In its first major announcement as a public company, Alnylam Pharmaceuticals said this week that it has struck another multi-year RNAi-based drug deal with Merck. While not the first partnership between big pharma and an RNAi therapeutics firm — that was a Merck-Alnylam deal signed last year — the collaboration is unique in that it calls for the Merck to take an active role in the RNAi drug development process right off the bat.
The alliance is focused on developing RNAi therapies for angiogenesis-related ocular diseases and includes Alnylam’s ongoing program in age-related macular degeneration. Under the terms of the deal, Merck has paid Alnylam an undisclosed upfront fee, and will make additional payments based upon the achievement of undisclosed milestones. These payments, the companies said, could total $19.5 million — a significant amount for Alnylam, considering that this is more than half of the $26 million the company netted in its initial public offering (see RNAi News, 6/4/2004).
The companies have also agreed to equally split the US profits derived from drugs developed under the collaboration, with Alnylam receiving royalties on international sales. Alnylam also has the option to co-promote the RNAi drugs in the US, while Merck will be entirely responsible for sales and marketing efforts elsewhere.
Perhaps most importantly, the deal calls for Merck to immediately assume 50 percent of the costs of developing the RNAi drugs covered by the deal with Alnylam, something that was not part of the companies’ first partnership, Vin Miles, Alnylam’s senior vice president of business development, told RNAi News.
That first deal, which is ongoing, was signed in September last year and has Alnylam developing siRNAs against undisclosed targets Merck provides. Merck will decide whether it is interested in getting in on the development and commercialization of each of the various siRNAs afterwards. Although this first deal — which also features RNAi technology development and IP licensing aspects — included an upfront payment to Alnylam, as well as annual cash payments, an announcement has yet to be made regarding whether Merck has selected a drug candidate it will help develop.
In the latest deal, “the joint development of RNAi therapeutics in the alliance will truly be a collaboration,” Miles said during a Wednesday morning conference call. “Research, preclinical, and clinical development will be overseen by a joint steering committee with equal membership from both companies.” He added that this committee will oversee the level of expenditures made through the collaboration, and that “as RNAi therapeutics … get closer to the marketplace, a similar joint committee will be established to oversee commercialization.”
While Alnylam’s management did not comment specifically on the impact the Merck deal will have on its balance sheet, Barry Greene, Alnylam’s COO, said during the call that “we expect the operating expenses of the company to increase only slightly above [the company’s existing] $5 million per quarter rate for the remainder of the calendar year 2004.” Further information, he said, will be provided when Alnylam reports on its second quarter financial results in August.
Through the new Merck deal, Alnylam has also moved one step closer to its goal of signing two strategic alliances with big pharma, wherein Alnylam retains “a significant portion of the long-term value of the program,” within the next 18 months, Greene noted.
“It is a very expensive business to be in the discovery and development of drugs,” Miles told RNAi News. “So, when you’re trying to structure alliances, if you’re a biotech company, there’s always a balance between getting as much money up front from people … [and continuing] to participate in the full value of the products as they go through development and reach the marketplace.”
In addition to potential financial benefits, Alnylam expects Merck’s network of clinicians and clinical trial know-how to give it an added advantage as it works to meet its goal of beginning a phase I study of its vascular endothelial growth factor-targeting AMD drug in the second half of 2005.
“We … with Merck now, have access to a network of significant opinion leaders in the AMD space,” Alnylam president and CEO John Maraganore said during the conference call. “Our partnership with Merck brings us access to their network in a very significant manner, and we’re confident that, working together with Merck, our ability to execute on clinical trials from a recruitment standpoint and so on, will go on without fail.
“We could not wish for a better partner in this endeavor than Merck, a company with which we have developed mutual respect, and which is an established and successful franchise in ophthalmology … and [has] a demonstrated commitment to RNA interference,” Maraganore continued. “This alliance represents a major step forward in the implementation of our business strategy. The structure of this agreement allows us to retain high value and downstream commercialization rights to the products generated through this collaborative effort,” he added.
During the conference call, Greene also noted that Alnylam plans to begin “a second therapeutic development program in the second half of this year,” while Maraganore said that preclinical data from the company’s AMD efforts will be presented at the annual meeting of the American Academy of Ophthalmology in October.
Additionally, the company expects to announce more than “five additional technology licenses to our … patent estate in RNAi,” as well as its first partnership under the company’s InterfeRx IP licensing program (see RNAi News, 12/19/2003), according to Greene. Started in December as a way to make its patent estate available to other RNAi drug developers in areas outside Alnylam’s areas of interest, the program has yet to result in a single publicly announced licensing deal.