West Coast Editor

Deep-pocketed big pharma plighted its figurative troth with the last high-profile player in RNA interference, Alnylam Pharmaceuticals Inc., in a non-exclusive licensing deal that could mean as much as $1 billion from Roche Holding AG - with $331 million up front that includes an equity investment of $42.5 million, for less than 5 percent of Alnylam's outstanding shares.

Not bad, considering the below-$600 million market cap for Alnylam, with Phase II trials testing its lead product just started. Alnylam's shares (NASDAQ:ALNY) skyrocketed 52 percent, closing Monday at $23.12, up $7.92.

John Maraganore, president and CEO of Cambridge, Mass.-based Alnylam, called the deal the "largest drug discovery alliance in biotech history" and a "landmark" for the industry. The part of the deal to arrive in up-front cash totals about $275 million.

Carlsbad, Calif.-based Isis Pharmaceuticals Inc., from which Alnylam licensed the intellectual property for RNAi work in 2004, also gains from the Roche pact, getting $26.5 million. Isis' shares (NASDAQ:ISIS) ended Monday at $11.80, up $1.73. "The total number of third party payments that potentially could be made under this agreement are less than $30 million," Maraganore said.

Expected to close in 30 days to 60 days, Alnylam's deal with Basel, Switzerland-based Roche calls for the latter's venture fund to buy about 1.9 million shares at $21.50 each.

Roche also will provide milestone payments and, potentially, field-expansion funds to expand the number of therapeutic areas, which already is broad, including oncology, respiratory diseases, metabolic diseases and certain liver diseases. "[Roche] can use all of our fundamental intellectual property to go after any disease target in those therapeutic areas, provided those targets have not already been exclusively licensed" to third parties, Maraganore told investors during a conference call, noting that the arrangement covers only existing IP; Roche would have to pay more for other IP that might be added down the road. The arrangement does not block Alnylam from wooing other partners, Maraganore said, and "very active discussions" are under way.

Among the therapeutic areas excluded in the Roche alliance are diseases in virology and infection, cardiovascular illness and disorders of the autoimmune and central nervous systems.

For $15 million, Roche is taking over Alnylam's European research site in Kulmbach, Germany (Bavaria), with about 40 employees, who will keep working on RNAi therapeutics discovery. Work there has been front-end discovery such as lead selection, high-throughput synthesis and design.

"We'll be transitioning those activities fully here to Cambridge in the months to come," and some technology will be transferred from Cambridge to Germany as well, Maraganore said. Roche will be doing most of the work, though a collaborative push is "a small part but an important part" of the deal, he added.

Just last week, the RNAi firm Silence Therapeutics plc, of London, partnered with the London-based pharma firm AstraZeneca plc in a potential £200 million (US$403 million) deal to develop drugs against respiratory disease targets. For a license to its short-interfering RNA technology, Silence gets an access fee of about $15 million, comprising $5 million in cash and a $10 million equity investment, and AstraZeneca is buying a parcel of Silence shares priced at £1.46 per share, giving it a nearly 3 percent stake in Silence. (See BioWorld Today, July 9, 2007.)

Alnylam's rival RNAi firm, Sirna Therapeutics Inc., of San Francisco, was taken over by Whitehouse Station, N.J.-based Merck & Co. Inc. for $1.1 billion, in a deal disclosed late last year. CytRx Corp., of Los Angeles, at the start of 2007 spun out its RNAi programs in the subsidiary RXi Pharmaceuticals Corp., which became the only "pure-play" company in the field, aside from Alnylam. (See BioWorld Today, Jan. 11, 2007, and Nov. 1, 2006.)

Last month, Alnylam started a Phase II trial with ALN-RSV01 in respiratory syncytial virus infection, which will involve adult subjects experimentally infected with RSV. The firm is expected to submit an investigational new drug application for PCSK9, targeting hypercholesterolemia, in the second half.