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Silence Says No Buyout Deal Forthcoming

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By Doug Macron

Silence Therapeutics this week announced that recent negotiations over a potential acquisition of the company have ended and that no such deal is forthcoming.

While there had been optimism that Silence could successfully negotiate a buyout, recent pullbacks by the handful of big pharmas that represented the biggest technology acquirers in the RNAi space cast doubt on whether the transaction would ever occur.

In September, Silence first announced that it had been approached by an unnamed party interested in buying it (GSN 9/9/2010). At the time, Silence's CEO Philip Haworth told Gene Silencing News that his firm was required to make the disclosure by the London Stock Exchange's AIM because of the “sharp rise in the [firm's] share price" over the preceding two days.

This week, however, Silence issued a statement confirming that “it is no longer in discussions [that] may lead to an offer for the company. The board is not aware of any parties with whom it has had discussions that are considering making an offer for the company at this time.”

Silence said that it had received “a number of indicative proposals, but it is the view of the board that none of these were sufficiently compelling to pursue further in the context of the continued success of the company. The board has therefore terminated these discussions to allow management to focus all of its efforts on the ongoing business.”

Over the past few years, biopharmaceutical companies looking to get in on the therapeutic RNAi game had increasingly looked to buy technological expertise with the gene-silencing technology rather than develop it in-house.

For instance, Roche in 2007 struck an alliance with Alnylam Pharmaceuticals, buying the RNAi shop's German subsidiary, which became Roche’s Center of Excellence for RNAi therapeutics, for $15 million as part of the deal (GSN 7/20/2007). The next year, the company made a bigger play when it paid $125 million to acquire Mirus Bio and its dynamic polyconjugate drug-delivery technology (GSN 7/24/2008).

The biggest buyout in the space occurred in early 2007 when Merck paid $1.1 billion for Sirna Therapeutics (GSN 1/4/2007), a price take that represented a 100 percent premium over Sirna's stock price at the time.

Even Silence itself was the result of the 2005 acquisition of Germany's Atugen by Britain’s SR Pharma, which had been looking to transition into RNAi and changed its name to Silence to reflect its new focus (GSN 7/29/2005).

But things began to change last year when a difficult economy and disillusionment over the speed with which RNAi-based drugs could move into the clinic prompted many of the big players to step back from their previous commitments to the technology.

First, Novartis said that it would not exercise an option to take non-exclusive access to Alnylam's RNAi technology and intellectual property portfolio, a move that carried a $100 million price tag (GSN 9/30/2010).

While Novartis did chose the maximum number of targets it could develop drugs against under its original deal with Alnylam, 31, it's decision not to keep working with Alnylam was a blow to the RNAi shop, which announced that it was cutting about 25 percent of its workforce in order to contain costs.

More telling about big pharma's stance on RNAi was Roche's decision last November to shut down its internal research and development of drugs based on the technology (GSN 11/18/2010).

The move came as part of a broader cost-savings initiative designed to allow Roche to "focus its investments on innovations that promise the greatest clinical benefit for patients," and a greater emphasis on late-stage drug candidates, it said. Specifically, the company is shutting down the German unit acquired from Alnylam and the Wisconsin-based operations that came from Mirus.

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A Roche spokesperson told Gene Silencing News at the time that the company hadn't written off RNAi altogether, but that it would only pursue development of drugs based on the technology through “external collaborations.”

And last week, as first reported by Gene Silencing News, Pfizer confirmed that it was shuttering its oligonucleotide therapeutics unit as part of a company-wide restructuring effort that will focus the firm on disease areas on which it focuses "based upon where the greatest medical and commercial impact can be achieved” (GSN 2/3/2011).

As a result of these belt-tightening moves by the RNAi field's biggest big pharma proponents, it grew increasingly uncertain who Silence's suitors may be, and whether any of them would be willing to step forward with a sweet enough offer.

Based on Silence's statement, it appears than none were, and recent statements by a Pfizer official, along with the pullbacks at Roche, Novartis, and Pfizer, suggest that the days of costly acquisitions in the sector may be over for now.

Art Krieg, CSO of Pfizer's Research Technology Center and head of its soon-to-be-closed oligo drugs unit, told Gene Silencing News late last year that, from his perspective, RNAi companies had developed “very unrealistic partnering expectations” after seeing major deals like the ones between Alnylam and Novartis.

"It's very difficult to have constructive partnering discussions with companies where their investors have that mindset,” he said at the time.


Have topics you'd like to see covered in Gene Silencing News? Contact the editor
at dmacron [at] genomeweb [.] com.

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