Alnylam, Tekmira Look Ahead After RNAi Divorce

11/14/12Follow @xconomy

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in trouble. “I suppose there are people in the industry who thought [the lawsuit] wasn’t a good idea. I felt, and the people around me felt, it was essential for the survival of the company.” He added: “A lot of the value in our business is based on our intellectual property. We need to remember that.”

Even though Alnylam is writing a $65 million check to settle a case it considers “meritless,” Maraganore insists that his company is getting some of what it wanted too. That’s because the new agreement calls for Alnylam to pay Tekmira some extra upfront cash, while sacrificing some bigger money it could have collected in the long term. Alnylam had previously agreed to pay Tekmira a “low single digit” percentage royalty on sales of products that use the Tekmira delivery technology, but the new agreement ratchets that royalty down to a “very low single digit” percentage, Maraganore says. And while the old agreement called for Alnylam to pay as much as $16 million, per product, in milestone payments to Tekmira for hitting certain development goals, the new agreement lowers the milestones to $5 million per product for drugs that treat transthyretin-mediated amyloidosis and liver cancer, and “basically zero” for other products in Alnylam’s pipeline, Maraganore says.

The reduced royalties and milestones make this “an attractive economic proposition for us,” Maraganore says. And even after writing checks for $65 million, Alnylam still has plenty of cash to run its business. It expects to end the year with more than $215 million in cash.

But now each company is on its own, and can’t count on the other side for help. Instead of relying on Tekmira as a contract manufacturer, Alnylam plans to focus on doing in-house manufacturing of the lipid-nanoparticles that it needs to deliver RNAi drugs into cells. The company has been building up that capability for a year, he says, and it has enough capacity to make batches of its lead drug candidate ALN-TTR02 for clinical trials, and into “early commercialization” of the product, Maraganore says. Alnylam also has been focusing on building up internal R&D strength for RNAi delivery. Alnylam’s in-house delivery group developed some new technology that is enabling it to start the first clinical trials later this year with an RNAi drug can be given through a subcutaneous injection—which goes just beneath the skin and is generally more convenient than intravenous delivery.

Tekmira, for its part, has been seeking to recast itself as a drug developer in its own right, not just a technology company that out-licenses RNAi delivery systems. Tekmira plans to use a new lipid nanoparticle technology in its TKM-PLK1 cancer drug candidate, which Murray says is 10 times more potent than earlier delivery technologies it developed and licensed to Alnylam. That drug is supposed to enter a mid-stage clinical trial in 2013.

Plus, Tekmira caught a fortunate break last month when the U.S. Department of Defense decided to keep funding an antiviral drug that Tekmira is developing to counteract the deadly Ebola virus. The U.S. military threatened to drop the program in August because of budget cuts, but decided in early October to keep supporting Tekmira’s work, while dropping another program it had supported at Cambridge, MA-based Sarepta Therapeutics (NASDAQ: SRPT).

Murray also says that Tekmira’s RNAi delivery technology is on the leading edge in the field, and that by settling and clarifying its dispute with Alnylam, it will now be in a better position to license it to other pharmaceutical companies. Any new licensing deals presumably won’t include Alnylam. As Maraganore put it: “This is, in many ways, a divorce. We don’t intend to work with them [Tekmira] in the future.”

Both Murray and Maraganore agreed on one thing—they are both glad to see the litigation come to an end, so both companies can concentrate more of their time and attention on drug development. Maraganore said that the case probably consumed one-fourth of his time in the past couple months. Plus, both executives said they believe the settlement will clarify ownership of key RNA intellectual property, which will remove some uncertainty that had been hanging over the field.

“It’s certainly good for the whole RNAi field that this lawsuit is over. It would have been better for the RNAi field if this lawsuit had never been started,” Maraganore says.

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