Tekmira Sues Alnylam for $1 Billion, Accusing Partner of Misusing RNAi Trade Secrets

3/16/11Follow @xconomy

[Updated 10:40 am ET, with Alnylam response] Tekmira Pharmaceuticals, the Vancouver, BC-based maker of technology to deliver RNA interference therapies, has filed a lawsuit against Cambridge, MA-based Alnylam Pharmaceuticals seeking damages of more than $1 billion because of what Tekmira’s CEO calls “relentless and egregious” misappropriation of trade secrets.

Tekmira filed the legal complaint (see full document) in the Business Litigation Session of the Massachusetts Superior Court, near Alnylam’s home turf in Cambridge, MA. Tekmira accuses Alnylam (NASDAQ: ALNY) of “misappropriation and misuse of trade secrets, know-how, and other confidential information,” as well as “unfair and deceptive trade practices, unjust enrichment, unfair competition, and false advertising,” according to a statement Tekmira released today after markets closed.

Mark Murray, Tekmira’s CEO, described what led to the litigation in a brief conference call this afternoon, in which he didn’t take any questions. The two companies have been partners for years, as Alnylam is considered one of the leaders in RNA interference therapy—which seeks to specifically silence disease-related genes—while Tekmira is a leading developer of lipid nano particle delivery technologies that are thought to help get the RNA-silencing therapies where they need to go in cells. The two companies struck a formal licensing agreement in 2007, followed by a further manufacturing supply deal in 2009. Delivery of RNAi treatments, scientists say, remains one of the major challenges that must be solved for this field to reach its potential in fighting diseases that aren’t adequately treated by today’s small molecules or protein therapies.

Over time, Tekmira alleges, Alnylam has misused the information it obtained under the agreements, which provided Alnylam the right to use the lipid nanoparticle technology. Tekmira claims that Alnylam abused its status as a collaborator by attempting to copy the Tekmira methods for its own proprietary delivery technology, and by sharing Tekmira’s delivery technology with a third party without Tekmira’s consent. Alnylam has sought patent protection on some of the methods which Tekmira has already patented, Murray said on the conference call.

Despite repeated requests for Alnylam to stop, Murray said in the conference call, “This illegal activity continues today.” Tekmira’s current lipid nanoparticle technology represents $200 million of cumulative investment over the years. And, the technology is vitally important to Alnylam as it is the method the Cambridge firm uses to deliver its lead RNAi drug candidate that circulates through the bloodstream—ALN-VSP for liver cancer.

“We concluded enough is enough,” Murray said on the conference call. In the statement, he said, “Tekmira’s goal for this litigation is to regain—as soon as possible—control over our proprietary lipid nano particle technology and preserve its full value.”

Tekmira said it hopes to achieve a “timely resolution” to the legal battle, and noted that it chose the business court in Massachusetts because it intends to reduce the time and expense of such complex business litigation. The hope, Murray said, is that a resolution can be reached in 12 months or less, although that can’t be guaranteed. Still, Tekmira said it doesn’t expect the litigation to alter its financial forecast for 2011.

[Update, with Alnylam response] Alnylam issued a statement this morning. Excerpts below:

“Alnylam has had a longstanding relationship and business partnership with Tekmira dating back to at least 2006, which includes significant past and ongoing funding of Tekmira as well as a significant equity position held by Alnylam in Tekmira. Alnylam received no prior notification of this complaint or dispute.”

“We firmly believe that the complaint filed by Tekmira is without merit or foundation, and we intend to fully defend ourselves in this matter,” said Barry Greene, President and Chief Operating Officer of Alnylam, in the statement. “Given the longstanding supportive and fully collaborative relationship we have had with Tekmira, it is surprising and extremely unfortunate that they have chosen to voice concerns through unexpected litigation rather than constructive business dialog, and to shift resources away from the scientific and clinical advancement of RNAi therapeutics, which should be the sole focus at this time.”

“As part of the communication to Alnylam regarding the filed complaint, Tekmira has stated that it will meet its contractual obligations related to the manufacturing of certain Alnylam development-stage and clinical pipeline products. Alnylam is maintaining its guidance regarding the company’s pipeline, partnership, and cash goals.”

“Since 2007, Alnylam has provided over $45 million in funding, including equity purchases, to Tekmira and provided approximately $6 million in manufacturing-related funding in 2010 with similar levels expected in 2011. In exchange, Alnylam has obtained broad license rights to Tekmira intellectual property in addition to exclusive rights, with the sole right to sublicense, to many patents and patent applications including the so-called “Semple” and “Wheeler” patent families (Semple U.S. Patent No. 6,858,225, and Wheeler U.S. Patent Nos. 5,976,567 and 6,815,432). In addition, Alnylam maintains exclusive research and discovery collaborations on novel lipid nanoparticle (LNP) formulations through agreements with AlCana Technologies, Inc., The University of British Columbia, and the Massachusetts Institute of Technology.”

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