Massachusetts firms Cubist Pharmaceuticals Inc. and Alnylam Pharmaceuticals Inc. have formed a 50-50 North American partnership to develop and commercialize Alnylam's respiratory syncytial virus (RSV)-specific RNAi therapeutics.
But Wall Street apparently was not so keen on the deal, sending both firms' shares down slightly Friday. Shares of Lexington, Mass.-based Cubist (NASDAQ:CBST) closed at $24.56, a loss of 63 cents, while shares of Cambridge, Mass.-based Alnylam (NASDAQ:ALNY) fell 88 cents, to close at $23.12.
Under the agreement, Alnylam will receive $20 million up front and could bank an additional $82.5 million based on certain development and sales milestones.
The company also could gain double-digit royalties on net sales outside of North America and Asia.
The partnership gives Cubist sole commercialization rights of the ALN-RSV program worldwide outside of Asia, where the rights are held by Japanese firm Kyowa Hakko Kirin Co. Ltd. under a $93 million deal signed with Alnylam last June. (See BioWorld Today, June 20, 2008.)
Cubist and Alnylam will share equally development responsibilities and profits in North America. After achieving certain development milestones, Alnylam could opt to convert the North American co-development and profit share to a royalty-bearing license with development and sales milestones.
The RSV-specific RNAi therapeutic program includes Alnylam's ALN-RSV01, which currently is being studied in a double-blind, randomized, placebo-controlled Phase II trial to assess the drug's safety and tolerability in adult lung transplant patients naturally infected with RSV, said Jason Rhodes, Alnylam's vice president of business development.
The trial also will evaluate the antiviral activity of ALN-RSV01 in patients with a naturally acquired RSV lower respiratory tract infection.
The firm expects to have data from the trial by the second half of this year, Rhodes told BioWorld Today. Following the completion of that trial, Alnylam expects to begin a trial of ALN-RSV01 in pediatric patients with RSV, he noted.
Results reported by Alnylam of a double-blind, randomized, placebo-controlled Phase II trial, known as GEMINI, showed that intranasally administered ALN-RSV01 demonstrated statistically significant antiviral efficacy with about a 40 percent relative reduction in RSV infection rate and a 95 percent increase in the number of infection-free patients compared with placebo.
The company's RSV-specific RNAi program also includes other potent and specific second-generation RNAi-based RSV inhibitors in preclinical development.
RSV is a common, highly contagious virus that causes infections in both the upper- and lower respiratory tract in children and adults, Rhodes explained.
There are about 18 million infections reported annually in most developed countries, resulting in about 1 million hospitalizations, he said.
In the U.S. alone, there are about 125,000 pediatric and 175,000 adult hospitalizations annually attributed to RSV, Rhodes said.
While RSV infection typically results in cold-like symptoms, it can lead to more serious respiratory illnesses such as croup, pneumonia and bronchiolitis, and in some cases, be deadly.
RSV infection in infants also has been linked to the development of childhood asthma.
There currently are no treatments that are broadly used to successfully treat RSV, Rhodes noted.
Pediatric patients especially, said Steven Gilman, Cubists' chief scientific officer, are "in dire need" of an effective treatment for the infection.
"RSV is an important disease for children, and there is a very large unmet medical need," he told BioWorld Today.
Given the RSV program's potential to be used in a fairly broad outpatient population, Rhodes said, it was always Alnylam's strategy to partner it.
"At this stage, we don't plan to build a broad outpatient commercial organization at this point in the company's development," he said.
Alnylam had a "broad range" of discussions with several pharmaceutical companies ranging from large multinational pharma companies to local biopharmaceutical firms.
Rhodes said his firm chose Cubist to partner on the RSV RNAi program because of its expertise in acute care and infectious disease products.
He noted Cubist's success in commercializing Cubicin (daptomycin for injection), the first antibiotic in a new class of anti-infectives called lipopeptides.
Cubist also has an agreement with London-based AstraZeneca plc to handle U.S. hospital sales for its intravenous antibiotic Merrem (meropenem for injection).
Cubist's product pipeline also includes ecallantide, a recombinant human protein in Phase II clinical trials for the prevention of blood loss during cardiothoracic surgery, and two development programs for drugs to treat Gram-negative infections and Clostridium difficile-associated diarrhea.
In addition, Rhodes said, Cubist is located just "15 minutes west" of Alnylam.
"So if you are going to have a partner where they are in a true 50-50 deal where you have to be working together to co-develop the product, it's obviously helpful to have them be local," he said.
Beyond the location, Rhodes said, the firms have a "culture similarity" that makes them "very compatible."
"Cubist is a superb partner," he added.
The deal "sits well" with Cubist's strategy to build its pipeline, Gilman said.
"We are very excited about the progress of RNAi therapeutics. This is a new area of science and new technology. The science together with the medical need for RSV will be a very dramatic, potentially exciting and rewarding program for us," he noted.
Analyst Thomas Russo, of R.W. Baird & Co., called Alnylam's partnership with Cubist "another disciplined deal" for the RSV RNAi program.
"We like it," he said.
But Piper Jaffray analyst Edward A. Tenthoff called the deal's terms "disappointing."
"In comparison, Kyowa paid $15 million up front plus $78 million in potential milestones last June for Asian rights, indicating that the value of the RSV program has declined," he said in a research note.