Less than a year after Alnylam Pharmaceuticals Inc. partnered with Merck & Co. Inc. to develop RNA interference-based therapeutics, the companies established a new, more specific alliance focused on ocular diseases.

As part of the multiyear collaboration, the companies will develop and commercialize RNAi therapeutics for diseases such as age-related macular degeneration (AMD) and other conditions caused by abnormal growth or leakage of small blood vessels in the eye. They expect to enter the clinic with the first therapy for AMD in the second half of 2005.

"This alliance will provide us with the resources and capabilities to accelerate the development of our Direct RNAi therapeutics that are administered directly to the eye," said John Maraganore, president and CEO of Alnylam, "enabling us to address important diseases, while allowing us to use our current technology to build our clinical pipeline."

Alnylam's stock (NASDAQ:ALNY) climbed 46 cents Wednesday to close at $7.56. The company conducted its initial public offering in May, selling 5 million shares at $6 apiece to raise $30 million. (See BioWorld Today, June 1, 2004.)

Cambridge, Mass.-based Alnylam expects to receive an initial cash payment from Merck, as well as additional milestone payments, for a total of $19.5 million. The companies will jointly fund development and share profits of resulting RNAi therapeutics that reach the U.S. market. A joint steering committee will oversee development. Alnylam retains an option to co-promote therapeutics in the U.S. and would receive royalties on any sales in all other countries worldwide.

Vincent Miles, Alnylam's senior vice president of business development, told BioWorld Today that the option to co-promote in the U.S., if exercised, would enable Alnylam to use Merck's expertise in building its own sales force.

Regardless of whether it exercises that option, Alnylam keeps a profit-sharing arrangement, instead of a royalty rate, for U.S. sales.

"The structure of this agreement allows us to retain high value and downstream commercialization rights to the products generated through this collaborative effort," Maraganore said Wednesday.

Miles said the agreement prevents him from breaking down the $19.5 million or giving more detailed financial terms. But he did say the companies plan to move additional ocular disease candidates into the preclinical setting, building a pipeline behind the lead AMD therapy.

Last September, Whitehouse Station, N.J.-based Merck and Alnylam entered the first major biotech-pharmaceutical collaboration focused on RNAi therapeutics. RNAi technology uses a natural biological mechanism to inhibit the expression of, or to silence disease-causing genes.

"Our therapies leverage the natural RNAi mechanism to selectively suppress genes that produce proteins that play harmful roles in human disease," Maraganore said.

Alnylam and Merck aim to apply the technology to develop drugs that selectively target human diseases. They will continue the broader collaboration begun last year, finding therapies for various indications, while also working on the more focused ocular agreement. (See BioWorld Today, Sept. 10, 2003.)

AMD affects more than 1.6 million adults older than 50 in the U.S. The condition causes severe deterioration of vision and can cause blindness. It results from the presence of leaked fluids and new blood vessels behind the retina that disrupt the integrity of the macula - the central area of the retina that is responsible for sharpness of vision.

"This is clearly an area where more effective treatments are greatly desired by patients and clinicians," Maraganore said.

Alnylam's lead product for AMD targets the protein vascular endothelial growth factor (VEGF). The company believes an RNAi therapeutic in AMD would have strong benefits over competing therapies, such as Lucentis and Macugen.

"These competing therapies work in a different fashion," Maraganore said. "They work by binding to VEGF, thereby inhibiting the angiogenesis process. Alnylam is leveraging the RNA interference to inhibit the production of VEGF at the RNA level."

In other words, Alnylam's therapy is trying to "turn off the spigot" that produces VEGF, while other therapies "are mopping up VEGF after it has been produced," he said.

With plans to enter the clinic next year, Alnylam expects to present preclinical data on the AMD candidate at the annual meeting of the American Academy of Ophthalmology conference in October.

Eyetech Pharmaceuticals Inc. and Pfizer Inc., both of New York, are developing Macugen. The companies filed a new drug application for the therapy as a treatment for wet AMD earlier this month. Genentech Inc., of South San Francisco, is developing the Phase III product Lucentis. Another potential competitor could be Vancouver, British Columbia-based QLT Inc.'s Visudyne, which was approved in 2000 to treat the classic form of wet AMD. However, Visudyne is a photodynamic therapy that works by a different method than Alnylam's therapy, Lucentis and Macugen.

Founded in 2002, Alnylam is developing a pipeline of RNAi products using two applications: Direct RNAi, to treat ocular, central nervous system and respiratory diseases; and Systemic RNAi, to treat oncologic, metabolic and autoimmune diseases. Initially, the company is focusing on Direct RNAi therapeutics for AMD, as well as Parkinson's disease.

Going forward, Alnylam has a goal to sign another strategic alliance for its research programs with a major pharmaceutical company over the next 18 months. Miles declined to say in what area that partnership might focus.

Alnylam's IPO in May marked the industry's 16th biotech IPO in the U.S. this year. The $30 million raised was well below the company's original intention to bring in $86.25 million.

As of March 31, the company had $24.3 million, not including proceeds from the IPO. Its net cash burn rate is about $5 million a quarter.

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