Friday, April 25, 2008

The Business of RNAi Therapeutics

I’m often asked about explaining RNAi and its potential as a therapeutic modality and investment in more layman terms. I hope my review, The Business of RNAi Therapeutics, that came out today in Human Gene Therapy will be able to address at least some of these questions. Although originally written with the scientist in mind asking him/herself about what the development of RNAi Therapeutics may mean as an investment or business opportunity, the science should be pretty digestible and accessible to the scientifically minded lay public. Here’s the abstract, the rest is freely accessible on the Human Gene Therapy website:

Business for RNAi Therapeutics has never been better. The confluence of the genome revolution, a pharmaceutical industry greatly challenged by generic competition and starved for innovation, and pre-existing nucleic acid drug development know-how that can now be directly applied to RNAi Therapeutics, means that RNAi, less than 10 years after its discovery in worms, has every chance of becoming the next major drug development platform for improving healthcare and generating profits at multiple levels. From the perspective of a molecular biologist interested in both basic and applied aspects of RNAi and related investments, I would like to first put RNAi into the context of the drug development enterprise and then discuss various strategies for translating the science of RNAi into commercially viable drugs as well as some of the risks the industry faces. While the discussion will focus on RNAi Therapeutics and the major US and European markets, it should be kept in mind that RNAi is a global effort and holds further commercial promise in agriculture, the research reagent and services markets, and the related area of microRNA-based therapeutics and diagnostics. Read on…here

8 comments:

Anonymous said...

Dirk

this is an excellent paper. Thank you.

Is there any more detailed information available on the terms of the option that Novartis has to purchase nonexclusive and perpetual access to Alnylam's entire RNAi therapeutics IP? (Table 2 , Platform Alliances) Depending on the terms, this could be a powerful instrument for Novartis.

Thanks, Martin

Ohad Hammer said...

Dirk,


Great article.
This is one of the best reviews I've ever read on RNAi. It indeed looks like a very fast maturation path for this field.

Thanks,
Ohad

Dirk Haussecker said...

Thanks everybody for the feedback. It makes writing all the more enjoyable.

Martin,

The original, rather visionary Alnylam-Novartis agreement in September 2005 gave Novartis broad say in which development programs Alnylam or its partners could pursue without Novartis. The initial 3-year term is about to come to an end, but Novartis can extend up to another 2 years. After that Novartis has the NON-exclusive option to integrate Alnylam RNAi IP, apparenty forever, but this would be for additional payments.

Now, a lot has happened in the meantime. If Novartis thinks that RNAi is promising and there is near-term potential, it probably would end up cheaper if they exercised their right now. But how to put a value on it? Since there are now a few therapeutic areas where RNAi Therapeutics can be viewed in more realistic terms (particularly delivery to the liver, cancer, and somewhat lung), it may be best for both parties to orient their follow-up deal on such realities. We shall see. The Annual report for 2005 may be a good source to read up on the deal:

http://www.sec.gov/Archives/edgar/data/1178670/000095013506001651/b58496ape10vk.htm

Anonymous said...

Dirk

I looked into the 10-K for 2005 and for 2007 and both provide pretty much the same information:

"The collaboration and license agreement also provides Novartis with a non-exclusive option to integrate our intellectual property relating to RNAi technology into Novartis’ operations under specified circumstances. In connection with the exercise of the integration option, Novartis will be required to make additional payments to us. Under the terms of the collaboration and license agreement, we retain the right to discover, develop, commercialize or manufacture compounds that function through the mechanism of RNAi, or products that contain such compounds as an active ingredient, with respect to targets not selected by Novartis for inclusion in the collaboration, provided that Novartis has a right of first offer in the event that we propose to enter into an agreement with a third party with respect to any such target."

What this means, however, is uncelear.

Either there are formula-based or firm terms for the license (license fee, royalties on product sales etc.) in the option agreement or there is some sort of wishy washy language on fair value, market terms, to be agreed in good faith and such. I would assume (and hope from an investor's perspective) that it is the latter rather than the former as the former would, in my view, be material to investors from today's perspective and would thus compel a more complete disclosure (at least in the 10-K for 2007). Alnylam's IP estate is from today's perspective probably the company's most valuable asset validated by inter alia the Roche deal and if Novartis had an option to license all of this (past and future) on the basis of firm license terms negotiated in 2005, then one would expect that to be a giveaway (from today's perspective judging by the value tag of the Roche deal).

So I would hope (and expect in view of there being no disclosure) it is something more like the former.

I will try to pose a question to Alnylam investor relations on this and see what I get(not that I would expect anything beyond what is in the 10-K).

Also, I wonder how the priority target selection by Novartis works. Again, the devil is in the detail and one can hardly assess to what extent this ties up the company's hands without knowing more detailed terms.

Martin

Dirk Haussecker said...

Martin-

I agree, there is a lot of things we don't know about the Novartis agreement and that may turn out to be quite material to what happens in the coming months. I still think though that progress in systemic delivery since the initial Novartis agreement will force Novartis to re-new their deal this year instead of opting for an extension:

1) A more advanced RNAi platform should command higher payments compared to today, although we don't know how that would be reflected in the agreement and disappointment with RNAi may prompt Novartis to just walk away, saving them a lot of money in the process.

2) Although Novartis (still) has a lot of influence which targets can be picked by Alnylam and its partners, why pay Alnylam the milestones for target picks if they don't have access to the technology to knock them down in man? Progress with liposomal delivery to the liver and cancer may well force them to exercise the integration option which would then allow them to enter the clinic by gaining access to SNALP via Alnylam. In light of this, the Protiva-Tekmira reunification could be seen as a setup to such a deal.

D said...

Dirk,

Great paper. A quick google search filled in the question marks on Table 1: Senetek is targeting tenascin-C, an extracellular matrix protein.

For anybody who wants more discussion on the RNAi patent landscape, there is an informative nature article in Volume 25, Number 3 of Nature Biotech.

Thanks,
Derek

Dirk Haussecker said...

Seems like my Google skills are not as good as yours. But thanks, Derek, for complementing the table and I look forward to seeing your comments on this blog.

I'm a bit skeptical about this particular program and wonder about the quality of the prelinical work the trial is based on. It appears that all the patients in the trial are doing well, but that certainly did not seem to attract much partnering interest. At this stage, it is important for RNAi therapeutics companies to participate in the scientific discourse, also to increase their credibility.

Catarina Margarida said...

Hello. I´m a student and I have to do a work in the area of siRNA, and I would like to read this paper (Business of RNAi therapeutics, but I can´t acess it. Can you help me in a way that would help me to acess it?

Thank you, Ana Dias.
You can contact me : nicax23@hotmail.com

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