West Coast Editor

SAN FRANCISCO - Long known as the venue where many deals quietly begin, the JPMorgan Healthcare Conference also can be the place where the world finds out about existing relationships that just got better.

Witness RNA interference-focused Alnylam Pharmaceuticals Inc. and INEX Pharmaceuticals Corp., which disclosed, as the JPMorgan meeting entered its second day, that they have expanded their work together on lipid-based delivery, with Alnylam also taking a license to INEX's liposomal approach. Alnylam's president and CEO, John Maraganore, spoke Tuesday afternoon at the conference about "the opportunity of attacking disease targets that have to date been undruggable."

And thanks to the deal's somewhat complicated terms, Vancouver, British Columbia-based INEX now has a much more significant piece of that action.

Timothy Ruane, INEX's president and CEO, used words such as "landmark" and "groundbreaking" to describe the new arrangement, which "creates a global operating system for systemic delivery [of RNAi therapies], kind of like the Windows/Intel' approach for gene silencing."

INEX's stock (TSE:IEX) soared 77.1 percent on the news, closing Tuesday at C62 cents (US52 cents) up C27 cents. Alnylam's shares (NASDAQ:ALNY) ended the day at $22.22, up $1.81.

Systemic delivery is vital to RNAi's success. In July, Alnylam started a new collaboration with University of Texas Southwestern Medical Center at Dallas to test new approaches for reducing LDL-cholesterol levels using RNAi therapeutics directed to a target called proprotein convertase subtilisn/kexin type 9, or PCSK9.

The target is well validated for cholesterol management, and an investigational new drug application for the first systemic compound is expected this year. Alnylam plans to use "lipidoid" nanoparticle technology, developed with the Massachusetts Institute of Technology, to encapsulate the PCSK9-specific drug.

"In essence, our deal combines all lipid-encapsulated rights together," Ruane told BioWorld Today. "Their MIT lipidoid, from what we understand, is pretty interesting, and we'll be the manufacturer of those rights. We believe our intellectual property and technology complements that quite well."

Specifically, the deal brings $8 million up front for INEX, in the form of new Alnylam stock and/or cash, plus $4 million in research and development funding over the next two years, as the firm continues working on lipid-based delivery methods for Cambridge, Mass.-based Alnylam.

INEX will provide contract manufacturing services for Alnylam, which is making a $5 million loan available for costs. For each product that uses INEX technology, the firm could get $13 million in milestone payments, with $9.5 million of that amount due on approval and launch with more than $500 million in sales. INEX gets royalties, too.

"The real jewel for us is the ability to develop three [small interfering RNA] products for our own pipeline," Ruane said. Alnylam is granting INEX an option for three InterfeRx RNAi therapeutic-target licenses, subject to Alnylam review and what were described as "third-party obligations," such as those of Alnylam to Basel, Switzerland-based Novartis AG, through the potential $700 million-plus deal entered in the fall of 2005. (See BioWorld Today, Sept. 8, 2005.)

Alnylam came up with the InterfeRx program as a way of licensing target-specific rights to its RNAi-based IP outside Alnylam's focus areas. With its three InterfeRx options, and with liposomal delivery already in-house, INEX owns full freedom to operate - subject only to a royalty for Alnylam, not milestones, Ruane said.

"We have seven years under the agreements to select those [InterfeRx] targets, and we're issuing an open invitation to academic as well as industry collaborators" who might have useful constructs and want to make a deal, he said. INEX could establish joint ventures, make in-licensing arrangements or do the necessary work itself.

"We have the rights to pull the trigger on these options, and there are lots of public and private companies out there that need to get delivery [capability] as well as InterfeRx," he said, adding that INEX also has rights to use the MIT lipids in its three products.

Another piece of the deal involves Alnylam granting to INEX an exclusive license to Alnylam technology and IP around immune stimulatory oligonucleotides, or short sequences of DNA, that don't function through an RNAi mechanism.

"That's something separate [from InterfeRx] they had built early on," Ruane said, noting that INEX already is working in the field of immune stimulation with its lead product INX-0167.

The compound boosts immune cells to enhance potency of monoclonal antibodies such as Rituxan (rituximab) for lymphoma from South San Francisco-based Genentech Inc. and Herceptin (trastuzumab) for breast cancer, also from Genentech.

Data presented in December at the annual meeting of the American Society of Hematology in Orlando, Fla., compared INX-0167 to ProMune, also known as CpG7909, the toll-like receptor 9 agonist from Wellesley, Mass.-based Coley Pharmaceutical Group Inc., partnered with Pfizer Inc., of New York. (See BioWorld Today, Nov. 29, 2005.)

"The data were pretty clear that we were superior to the Coley product in primate models," Ruane said. INX-0167 is aimed for Phase I trials later this year. In the second half of 2007, Alnylam plans to put its lead product, an inhaled formulation of ALN-RSV01 for respiratory syncytial virus, into Phase II trials.

At the conference luncheon Tuesday, David Brailer, former National Coordinator for Health Information Technology, spoke about the medical industry's "unabated cost and affordability crisis."

In the past, inflation in the sector was driven by price increases, he noted. Now, it's dominated by volume increases, with more procedures done on the same group of people - many of whom still die or suffer injury as a result of medical errors.

"It's a tremendous problem, and one that's still a consternation as we go forward," Brailer said. He added that patients "don't know what to do. They report increasing dissatisfaction with all aspects [of medical care]."

A few, though, are taking charge.

"People are beginning to ask tough questions and understand what their options are," Brailer said. "We're seeing the emergence of the radical consumer."

The conference continues through Thursday.