Thursday, June 19, 2008

Alnylam Starts Monetizing RSV Drug Candidate, but Keeps Options Open

As the biotech world is gathered at the BIO 2008 in sunny San Diego, Alnylam announced today the licensing of Asian rights to their lead, early phase II, RNAi Therapeutics program ALN-RSV01 for the treatment of RSV infection, to Kyowa Hakko, a Japanese company with an increased focus on biotech drug development. The deal involves an upfront $15M cash payment to Alnylam, with additional development and commercialization milestones of up to $78M and remarkable double-digit sales royalties.

Earlier this year, ALN-RSV01 has demonstrated proof-of-concept antiviral activity in an experimental infection model in healthy adult volunteers. This deal therefore comes at a reasonable value inflection point for the drug. Since the Asian rights for ALN-RSV01 were explicitly excluded from the platform licensing deal with fellow Japanese company Takeda, last month, today’s announcement may not come as a surprise to some observers. However, it shows that, supported by the strength of the RNAi platform, IP, and know-how, Alnylam management has executed on yet another strategic corporate goal. The exact timing may have to do with the convenience of signing contracts while assembled at the BIO, by the way taking place not too far away from where not only Kyowa Hakko’s parent company Kirin, but also Takeda have US operations, but possibly (pure speculation) also with the achievement of some clinical milestone (patients dosed in the current lung transplant trial etc.).

Importantly, while Alnylam is thus starting to monetize ALN-RSV01 thereby lowering the risk that its broad RNAi Therapeutics platform may be unduly predicated on this first-generation RNAi Therapeutics candidate, this arrangement leaves Alnylam almost all options open with regards to ALN-RSV01. It leaves them with the clinical development responsibility which is a good thing for a company that aims to become a vertically integrated drug company and, despite its young age, may be the best to shepherd such an RNAi drug candidate through clinical development due to its intimate familiarity with the technology. On the other hand, should one of Alnylam’s upcoming programs for hypercholesterolemia, liver cancer or Huntington’s Disease, show even more promise than ALN-RSV01 early on in the clinic, Alnylam may decide to lower their exposure to ALN-RSV01 through further partnering, potentially on even more lucrative terms following results from ongoing phase II studies. If not, Alnylam may decide to invest more and thus retain most of the rights to ALN-RSV01 for itself.

The terms of the agreement are very favorable indeed and illustrate the virtue of developing innovative therapeutics based on novel mechanisms of actions for diseases of high unmet medical needs- one of the attractions of RNAi Therapeutics. By this, even programs that may ultimately fail in the clinic could actually pay for themselves. The deals just keep coming, and it is only a question of time until even Wall Street realizes that as Alnylam starts paying taxes on the resulting profits, that this is actually part of a sustainable business strategy.

6 comments:

jpb said...

As far as I understood, virus inoculation did not precede siRNA instillation. Such local administration of large amounts of a polyanion is reminiscent of ISIS anti-CMV Vitravene and of numerous papers describing nonspecific antiviral effects of polyanions that interfere with virus cell entry. Indeed, many viruses (including RSV, Krusat&al, Arch Virol 1997) require syndecan binding for cell entry. Control experiment with irrelevant siRNA sequence welcome.

Dirk Haussecker said...

JPB- I agree that Alnylam has taken a careful approach to developing ALN-RSV01. From a business perspective, I think it was very wise to focus on demonstrating some type of antiviral activity first, instead of selecting the most challenging clinical study right away. It's much easier, also from a scientific perspective, to progress a program on the back of a successful study than after a failure. This allows the company to steadily create value for ALN-RSV01, as seen in last week's first monetization of the program, without risking too much of the overall health of the company- a company focussed on developing an entire platform, not a one-shot play.

Some of the answers to the questions you are asking will likely be forthcoming over the next year or so as the phase II studies proceed. Note, however, that some of the mouse studies on which ALN-RSV01 is based successfully applied RSV siRNAs post-infection. However, I very much doubt that you will ever see a control siRNA in a clinical study. Such a control siRNA would qualify as a drug candidate in itself. At this point, it's all about the safety and efficacy, no matter how you get it. Having said this, the overall success of the RNAi Therapeutics platform relies on the predictable potency and specificity of gene knockdown.

jpb said...

Dirk, I agree with your balanced view / balanced interests statements, yet especially with your last sentence.

Anonymous said...

I posed a question relating to the specificity of ALN-RSV01 to Alnylam investor relations shortly after the Kleinman Nature paper.

In its response, Alnylam stated that it has been aware of the immunostimulatory properties of siRNAs for some time (pointing to the Hornung paper in early 2005) and, accordingly, has been consistently testing against control siRNAs.

As to ALN-RSV01 specifically, Alnylam stated that ALN-RSV01 shows specific anti-viral activity as compared with a large number of control siRNAs and that, ALN-RSV01 demonstrates anti-viral effects in vivo through an RNAi mechanism as proven by 5'RACE measurements. Alnylam further expressly said that they can exclude any effects similar to those reported by Kleinman et al. in a mouse CNV model in relation to ALN-RSV01.

The above would thus appear to suggest that ALN-RSV01 indeed enters the cell and triggers RNAi (but of course one has to keep in mind that this is based on what Alnylam says).

However, even if ALN-RSV01 actually triggers RNAi, the question that appears to remain unanswered is why there was such a significant difference in the Gemini results between the effects of ALN-RSV01 in preventing the infection (100% improvement over placebo) and in fighting it once it took hold (40% improvement over placebo).

In addition to the general strategic business sense that the Kyowa Hakko deal appears to make from Alnylam's perspective (as noted in Dirk's blog entry), an additional encouraging element may be sought in that one would not expect someone like Kyowa Hakko to agree to pay $15 mil in cash upfront for a single product play prior to receiving some satisfactory answers to questions such as the ones discussed above.

Martin

jpb said...

Martin, concerning your last paragraph and associated confidence, talk subprimes to Merrill Lynch or Citigroup's CEO's...
Money flows,
this is the way it goes!

Anonymous said...

jpb, you certainly do have a point there ;o)
my observation obviously hinges on the assumption that the scientific crowd is generally more rational and critical than the bankers. but to be sure, there are those that believe that the money pouring into RNAi is the product of the desperate big pharma acting irrationaly in its chase for innovation rather than an objective validation of the technology.
only time and clinical data will tell...

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