Just after AstraZeneca dipped its toes in the research pool that is RNA interference (RNAi), Roche has dived in head-first and signed a deal worth over $1 billion with the USA's Alnylam Pharmaceuticals.
The Swiss drugs giant has obtained a non-exclusive licence to Alnylam’s technology platform for developing RNAi therapeutics covering oncology, as well as respiratory, metabolic and liver diseases. Roche will also acquire Alnylam's European research site (and 40 staff) at Kulmbach, Germany, which will become its Center of Excellence for RNAi therapeutics discovery. The latter is considered to be one of the hottest new areas of drug research and resulted in last year's Nobel Prize in medicine for the two discoverers of the technology, Andrew Fire and Craig Mello.
However access to Alnylam’s wares does not come cheap. Under the terms of the deal, Roche will fork out $331 million upfront in cash and equity investment, including a stake of 1.975 million shares at $21.50 each, or just less than 5% of Alnylam's outstanding common stock. The value of the agreement could rise to over $1 billion, depending on future product milestones and field expansion payments, and that figure excludes potential royalties on sales of commercial products.
Explaining Roche’s desire to move into the field, head of global pharma research Lee Babiss said that “Alnylam has made significant advances in RNAi therapeutics, one of the most promising approaches to tomorrow’s healthcare technology” and the alliance “provides us with new capabilities to target complex diseases within our focus areas”. John Maraganore, Alnylam’s chief executive, claimed that “such significant support from Roche” will strengthen his firm’s efforts “to build a leading innovation-based biopharmaceutical company”, adding that the pact “greatly extends our leadership position in the discovery and development of RNAi therapeutics”.
There are however other companies making considerable strides in RNAi and AstraZeneca has just signed a £200 million deal with one of them, Silence Therapeutics, while Merck & Co acknowledged the importance of the technology last October when it acquired Sirna Therapeutics for $1.1 billion. RNAi is a naturally occurring mechanism within cells and potentially forms the basis for a new class of therapeutic products that can selectively silence genes within the cell. Since many diseases are caused by the inappropriate activity of specific genes, the ability to regulate such genes selectively through RNAi has led to great excitement in the scientific community.
The response to deal from analysts has been cautious and Denise Anderson at Kepler Equities noted that the price, especially the upfront payment, looks pretty high, given that RNAi technology is still in its early stages and the market capitalisation of Alnylam is less than $600 million. However the latter firm is not complaining and investors flocked to the stock, pushing it up 52% to $23.12. Alnylam currently has alliances in place with Merck & Co, Medtronic, Biogen Idec and interestingly, Roche’s rival Novartis, which bought a 19.9% stake in 2005.