Protiva Biotherapeutics and Tekmira Pharmaceuticals said this week that they have signed a deal to merge, reuniting two companies that have been at odds over the rights to RNAi delivery technology Protiva developed after being spun out of Tekmira’s former parent company Inex Pharmaceuticals.
As a result of the deal, the combined company expects to advance two RNAi drugs into the clinic by 2009 including ones for hypercholesteremia and cancer, according to a joint statement.
The transaction, which is expected to occur shortly after a special meeting of Tekmira’s shareholders in late May, will end all legal disputes between the Canadian companies over Protiva’s so-called SNALP, or stable nucleic acid lipid particle, delivery technology.
In conjunction with the deal, Tekmira has also secured $10 million in equity investments from collaborator Alnylam Pharmaceuticals and Alnylam partner Roche in exchange for access to the combined company’s drug-delivery intellectual property.
The new firm, which will retain the Tekmira name, will “create greater value for the shareholders of both Tekmira and Protiva than either company could achieve on its own,” Tekmira’s current President and CEO Timothy Ruane said in a statement.
The deal also positions the new company to be a key player in the RNAi therapeutics field, added Protiva President and CEO Mark Murray, who will continue in these roles at the post-merger firm.
Under the terms of the arrangement, Tekmira will buy all outstanding equity of privately held Protiva in exchange for 22.8 million shares of newly issued stock, with 1.8 million shares reserved for the exercise of Protiva stock options. Tekmira currently has 24.6 million shares outstanding and expects to have 51.6 million shares and 5.4 million options outstanding after the deal closes.
Upon consummation of the transaction, Alnylam and Roche (see RNAi News, 7/12/2007) will each pay $5 million for about 2 million shares of Tekmira stock valued at $2.40 a share.
Tekmira shareholders will own 48 percent of the combined company, Protiva shareholders will own 44 percent, and Roche and Alnylam will own 4 percent each, Ian Mortimer, Tekmira’s CFO, said during a conference call to discuss the transaction. He added that with the equity investment from Roche and Alnylam, the new company is expected to have more than $35 million in cash and cash equivalents, which will be sufficient to fund operations for more than two years.
“We have long valued the technologies and know-how of both Tekmira and Protiva, and are pleased that [their RNAi delivery technology] and IP can now reside in one entity,” Alnylam President and COO Barry Greene said in a statement. “For quite some time, this has been the right answer for the scientific and clinical advancement of RNAi therapeutics.”
According to Tekmira and Protiva, the combined company has obtained the rights to develop seven RNAi therapeutics based on Alnylam IP, including the three covered under Tekmira’s expanded deal with the RNAi drugs shop, in exchange for milestones and royalties.
With these licenses in hand, “the new Tekmira expects to advance two systemic RNAi therapeutics into clinical development over the next 12 [to] 18 months as treatments for hypercholesteremia and cancer,” the companies added.
“We have long valued the technologies and know-how of both Tekmira and Protiva, and are pleased that [their RNAi delivery technology] and IP can now reside in one entity. For quite some time, this has been the right answer for the scientific and clinical advancement of RNAi therapeutics.”
The first drug candidate, ApoB SNALP, targets apolipoprotein B, a protein involved in cholesterol metabolism, as a treatment for high cholesterol and is expected to reach phase I during the first half of next year. The second candidate, PLK1 SNALP, targets polo-like kinase 1, a gene linked to the growth of certain solid tumors, and is slated to enter phase I testing sometime in 2009.
In exchange for the expanded rights to Alnylam’s IP, the RNAi drugs shop was given an option to co-develop and co-market PLK1 SNALP that expires at the commencement of phase II trials.
The option is for “a 50/50, cost-sharing, product-development arrangement,” Murray explained during the conference call. Should Alnylam exercise its option for PLK1 SNALP, it will “reimburse [the new Tekmira] for 50 percent of the [drug’s] development costs incurred to the point at which [it opts] in, and will pay 50 percent of the costs going forward.”
At the same time, Alnylam will be free to provide Regulus Therapeutics, its microRNA drug joint venture with Isis Pharmaceuticals (see RNAi News, 9/13/2007), with access to Tekmira and Protiva’s technologies in exchange for milestones and royalties.
Likewise, Roche, as an Alnylam collaborator, will have access to the new Tekmira’s IP in exchange for milestones and royalties on RNAi products it develops using the company’s technologies. Pursuant to Protiva’s October 2007 deal with Merck, the combined company stands to receive up to $17 million in milestone, plus royalties, on drugs the big pharma develops using Protiva’s technology.
The new Tekmira’s management team will be led by Protiva’s Murray and will also include Tekmira CFO Ian Mortimer as executive vice president and CFO and Protiva CSO Ian MacLachlan as executive vice president and CSO. Tekmira’s Ruane will resign from the company but continue to act as a consultant.
The new company’s board, meanwhile, will include four board members from the two companies and be chaired by Tekmira director Michael Forrest.
All in the Family
Alnylam has been one of Protiva’s most high-profile partners, notably publishing in Nature in 2006 data from collaborative research showing that siRNAs targeting the gene for apo B could be used with clinical efficacy after systemic administration in non-human primates when encapsulated in Protiva’s SNALPs (see RNAi News, 3/30/2006).
But despite this promising work, Alnylam exclusively optioned a similar liposomal delivery technology from Inex, which later spun out all its drug-development assets into Tekmira, ostensibly because of Inex’s claim to hold the rights to the SNALP technology.
The dispute over SNALPs began in 2005 when Sirna Therapeutics licensed the technology to deliver RNAi-based drugs against three targets including hepatitis B/C and PTP 1B, a gene associated with insulin resistance and diabetes.
Although it had success using the delivery technology, Sirna sued Protiva for breach of contract and fraud, alleging that Protiva misrepresented its ownership of SNALPs (see RNAi News, 3/2/2006). According to court documents, Sirna believed the technology’s rights were held by Inex, which had spun out Protiva in 2001 to develop gene-delivery technologies for cancer and inflammatory diseases.
In response, Protiva sued Sirna, charging the RNAi drug developer with maintaining a “hidden agenda” to develop its own siRNA delivery technology using Protiva's proprietary technologies and know-how (see RNAi News, 3/30/2006).
At the same time, Protiva sued Inex in both Canada and California for stating to people in the RNAi industry that Protiva did not control intellectual property related to the use of SNALPs for RNAi — talk that Protiva said led to the end of the deal with Sirna and damaged licensing talks with other companies including Alnylam.
Inex later countersued Protiva in a Canadian court, claiming that it only granted Protiva limited rights to the SNALP technology following the spinout and these rights do not include RNAi applications (see RNAi News, 5/4/2006).
The following year, Sirna was acquired by Merck, which took a non-exclusive license to Protiva’s delivery technology in order to settle the companies’ legal battle (see RNAi News, 10/18/2007). However, the row between Protiva and Tekmira continued in Canada even after Protiva dropped the suit it filed against Inex in California.
That Canadian litigation had been in a holding pattern since 2007 as Protiva and Tekmira appeared to go about their business: Protiva signed its non-exclusive deal with Merck and Tekmira expanded its arrangement with Alnylam (see RNAi News, 1/11/2007).
But with the transaction announced this week, Protiva and Tekmira’s legal battle has drawn to a close.