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RXi SEC Filing Discloses Details of Its Tech-Licensing Deal with Invitrogen

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CytRx spinout RXi Pharmaceuticals last week provided additional details, including the financial terms, of an RNAi technology-licensing deal it signed with Invitrogen last November.
 
The disclosure, which was made in a filing with the US Securities and Exchange Commission, revealed that RXi could pay more than $4 million to Invitrogen, not including royalties and license fees, for every RNAi drug it commercializes using the licensed technology.
 
In November, RXi announced that it had licensed Invitrogen’s Stealth and other proprietary technologies related to configurations of chemically modified dsRNA for use against designated target genes (see RNAi News, 11/15/2007).
 
At the time, specific terms of the arrangement were not disclosed. But in last week’s SEC filing, which was related to RXi’s plans to go public, the company shed some light on the deal.
 
According to the filing, RXi acquired the worldwide rights to three US patent applications, as well as any associated intellectual property. The first, No. 20030083272, is entitled “Sense mRNA Therapy” and claims “novel methods for the stabilization of mRNA [that] enable its use in sense RNA therapy to transiently express proteins in a cell.”
 
The other applications, Nos. 20040014956 and 20060009409, are entitled “Double-Stranded Oligonucleotides” and claim “antisense sequences, including duplex RNAi compositions, which possess improved properties over those taught in the prior art.”
 
For the license, RXi paid Invitrogen an upfront fee of $250,000. In addition, RXi is obligated to pay Invitrogen annual maintenance fees of $250,000, although these payments can be increased to $375,000 in exchange for a reduction in royalties paid on the sale of products commercialized using Invitrogen’s technology.
As part of the deal, RXi also obtained exclusive, three-year options to use the technology covered by the IP in developing therapeutics against specific research targets.
 

“Licensing this broad technology from Invitrogen is part of our strategy to continually enhance our proprietary [RNAi] compounds for therapeutic applications.”

These targets can be added to the arrangement at RXi’s request once per quarter in exchange for an upfront payment of $25,000 per target, plus two annual payments of $25,000. Invitrogen can only deny their inclusion in the deal if the targets are the subject of either a license negotiation or pre-existing licensing agreement with a third party.
 
RXi can remove targets from the deal at any time.
 
Upon the exercise of each option, RXi will pay Invitrogen $200,000 and will have two years to designate the target as a clinical target. For each target that is designated as a clinical target, RXi will pay Invitrogen $300,000 and be free to develop and commercialize RNAi drugs against the target.
 
For each drug covered under the deal that reaches phase II development, RXi will pay Invitrogen $500,000. Upon the initiation of a phase III study, RXi will pay Invitrogen $750,000. Invitrogen then stands to receive $1.5 million for each drug approved in the US and $750,000 for each drug approved in the European Union.
 
Invitrogen is also entitled to a three percent royalty on the net sales of products resulting from the agreement, although this rate can be lowered under certain circumstances including the increase of RXi annual license maintenance fees to Invitrogen.
 
Full Circle
 
Last January, CytRx fulfilled a long-standing promise to spin out its RNAi drug assets into a new, publicly traded company when it established RXi (see RNAi News, 1/11/2007). About nine months later, RXi filed with the SEC to float its shares on the Nasdaq exchange (see RNAi News, 11/1/2007).
 
Around that same time, RXi acquired the rights to the Stealth technology, which Invitrogen acquired when it bought RNAi reagent shop Sequitur in late 2003 (see RNAi News, 11/7/2003).
 
Although Invitrogen quickly incorporated the technology into its research product lineup, the work that Sequitur had been conducting on therapeutic uses of the technology was put on the back burner (see RNAi News, 10/1/2004).
 
Invitrogen ultimately found a home for the therapeutic applications of the technology in RXi — a move that essentially put the technology back into the hands of those who developed it: RXi President and CEO Tod Woolf was the founder and CEO of Sequitur, while RXi’s Vice President of Technology Development Dmitry Samarsky previously held business-development positions with both Invitrogen and Sequitur.
 
“Licensing this broad technology from Invitrogen is part of our strategy to continually enhance our proprietary [RNAi] compounds for therapeutic applications,” Woolf said in a statement at the time.

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