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12:00 AM
Jul 16, 2007
 |  BioCentury  |  Strategy


Last week's deal between RNAi company Alnylam Pharmaceuticals Inc. and Roche will provide a big bolus of non-dilutive financing that ALNY will put to two uses: moving its pipeline through the clinic and working on the drug delivery technologies required to deliver RNAi therapeutics.

The deal thus gives Alnylam leverage to add value in the near term through clinical proof of concept and to solve technical issues in the delivery of its molecules.

But more importantly, the deal preserves ALNY's transformational potential by retaining future options to continue to monetize the company's RNA interference platform as it ripens.

The specifics

ALNY (Cambridge, Mass.) granted Roche (SWX:ROG, Basel, Switzerland) a non-exclusive license to RNAi technology in four disease areas for $331 million in upfront cash and an equity investment. The $288.5 million in up front money includes $15 million to purchase ALNY's research facility in Kulmbach, Germany. The facility focuses on discovery research and lead generation.

ROG also will make a $42.5 million investment in ALNY, which is eligible for undisclosed milestones, plus royalties. The pharma is taking a 5% stake through the purchase of 2 million shares at $21.50, a 41% premium to ALNY's close of $15.20 on July 6, the last trading day before the deal was announced.

The deal covers cancer, pulmonary, metabolic and liver diseases, and the companies also will collaborate to discover RNAi therapeutics against undisclosed targets in the four disease areas. But the deal excludes ALNY's core disease areas in cardiovascular, autoimmune and CNS and infectious diseases.

ROG may expand the deal to include other indications for additional undisclosed expansion payments. In total, the partners said the deal could fetch more than $1 billion.

Isis Pharmaceuticals Inc. (ISIS, Carlsbad, Calif.) will receive $26.5 million from ALNY under a 2004 deal in which ISIS granted ALNY a license to IP for double-stranded oligonucleotide therapeutics that mediate RNAi. ISIS also is eligible for milestones and royalties (see BioCentury, Oct. 25, 2004).

Moving to broader deals

Despite the size of the deal on paper, ALNY President and CEO John Maraganore noted ROG is only licensed under ALNY's existing IP. Thus, if the pharma...

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