Tuesday, May 27, 2008

More Reflections on Alnylam-Takeda Deal

Maybe because of recent multi-billion dollar write-offs by the financial industry, the wizards on Wall Street do not consider $100+50M in upfront payments for a non-exclusive, non-dilutive platform alliance deal for just two therapeutic areas and multiple opt-in opportunities worthy of their attention, but this may have been Alnylam’s best deal yet. Congratulations to the entire team at Alnylam that made this possible and for energizing a global and coordinated effort to bring RNAi-based Therapeutics to patients!

With the strong financial position thus secured, for future deals we should expect to see a gradual shift from upfront cash-loaded deals towards those with a focus on the long-term strategic goal of maximizing the upside from the actual sale of RNAi Therapeutics. Opt-in rights, including the option to wait until the rather late stage of phase III trial start and yet gain 50:50 US co-development rights for promising drug candidates, are an important component of that strategy. And while we haven’t heard about the royalty rates, they should be “significant”.

Alnylam’s achievement of pioneering such a wide-reaching platform licensing strategy is both envied but at the same time also respected and admired by its peers, and unprecedented for biotech, including competing nucleic acid platform technologies, and points towards an important part of the future of drug development. In the words of John Maraganore, RNAi has become the big thirst quencher for innovation by the pharmaceutical industry, and Alnylam’s know-how and IP are the beer and tap for that.

Novartis looks to be the next to order a drink from Alnylam’s bar as it is now likely that it will exercise its right to more recent IP and enablement to put it on par with Roche and Takeda. Although the conversion of Novartis’ relationship with Alnylam is on pre-negotiated terms and will not necessarily follow the current $50M price tag per non-exclusive therapeutic area, John Maraganore assured analysts and investors that they were unlikely to be disappointed, especially since double-digit million dollar platform deals do not justify any more Alnylam’s deal efforts. After Novartis, the question then begs as to which US pharmaceutical is keen to gain first access to Alnylam-enabled near-term RNAi Therapeutics opportunities.

For those interested in following further developments in this story including the mechanics of Alnylam’s platform alliances, tomorrow’s special Annual Shareholder Meeting by Tekmira which will seal its reunification with Protiva and whose delivery technology is driving many of these first generation RNAi Therapeutics platform deals, is the place to turn your attention to.

Clarification: In my earlier post, I suggested that the $50M “near-term technology transfer payments” may be due if not as early as tomorrow on the close of Tekmira and Protiva, when Tekmira and Takeda will finalize their relationship. While much of the $50M may still relate to SNALP-RNAi, the company has now guided that the amount will be paid out, largely under the control of Alnylam, within 36 months and I guess could also be partly for tax efficiency purposes.


Anonymous said...

Hi Dirk

the market reaction to the Takeda deal demonstrates how irrational investors act at times.

Obviously, investors were keen on seeing upfront fee that beats Roche and were disappointed with the "meager" 100M+50M.

However, bringing in more upfront fee cash than Alnylam needs to fund its R&D and operations would be irrational. Assuming that Alnylam's funding is now secured for the next couple of years (and it is a reasonable assumption to make), it makes more sense to go for the potentially much more lucrative downstream rewards(e.g. the late stage 50/50 opt in rights), rather than to hoard cash from upfront fees that you don't have any productive use for.

The choice of Takeda is also interesting from a geographical point of view.

First, Alnylam now has big pharma partners in Europe and in Asia. While this secures funding and technology validation, it appears to leave room for a deal in the US should an interesting opportunity arise. I wonder if this is a product of coincidence or of some strategic thinking.

Second, can there be some other benefits from the geographical dimension? The one thing I do not quite understand - and perhaps you can comment - is whether this brings any benefit in terms of applying for the first approval a drug in Japan/Asia or Europe or conducting clinical trials there. Is the length and cost of the process there comparable to that in the U.S.? Or may there be some other benefits from having a particular drug approved in Europe and/or Asia in advance of the US (e.g. the recent tightening of cholosterol drugs criteria by the FDA that hit ISIS' mipomersen timeline).

Finally, the deal should help further leverage Alnylam's technology as Alnylam will stand to benefit from furhter research that may be applicable to other areas not covered by the alliance. The fact that Alnylam will now be the focal point of know how generated by well-funded research with three different big pharma partners base on its technology provides the opportunity to accelerate away from competitors.

On a more off topic note, I was quite surprised by the potential of an RNAi therapeutic for Malaria. This would appear to indicate that indirect approaches directed at host rather than the pathogen itself may have broader application possibilites than (at least I) thought possible.



Anonymous said...

One more thought on the deal.

The agreement provides for a "cross-license of delivery technologies between the two companies". This may be actually an important feature of the agreement given how gating delivery appears to be for the expansion of RNAi therapeutic applications.

Dirk, is there anything known about Takeda's ability to contribute to the delivery research?


Dirk Haussecker said...


You make a number of interesting points and raise some questions that I do not all have an answer for. The market reaction to the Takeda deal is yet another proof of a market manipulated by aggressive short-selling, mostly by hedge funds (the declared short interest for ALNY is around 20% and growing). Short selling is an instrument for and by the financial industry and has little to do with efficient markets. I hope that like the excesses of the mortgage industry the bubble will eventually burst and lead to regulatory reform since we all know now that unlimited borrowing and forging of shares cannot be sustained forever.

You ask whether Takeda’s presence in Asia may allow Alnylam to accelerate clinical development. This is possible particularly as the agreement includes mutual co-development options. I could imagine e.g. Takeda to be particularly interested in Alnylam’s, but also TKM’s RNAi Therapeutic candidates for liver cancer, a prevalent disease in Asia, and for which Takeda may be an ideal development partner. On the other hand, there are so many potential targets for liver cancer through RNAi’s ability to target virtually any protein-coding gene that it is possible that Takeda will choose its own champion into which Alnylam may opt in.

I’m also curious about which delivery technologies the companies will cross-license. SNALP RNAi seems obvious, but you probably wonder what Takeda will bring to the table. I can only guess here, but my impression is that there have been an increasing number of RNAi delivery papers from Japanese groups and it is possible that some of them have ties with Takeda, although this is pure speculation. These include both siRNA conjugation and targeted liposome approaches. An example of the latter is the Sato et al. paper on the targeted delivery of liposome-siRNAs by Vitamin A to hepatic stellate cells which are central in liver cirrhosis (http://www.nature.com/nbt/journal/v26/n4/abs/nbt1396.html; and recently reviewed on this blog: http://rnaitherapeutics.blogspot.com/2008/04/journal-club-therapeutic-rnai-delivered.html) and that would be complementary to Tekmira’s SNALP-RNAi technology.

Thanks again for your contribution to this blog,

Dr. Neugenes said...

Did you ever consider that the market may be rational and the big, desperate, cash rich big pharmas might be the ones who are irrational? Like betting hundreds of millions on a technology that mostly has only pre-clinical data to support its potential as well as a Nobel Prize and a bunch of excited scientists?

And, please don't point to the RSV data as proof of potential. If antisense achieved those results their shares would have tanked and rightly so. Could they have designed a trial that had a better chance of guaranteeing some level of success (and the success they achieved was weak). Do you think there is any comparison to the siRNA companies going after macular degeneration as the antisense guys originally did? And the antisense drugs didn't get into the cells either, as Dr. Ambati clearly stated, although the RNAi party crowd doesn't want to debate that reality. What a shocker, big, heavy and negaively charged...siRNA should just slide right in! :-)

Hedge fund guys who short companies are betting that the irrational people are the ones who are so biased in their beliefs that they can't see the coming pitfalls and problems due to their conviction that this has to work. The rational people know this is going to be a bumpy ride and there are more things that can knock these stocks then can prop them up. It will take another year for siRNA credibility dollars to be used up, then look out. Maybe at that point, they will have their holy grail of delivery. But at what cost...and will specifity issues truely have been worked out? Will they still be chasing local delivery targets because of these issues? Will the FDA become concerned about safety in any indication where prolonged dosing is required? And on...and on.

USAMRIID has published papers using morpholinos against Ebola in over 1,000 mice using 1,000 times the lethal dose. Not a single mouse died. Dr. Kay published a paper on siRNA and the headline was...dead mice. The very thing the RNAi backers have come to love about siRNA (its natural elegance) may at one point turn out to be its biggest limitation. Rational people don't blindly assume all issues will be surrmounted because "big pharma says so". Rember the Eli Lily Isis deal? Guess that meant antisense was going to work? Or all the money bet on Genta? A Nobel Prize can do wonderous things...including irrational exuberance that extends beyond investors and into the biz dev and m & a guys in big pharma. And blog writers at a university that has multiple professors who are engaged in RNAi research and consulting funded by RNAi companies or their big pharma partners. Just a dose of reality for all the Koolaide drinkers :-)

Dirk Haussecker said...

Dear Dr. Neugenes,
It appears that you did not read the Ambati paper fully, or did not understand it fully, and you clearly misinterpret "Dr. Kay's" studies. Note that the Ambati paper also showed that cholesterol-conjugated siRNAs entered cells and had an anti-angiogenic effect in TLR3 knockout mice.

As to the Ebola studies, I think there is an interesting rivalry going on within USAMRIID, and between AVI and Alnylam/TKM. Results from both technologies are promising. But remember, Dr. Neugene, while AVI's monkey studies with morpholinos were a pre-treatment model, Protiva-TKM's RNAi studies in guinea pigs were highly successful in a post-infection model, in a setting similar to what one would apply say in a laboratory needle-stick accident.


Dr. Neugenes said...


I know putting down the Koolaide can be hard, but please try. First of all, I read the paper. Second, the fact that I clearly stated my knowledge of the many approaches of enhancing delivery makes your statment incorrect. The issue is that Alnylam's lead candidate on RSV isn't using that method. Yes or no? If they are not, then it is my strong opinion that this program will fail, as did all of the first generation antisense chemistries. This is a buy time program, nothing more. And we both know how the issues related to off target effects are real. They aren't going away because of a simple surrmounting of one issue as there are other issues here including specifity that don't go away with delivery.

And my comments on Dr. Kay were what they were. There are issues with this technology, which he clearly pointed out. You say they are surrmountable and I say if we were in a court of law, there is a beyond a reasonable doubt based on the evidence that the modifications to avoid off target effects may in turn limit effectivess, so it will be interesting to see how it plays out. I am beyond skeptical.

And, in a debate like this, what always really frustrates me is when those who are so one sided in their opinion and biased in their views, don't provide correct information and data. You might want to rethink your statement about siRNA versus morpholino based antisense use at USAMRIID targetingg Ebola. The only rivalry going on there is based on money and funding, not actual scientific results. In fact, your statement is factually untrue and I can prove it quite easily.

Please follow this link and download this PDF of a presentation by USAMRIID at a NIH meeting earlier this year.


If you honestly took the time to read this and knew the players and work happening there, you would know that USAMRIID has publicly announced 100% survival of non-human primates using PPMO's delivered one hour after challenge. You would also know that this work has now progressed and has reached the 2 to 3 day post challenge delivery of PPMO to get the same result in non-human primates.

In the same presentation, you can see where they are with siRNA. Not even in the same ballpark. There is no way in hell siRNA is going to deliver a result like that anytime soon. Would love to hear your retort or debate. You may also want to download the transcript from this meeting and hear the details of how advanced USAMRIID's antisense programs are versus siRNA. siRNA is getting them more dollars to play with, PPMO's are getting results.

Dirk Haussecker said...

Dear Dr. Neugene- I have to agree that you are intimately familiar with AVI's hemorrhagic fever virus programs, but that you take advantage of this by posting a rebuttal that is mis-leading on many counts (see below).

You state "The only rivalry going on there is based on money and funding, not actual scientific results." Why do you think that competition for funding wouldn't translate into other forms of competition? Actually, I do not understand the meaning of your statement.

The presentation by DR. Bavari indeed shows only in vitro siRNA data. However, to take this as evidence for that morpholino's are much more advanced than siRNAs for hemorrhagic fever virus at USAMRIID, is misleading as you will be well aware that Dr. Bavari's colleagues at USAMRIID already published with Protiva in 2006 positive post-challenge data, not just pre-challenge data as for morpholino, for SNALP-RNAi in guinea pigs. I also note that Dr. Bavari is not a co-author on that paper, and let's just leave it at that.

You also suggest that non-human primates have successfully been treated with morpholinos in a post-challenge setting. However, this is not obvious from the link you refer to. In case I missed it, which slide is supposed to show such data?

Then your comment: "siRNA is getting them more dollars to play with, PPMO's are getting results." I am not surprised that siRNA research gets "them" more money, as it is scientists that peer-review the grant proposals and appropriate the money where the science is strongest.

By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.