin said, Novartis decided that the best way to move forward in the RNAi therapeutics field was to collaborate with a top-tier player -- in this case, Alnylam.

"Novartis' whole approach to collaboration is … to work with the single best accumulation of people that you can found, it's to do something faster, to do something better, and to accelerate the whole process of getting to a novel medicine," he said.

"We can speculate about [whether Novartis might have pursued RNAi therapeutics on its own], but that isn't the issue," Levin added. "It doesn't bear speculation. We had already made the decision to go into this area and build expertise with a collaborator."

According to Levin, Novartis discussed possible collaborations with a number of different RNAi companies, but ultimately decided on Alnylam based on a number of factors.

One of the biggest, perhaps, was a long-term relationship between Alnylam co-founder and MIT professor Phillip Sharp and Mark Fishman, president of the NIBR. "Phil Sharp and Mark Fishman had started the dialogue [about the partnership] three years ago," he said, "so none of this was a surprise."

Also driving Novartis' decision was Alnylam's intellectual property estate. Despite Alnylam's best efforts to tout its IP portfolio as the most robust in the RNAi field, the patent landscape in the area remains murky at best. However, Levin said, "when you have a small group of people who are recognized leaders in the area [and] have established an intellectual property position that at least provides clarity in what looks like a complicated area, then you are already at an advantage [as a party coming in from the outside]. You know the leadership and you know the base of technology that they're operating on," he said.

"Then you look for some serious application [from a partner] -- have they done something of great interest?" Levin said. "In that context, it's not to be underestimated that publishing peer-reviewed articles in significant scientific journals is actually a very good way of looking at early-stage technologies."

During this year and last, the company's researchers have published at least four papers in peer-reviewed journals on RNAi, including a paper in Nature last year detailing the use of modified, intravenously delivered siRNAs to knock down in rats a gene encoding apolipoprotein B, a protein essential for the formation of low-density lipoproteins and associated with cholesterol metabolism (see RNAi News, 11/12/2004).

Finally, Levin said, the deal between Novartis and Alnylam was cemented by the companies' sharing of a "common vision" of working together to overcome the significant technological hurdles facing the RNAi field.

This isn't to say, however, that Novartis has made Alnylam its one and only in the RNAi space.

Levin said Novartis spoke with other companies "before, during, and after" its negotiations with Alnylam. "This is a wonderful field that has only begun its development. We think it's got a long way to go and there'll be many key players in it," he said. "Our view is that we're delighted with whom we've started with -- we'll get a very strong base of understanding.

"There're many opportunities that will arise in the future," Levin added. "What they'll be I'm not going to speculate."

-- Doug Macron ([email protected])

SEC Documents Shed Additional Light on Novartis-Alnylam Deal

Alnylam Pharmaceuticals this week filed additional information with the US Securities and Exchange Commission related to the company's collaboration with Novartis, which calls for Novartis to take a 19.9-percent stake in Alnylam.

According to the SEC filings, Novartis has agreed not to acquire any securities of Alnylam (other than those associated with the closing of the alliance); not to participate in any tender or exchange offer, merger, or other business combination involving Alnylam; nor to seek to "control or influence the management, board of directors, or policies of Alnylam" until at least three years after the deal was signed.

Jeremy Levin, global head of strategic alliances for the Novartis Institutes for BioMedical Research, told RNAi News this week that, under the deal, Novartis has not gained any seats on Alnylam's board in connection with the stock purchase. "There's no control aspect, except those which are built into the collaboration where there is join programming. There is no corporate control [on Novartis' part]" over Alnylam.

As for why Novartis is acquiring a 19.9-percent equity stake in Alnylam, as opposed to 20 percent, Levin said that it's simply "the figure that we picked. That's how the number came out. If Alnylam should finance themselves it might be different. It just happens to be what it is," he said.

Levin noted that Alnylam's recent adoption of a shareholder's rights plan "did not play a role" in the size of Novartis' equity stake in Alnylam (see RNAi News, 7/22/2005).

Separately this week, Isis Pharmaceuticals reported that it is due to receive nearly $4 million in payments from Alnylam following the signing of the Novartis deal.

According to Isis, it is entitled to receive a portion of Novartis' upfront payments to Alnylam, and it has the potential to earn additional revenue in the form of milestone and royalty payments on drugs that use the Isis technology licensed to Alnylam under the companies' March 2004 IP co-licensing arrangement (see RNAi News, 3/19/2004).

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