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The RNA interference field, although growing, is young - the clinic is still a blip on the horizon. However, on Tuesday the industry saw the first pharmaceutical-biotech deal centered on the technology and witnessed another RNAi leader firming up its intellectual property portfolio.

Alnylam Holding Co., of Cambridge, Mass., formed a collaboration with Merck & Co. Inc., of Whitehouse Station, N.J., to develop RNAi-based therapeutics and technology.

And Sirna Therapeutics Inc., of Boulder, Colo., which has been working in the ribozyme field since its name was still Ribozyme Pharmaceuticals Inc., strengthened its siRNA intellectual property by entering a worldwide license agreement from the University of Massachusetts Medical School for its "undivided interest" in RNA interference IP. (See BioWorld Today, April 18, 2003.)

While there are plenty of companies pursuing and interested in RNAi, including CytRx Inc., as that young section of the biotechnology industry matures, those two names - Sirna and Alnylam - keep popping up.

Pharma Buys Into RNAi, Alnylam

The Merck agreement "is the first deal for Alnylam and the first deal for RNAi therapeutics," said John Maraganore, CEO and president of Alnylam. "The collaboration has two components. First is therapeutics, which is the main part of the deal."

Merck will provide privately held Alnylam with drug targets that it has validated as having a role in disease. It will be Alnylam's job to develop RNAi compounds against the targets and advance them through preclinical development. Once through preclinical, the companies will decide whether to take the compounds forward alone, separately, or in the worst-case scenario, not at all.

"After preclinical, Merck has an option to come back in and pay a milestone fee as well as enter into a co-development and co-promotion relationship" with Alnylam, Maraganore said. There also is a scenario where Merck would move the compounds along, and Alnylam would receive royalties.

The second part of the agreement calls for the companies to both work toward the continued development and advancement of RNAi technology. Any IP that comes out of that work would be co-owned by Merck and Alnylam, but exclusively licensed to Alnylam for therapeutic uses.

Merck will make an up-front payment, annual cash payments and an equity investment. Alnylam could earn another cash payment and equity investment through the achievement of a milestone. For each candidate that Merck decides to help develop, Alnylam would receive further payments. Also, Merck receives a co-exclusive license to Alnylam's intellectual property for use in in vitro and in vivo target identification and validation.

Although unwilling to disclose what percentage of Alnylam Merck has the potential to purchase, Maraganore said it's a "significant equity investment" but "it's not a controlling interest."

Senior management often talks about agreements "validating" platforms, approaches or business models. In the case of Alnylam, that might be particularly true given the young, uncharted territory into which Merck is sailing.

"Alnylam has for some time felt that building up the intellectual property is a critical part [of this field]," Maraganore told BioWorld Today. "Merck's deal with us was done after a very significant due diligence on our IP estate."

In July, Alnylam merged with the German firm Ribopharma AG, consolidating the companies' RNAi knowledge. Maraganore noted that as the space has matured, there has been "a fair amount of confusion" about who has the leading IP position in RNAi technology. (See BioWorld Today, July 8, 2003.)

"The Merck deal helps clarify that confusion," he said.

Sirna Firms Up Intellectual Property Position

When you think of RNA interference, you think Fire and Mello - the two scientists who discovered the technology in 1997. Craig Mello worked at the University of Massachusetts Medical School and Andrew Fire at the Carnegie Institute in Washington, so when considering where to go for the intellectual property behind the technology, some see UMMS as the default destination. The truth, said Sirna CEO Howard Robin, is bigger than that. Although the deal with UMMS got Sirna the school's full interest in the technology, "the [RNAi] IP was developed at UMass but also at the Whitehead Institute, Max Planck Institute and the Massachusetts Institute of Technology - all four of those have full ownership," he said.

Each entity has the full range of that RNAi IP in its portfolio, so while Alnylam has complete access to Max Planck's IP, "UMass has licensed [its IP] to us," Robin said. The IP Alnylam and Sirna have, he said, now are "identical."

The one small difference is that CytRx Corp., of Los Angeles, in April said it licensed from UMMS RNAi intellectual property relating to Type II diabetes, obesity and cancer. For those areas, then, Sirna has a nonexclusive license, but every other area is exclusive. (See BioWorld Today, April 22, 2003.)

While Robin mentioned that Alnylam is "a good group" and characterized Maraganore as a friend, what sets Sirna apart from the competition, he said, is its history working with the ribosome and "about 80 other patents issued or pending that cover siRNAs. And we have probably 50 patents on mammalian and viral gene targets. I think that gives us a formidable IP estate at Sirna."

Through the agreement, UMMS will receive licensing fees in cash and common stock, with the potential to receive more of both through the achievement of certain undisclosed milestones. The total potential stake is not enough to be controlling, but would make the school a "significant shareholder," Robin said. The school also would receive royalties, and the two would share revenues generated from the sublicensing of the patent - because Sirna has every intention of licensing it out to others.

"This is a technology that is going to probably be very important," Robin told BioWorld Today. "Large pharma is clearly interested in siRNAs. I don't have to maintain this technology strictly for Sirna. We have lots of IP and lots of great scientists that give us a strong position."

The challenge today for RNAi is the delivery method and making therapeutics stable, because as Robin put it, "You can't make a therapy with a half-life of 10 minutes." Sirna has made progress, he said, but the stability problem is not licked yet. However, in the next year, he'd like to see Sirna with an investigational new drug on file, most likely for either macular degeneration or hepatitis C.

"We have been able to make excellent progress in administering this subcutaneously and are seeing great kinetics," he said. "I'd like to be close to entering the clinic."

Sirna's stock (NASDAQ:RNAI) rose 82 cents Tuesday, or 15.9 percent, to close at $6.

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