The reason why I have been a strong supporter of Tekmira is because I give them the scientific credit for developing the most valuable systemic RNAi Therapeutics delivery technology without which the field would be in much worse shape. The gate-keeping position of Tekmira being the real enabler and innovator of LNP delivery, the result of having persisted through many years of dogged, high-class research, an effort older than Alnylam itself, however has been increasingly challenged by Alnylam’s apparent attempts to be seen as the go-to-guys for LNP delivery.
Tekmira now accuses Alnylam of having crossed the line by misusing critical trade secrets obtained during their LNP delivery partnership and otherwise undermining Tekmira's reputation and business relationships of the company. In its lawsuit filed with the Business Litigation Session of the Massachusetts Superior Court, Tekmira hopes to be awarded north of $1B in damages.
Since the alleged wrongdoings get to the core of Tekmira’s value as the leader in systemic RNAi Therapeutics delivery, a position which critically depends on its ability to protect ‘LNP’-related trade secrets and know-how, these are very serious allegations indeed. The latest developments, however, don’t surprise me in the slightest since from the outside it looked as if Tekmira was being treated quite unfairly, almost bullied in this relationship.
The $1B in damages most likely reflect the over half a billion in non-dilutive funding Alnylam was able to bring in as a result of its Tekmira/Protiva relationship. While the press releases highlighted that the deals were for RNAi trigger IP primarily, such trigger IP would have been worth much less without realistic delivery, and the four therapeutic areas covered in the Roche and Takeda deals, three of which are amenable to LNP delivery, strongly indicate that LNP, aka SNALP, was a driving force in reaching and valuing the deals.
In return, Tekmira got very little by comparison. A few millions as a result of their IP deal that gave Alnylam access to some of Tekmira's LNP delivery IP and some co-development and especially manufacturing income. Nevertheless, Alnylam seemed unsatisfied with this situation since Roche and Takeda highlighted the fact that it was still necessary to consult with Tekmira if Alnylam wanted to fully use and sub-license Tekmira's LNP technology. As a result, it seems that Alnylam engaged in tactics to downplay Tekmira’s importance which became first apparent in the summer of 2007 when Alnylam went out on a limb and claimed that it would be able use Alnylam-made LNPs with ‘lipidoids’ for its liver cancer program instead of those made by Tekmira (see blog 'Alnylam Chooses Lipidoids over Cationic Liposomes for their First Systemic RNAi Clinical Studies'). Of course, we now know that ALN-VSP01 became ALN-VSP02, a formulation comprising Tekmira technology and lipids.
A patent application by Roche for Factor VII knockdown in the liver (WO 2010/055041) may also be indicative of the dynamics of the Tekmira-Alnylam relationship. Almost throughout the application, LNP01 'lipidoid' formulations were used, but then without much discussion Tekmira formulations were used for the non-human primate part of the study. When I read that application for the first time, it immediately raised questions in my head whether Alnylam led on Roche to believe that it could do without Tekmira's help. Instead, Roche ended up partnering with Tekmira for developing its first RNAi Therapeutics candidates to the IND stage.
The campaign of marginalizing Tekmira reached a point where LNP newcomer Alnylam, still by far the more visible company in RNAi Therapeutics due to its widely admired deal record, started to shape the vocabulary of LNP delivery. Examples of this are terms that were introduced such as ‘lipidoids’ suggesting non-violating IP and superior technology (in fact, these cationic liposomes have shown little promise for clinical development), ‘first-generation’ versus ‘second-generation’ to suggest that Alnylam has by-passed Tekmira in LNP prowess and does not need it any more, and the very term ‘LNP’ itself which replaced ‘SNALP’ that Tekmira, the true liposomal delivery innovator, had once coined. Such simple language created, and still causes significant uncertainty among Tekmira investors consequently damaging Tekmira’s ability to finance.
Alnylam caused further confusion by setting up shop right in Tekmira's very own backyard in Vancouver by helping to form and fully fund Alcana, a company made up largely of former Tekmira scientists that got laid off in the wake of the Tekmira-Protiva merger. Since Tekmira’s value is heavily dependent on its ability to protect its trade secrets around LNP formulation and Vancouver is not that big a place, this move by Alnylam seemed rather brazen. On top of that, Alnylam teamed up with Pieter Cullis, a well known LNP delivery expert from UBC in Vancouver and formerly closely associated with Tekmira. Quite degrading of a business partner, I would say.
Alnylam crossed the line
While one might shelve much of the above under the category 'bullying behavior', Tekmira’s Complaint alleges that Alnylam clearly crossed the lines of legal propriety and caused substantial harm to the Company by improperly disclosing trade secrets to third parties, in an apparent effort to marginalize Tekmira in business development discussions, by filing for patent protection for inventions based on such trade secrets, and maybe worst, by documenting some of them in patent applications.
Followers of this blog may not be surprised to learn that I believe Tekmira to have a good chance at proving their case in front of a jury as this latest development has been a trainwreck a long time in the making. For what it’s worth, I had written both companies that theirs seemed to be a very unhealthy relationship and that they should take action to remedy it. The most logical option, of course, would have been for Alnylam to acquire Tekmira. It would have given Alnylam not only full ownership of Tekmira technology and, equally important, filled up Alnylam’s pipeline with three promising development programs. In fact, acquiring Tekmira may still be Alnylam’s best hope to come out of this unscathed. Counter-suing Tekmira into bankruptcy would only mean that it is destroying the manufacturing base for almost all of its pipeline candidates. Unfortunately, based on the allegations and actions it may require some reminding that Alnylam does not actually already own Tekmira.
I have no good explanation as to why Alnylam treated Tekmira the way it apparently did. Alnylam has been much more generous to partners such as ISIS and to MIT (see lipidoid deal). Is it because it deemed Tekmira’s financial and political clout to be much more limited? Has it put politics over fairly compensating for scientific value?
Merck lurking again?
This week, of course, has also seen the settlement of the Tuschl litigation (best documented in the RNAi Litigation blog by John Leavitt and colleagues) where Alnylam and Max Planck regained control over the valuable Tuschl II patent estate, but not without granting UMass the right to sublicense some of it to Merck. As I was walking the streets of Paris this week just as the Tuschl settlement was coming down the pike, I was reminded by the above poster of the possibility that without access to Tuschl II and leading RNAi delivery, Merck employees working on RNAi Therapeutics may soon be looking for new job opportunities.
So with Tuschl II in the bag, Merck may now want access to LNP delivery. One scenario envisages that as part of the settlement Alnylam provides Merck with access to LNP delivery. In that case, it would be easy to understand Tekmira’s frustrations. However, given the historical rivalry between Alnylam and Merck, this is difficult for me to imagine.
The other scenario would be that should the current lawsuit lead to Alnylam forfeiting their rights to Tekmira’s LNP technology, it would open up Tekmira for a sale to Merck. Yes, Protiva/Tekmira once sued Merck for similarly misappropriating LNP-related trade secrets and got a nice $45M plus potential $12M from Merck as part of a settlement, but that lawsuit was filed for events that happened before Merck acquired Sirna Therapeutics and most of the people involved in that affair are likely to have left Merck by now. Supporting the view that Merck is somewhat Tekmira-friendly and, more importantly, thinks highly of their technology and scientific team are comments made by Alan Sachs, the Head of RNAi Therapeutics at Merck, at the RNAiAsia conference: ‘[Tekmira] are truly LNP experts’.
Update: Alnylam just responded to the lawsuit, calling it 'surprising and extremely unfortunate'. Read more 'here'. Furthermore, Alnylam believes that its investments in Tekmira, approx. $50M including an equity investment, entitle it to broad use of its technology.