In its largest deal to date, RNAi firm Silence Therapeutics plc is partnering with AstraZeneca plc in a potential £200 million (US$400 million) to develop drugs against respiratory disease targets.
In return for granting the pharma firm a license to its short-interfering RNA (siRNA) technology, Silence will receive an initial access fee of about $15 million, comprising $5 million in cash and a $10 million equity investment. AstraZeneca will purchase Silence shares priced at £1.46 per share, giving it a nearly 3 percent stake in Silence. Under the deal, the companies will work jointly to discover and develop siRNA molecules against up to five targets provided by AstraZeneca, with AstraZeneca retaining full responsibility for further clinical development and commercialization.
Silence will receive milestone payments, plus an "upper-end single-digit" royalty rate on the sale of any products emerging from the collaboration, said Iain Ross, executive chairman for London-based Silence Therapeutics.
As the "only real RNAi player in Europe," Silence, formerly known as SR Pharma plc, has been working in the space since mid-2005 when it acquired Berlin-based Atugen AG, Ross said. "Atugen had been doing target validation work," for a number of partners since 2000, including London-based AstraZeneca, but the newly merged company decided to shift its focus to creating a therapeutic pipeline based on the RNAi technology.
"We've been a little bit quieter" than U.S. competitors, Ross said, adding that the RNAi space has a "higher profile" in the U.S., thanks in part to American scientists Craig Mello and Andrew Fire, who won the Nobel Prize last year for their discovery of RNA interference (RNAi), as well as to large RNAi-based deals such as Sirna Therapeutics Inc.'s $1. 1 billion acquisition by Merck & Co. Inc. last year and Alnylam Pharmaceutical Inc.'s potential $700 million collaboration with Novartis AG signed in 2005. But RNAi steadily has been gaining popularity in Europe, as evidenced by Silence's partnership with AstraZeneca.
"Big pharma is very interested" in RNAi, Ross said, especially the speed with which molecules can be identified. "We can move to preclinical very quickly, which is important to pharma because that way [the product] will have longer patent protection."
Silence holds its own patent portfolio relating to RNAi technology. Its intellectual property also includes a chemistry technology designed to "confer stability to RNAi molecules" and a drug delivery technology for systemic RNAi drug administration, Ross said.
Prior to the AstraZeneca deal, Silence's technology gained a partner in New York-based Pfizer Inc., which licensed rights to RNAi candidate RTP801i from Silence's partner Quark Biotech Inc., of Fremont, Calif., for ophthalmic indications. Pfizer is in Phase I development in age related macular degeneration.
Over the last half of the year, Silence intends to seek other partners, hoping to see another collaboration similar to the AstraZeneca deal that's focused on a different therapeutic area or different targets, Ross said.
The company is careful not to give away rights to an entire therapeutic area; instead, it names specific targets identified by its collaborators. Partners are sought for all therapeutic areas, with the exception of oncology.
On its own, Silence is advancing two preclinical compounds in cancer, one aimed at gastrointestinal cancers, starting with pancreatic cancer, and the second directed at non-small-cell lung cancer.
Ross said the company anticipates "moving both into Phase I trials in 2008."
Silence employees 34 people, most of them based on the company's research facility in Berlin. In the aftermath of the deal Monday, its shares (LSE:SLN) closed at £1.35, down £0.04.