To create a world-leading effort in the field of respiratory diseases, Sirna Therapeutics Inc. and GlaxoSmithKline plc formed an alliance focused on RNA interference-based drugs in a deal worth more than $700 million.

The collaboration is reminiscent of another signed for similar money last September between Novartis AG and Alnylam Pharmaceuticals Inc.

"This is another major deal in the area of RNA interference, and I think it is now becoming very, very clear that large pharmaceutical companies think RNA interference is important," Sirna's president and CEO Howard Robin told BioWorld Today.

Just as recombinant proteins and monoclonal antibodies once offered therapeutic promise, RNA-based drugs could represent a new modality to become "the next major breakthrough in medicine," he added.

San Francisco-based Sirna expects to receive an initial payment of $12 million, half of which will be cash and the other half will consist of stock purchased by GSK at $8.36 per share. On top of that, Sirna may receive milestone payments of more than $700 million, as well as contract manufacturing revenues and royalties on worldwide sales.

"If you look at the clinical milestones, they are exceptionally impressive," Robin said. "A number of these milestones are short term rather than later term. Overall, we're very, very pleased with the way this looks."

The company's stock (NASDAQ:RNAI) rose 13.2 percent Monday, or 89 cents, to close at $7.63.

Under the multiyear deal, London-based GSK gains exclusive rights to optimized and formulated short-interfering RNAs (siRNAs) against targets from both companies. GSK assumes all further preclinical and clinical development costs, and takes on the responsibility of worldwide commercialization of products that result.

Initially, products that come out of the deal will make use of GSK's aerosolized delivery vehicles, but the companies also will work together to find oral therapies. In preclinical animal models, Sirna has "shown already through aerosolized inhalation an 80 percent reduction in airway constriction" with siRNAs, Robin said.

The companies likely will target asthma and later move into other respiratory diseases, a therapeutic area that Robin said "has billions of dollars in market potential." The potential is what sets the deal apart from Sirna's alliance with Allergan Inc., of Irvine, Calif., to develop drugs for ophthalmic diseases, including an early clinical candidate for age-related macular degeneration (AMD). That deal, signed last September, called for an up-front payment of $5 million and development milestones of up to $245 million, as well as research funding and royalties. Since then, the companies have completed a Phase I trial for Sirna-027 in AMD, and plan to move it into Phase II trials this year. (See BioWorld Today, Sept. 30, 2005.)

"The Allergan deal was the first deal that we did in a much smaller market, in AMD, as well as ocular," Robin said. "This deal [with GSK], of course, has a much different market potential," considering asthma is one the largest drug markets in the U.S.

"As time goes on, as we continue to validate the importance of siRNA technology," he continued, "you will start to see future deals from Sirna Therapeutics become substantially larger than this one."

Unlike the Novartis and Alnylam deal, Sirna is not restricted from partnering its programs with other companies for indications outside of respiratory diseases. If Alnylam wants to seek more partners for other programs, Novartis has the right of first offer.

"We are focused only on respiratory disease," Robin said. "So we have not given GSK the right to look through our entire portfolio and pick any target. Nor do they have a right of first negotiation to the work that we do."

Basel, Switzerland-based Novartis entered the deal with Cambridge, Mass.-based Alnylam a few weeks before the Allergan and Sirna deal was announced in September. It included $56.8 million in initial payments, which included the purchase of 19.9 percent of Alnylam's outstanding shares. In total, the deal with milestones is worth more than $700 million. (See BioWorld Today, Sept. 8, 2005.)

"From an economic point of view, the milestone potential is just as large" as Sirna's deal with GSK, Robin said. "I think the up-front payments from a cash point of view are essentially the same. From an equity point of view, [ours] is considerably less," but Sirna was not looking to sell a significant amount of the company.

GSK's $6 million equity investment in Sirna will give the pharmaceutical company about a 1 percent stake.

Sirna has not disclosed which targets are part of its deal with GSK. Its respiratory disease programs are focused on P38, interleukin-4 and interleukin-13, among others, but GSK - which can select more than one target - has not specified any yet.

"It may be one of those targets," Robin said. "It might be a target we haven't shown any data on yet."

Aside from its AMD product partnered with Allergan, Sirna has one other product nearing the clinic - Sirna-034 for hepatitis C. The company hopes to start Phase I trials by the end of this year.

Sirna Receives First U.S. siRNA Target Patent

Separately, Sirna released news that the U.S. Patent and Trademark Office would issue patent No. 7,022,828 today covering any chemically modified siRNA targeting I Kappa B kinase-gamma (IKK-gamma).

"What's really impressive about this patent is that the claims of the patent are not limited to any specific siRNA sequence, but cover any siRNA sequence used against the gene," said Bharat Chowrira, Sirna's vice president of legal affairs and chief patent counsel.

IKK-gamma is an activator of the NF-kappaB pathway, a mediator of diseases such as asthma, arthritis, cancer, chronic inflammation, neurodegenerative diseases and heart disease. Although it could be a target for asthma therapies, the timing of the patent announcement "has nothing to do with the GSK deal," Robin said.

It is significant because it sets a precedent for the other 250 gene targets for which Sirna has filed similar patents.

The issued patent "radically changes the playing field," said Sirna's senior vice president of corporate development Michael French, adding that the patent is not limited to a specific type of chemical modification or structure.

"It is unique in that we have in many ways, we believe, locked up much of the field," he said.