Thursday, March 5, 2015

Arrowhead Acquires 30 Alnylam Exclusive, Priority Target Picks and Plus More from Novartis

Arrowhead Research keeps mopping up the billions of Big Pharma dollars spent on RNAi Therapeutics R&D and IP.  After acquiring the Roche assets for dimes on the dollar in 2011, heralding Arrowhead Research becoming a real biotech company, it is now Novartis’ turn to give their RNAi assets to dedicated RNAi hands.

What Arrowhead bought

For $10M and $25M in cash and stock, respectively (representing a dilution of ~5%), Arrowhead research acquired

1)      new Novartis RNAi trigger chemistry that the company claims to fall outside competing RNAi trigger IP (thus avoiding milstone and royalty obligations);

2)      intriguing new RNAi trigger chemistry that supposedly enhances RISC RNAi effector loading of RNAi triggers in the cytoplasm and which  could enhance the potency and duration of gene silencing; and

3)      the RNAi-related IP rights that Novartis acquired from Alnylam in 2005, most notably the 30 target picks.

Arrowhead in the house

10 years ago, Novartis made headlines by getting access to 30 exclusive target picks under Alnylam RNAi trigger IP.  For the privilege of picking targets not only ahead of Alnylam, but also excluding Alnylam from these targets, Novartis paid $10M in cash and made a $58M equity investment at a 16% premium to the ALNY trading price back then (so say $20M overall), plus the usual biotech milestone (up to $700M) and royalty obligations.

At the time, Alnylam was criticized for selling much of the farm.  This is because 30 target picks might have been too much given the state of RNAi delivery technology at the time.  Archrival Sirna Therapeutics gloated that it would never enter into such broad sweeping deals and consequently started to win business from other Big Pharma names, culminating in the $1B acquisition by Merck in 2006.

Novartis had time until October 2010 to officially nominate its target picks. At the time, SNALP LNP delivery to the liver was the only game in town for clinically relevant RNAi delivery.  Therefore, if Novartis had any brains, it would have spent some of the picks on the juiciest liver targets in addition to their oncology dreams.  

Usually, I don’t give much credit to the critical thinking ability of Big Pharma, but given that a number of Novartis RNAi folks came from Sirna Therapeutics and had worked on liver targets such asHBV early on, it is a good assumption that, yes, a few targets are aimed at the liver.

Note also that Alnylam never entered the HCV drug development race, instead pointing to their unwillingness to compete with its microRNA joint venture Regulus Therapeutics for the target.  I never bought that argument and instead suspected that Novartis was on HCV.

This, of course, adds an interesting facet to the somewhat uneasy relationship between Arrowhead Research and Alnylam and how today's deal impacts Alnylam’s 3 STAr franchises, namely viral hepatitis, cardiometabolic, and orphan diseases.

Value of Novartis RNAi assets in the eye of the beholder

I fully expect the usual suspects to spin today’s news as Arrowhead Research (once again!!) acquiring assets that a Big Pharma had put on hold (in the case of Novartis in early 2014) and nobody else allegedly wanted.  This may be partly true given that Novartis did not appear to be successful at developing strong RNAi delivery technologies.  So the Novartis RNAi assets in isolation may not have been worth that much.

Arrowhead, however, is in a different position given that its DPC delivery technology is being validated in the clinic.  I expect the ARC-AAT results towards the end of the year to remove any doubt about that.  Moreover, Arrowhead is on track to commit its subQ DPC version into clinical development, instantly increasing the value of any cardiometabolic targets that Novartis may have picked.

This illustrates that for Arrowhead Research today was about expanding its RNAi trigger IP leverage in addition to increasing its chances of finding the best possible RNAi trigger against a given target from its broad stable of RNAi trigger structures and chemistries (usiRNAs, Dicer-substrates, canonical), and finally adding a unique RNAi pharmacology trick to its toolbox.  All of this to be married with its DPC delivery technology so that the result would be worth far more than the sum of its parts.


Today, we have only glimpsed part of the strategic and technological importance of the deal. Stay tuned as the movie unfolds.  Kudos to Arrowhead Research for making the bold, but mostly right strategic decisions.

36 comments:

Anonymous said...

Good for ARWR to dilute the attention from their HBV? They had just over $100M in cash at the end of 2014 and just bought some, hopefully, magic beans for 1/4 of what they had on hand.
Not sure how much their phase II is costing, but presuming it's fairly expensive they've made a substantial decrease in cash runway increasing the risk that a major financier might not come forward until too late, which ultimately should require management to refinance, diluting the value of this stock.
Not arguing it's a worthy product. It seemingly does what it's supposed to do in spite of mgmt's best efforts to f'k up the FDA submissions and PR. All of this without the inherent risk of the immunostim with LNP delivery.

TL;DR: Poor company buys stuff it cant afford; shareholders will likely eat the humble pie set out by ARWR mgmt

Anonymous said...

Mediocre company buys mediocre assets and is still mediocre.

What does this say about their ARC-520 progress? Confident they can blithely throw money around? Then why give up 5% of the company when the valuation is low right now? Why not give 2% of the company a few months from now instead?

Or are they desperate and in need of more pipeline since ARC-520 is simply not going to work as well as hyped?

Anonymous said...

Man the shorts are out in force today.

Anonymous said...

Dirk, any clue on how does this affect Novartis' deals with other RNAi companies such as Quark?

Anonymous said...

This is great news for Benitec. It shows they are about to become a great company in its own right. Otherwise they would've been bought by now because they are so cheap. All Benitec needs is the proof their one shot cure for all disease works.

PfizerSloth said...

ARWR are now Swiss branded with Roche and Novartis involvement despite some of those assets having come about from their involvement with ALNY.

ALNY sp creeping up to recent highs and beyond.

When Pfizer chooses to move this sector is going to go mental. Because that's where the money will come from.

That's what happens when you arrive late to the party. Just like a big lumbering, slithery sloppy sloth.

Anonymous said...

TKMR assets must be up for grabs now on a bargain basis as well.

Anonymous said...

No offence Dirk, but this blog seems to have taken a bit of a turn from decent technical science/business analysis to having a stock pumping bent.

If you have interest in a company, not declaring it (or lack of) in a piece like this will erode your credibility.

Anonymous said...

A solid analysis. It's clear this has angered the giant. It would be a horrible position to be in where you'd need to circumvent your own IP to work on any of these 30 picks...

If ARWR gets to block the only other RNAi company in the space on 2-3 good targets, that's worth a ton more than what they paid.

All eyes on ARC-520 3/4mg per kg data.



Anonymous said...

Well, if those 30 targets are truly valuable, why not ALNY just buy them back when they got tons of cash to spend.

Anonymous said...

$ARWR pays $25M for all of Novartis’s RNAi assets.

What do you think that makes Benitec the company worth??

I have endeavoured to be gentle in this forum as Benitec has increasingly shown itself unworthy and not up to the task, but given that today we are seeing an RNAi firesale by a major, $BTEBY could be worth as little as $15M. Because they have NOT proven efficacy at all, and neither have they proven non-off-target silencing. They have had more than a year, and zip zilch nada nillo big fat zero.

If you are still holding Benitec, Get out of Benitec.

Anonymous said...

$15m .... really. Benitec have $23m in the bank and a market cap of $70m. Their slow dosing is quite in line with all gene therapy trials, including Bluebird Bio, the market darling who have only dosed around 15 patients and are valued at $3.65b in the orphan disease space. Expect Benitec to have a similar market cap in a few years time if efficacy is shown. In regards to the patents, it is worth reminding people that Alnylams foundations expire earlier that those of Benitec, and it hasn't hurt their market cap one bit. With safe harbor and 20 years to get a drug to market, most foundation patents are now worthless.

Anonymous said...

Benitec is worst RNAi company, have no money and no evidence that ddrnai works.
Some paid members from benitec are in hotcopper.com taking to each other boasting about Benitec technology everyday.

I don't understand one thing why hotcopper team is in love with Benitec, when there is tones of golden companies to invest.
Example - Juno, BLCM, GILD, AAVL, OPHT, ONCE SAGE so many.....

If you are real investor do not even think about investing Benitec crap. It is going to be Marina Biotech soon. ARWR is investing and spending 20-25M every Q. Benitec total money power/asset in cash is around $25M.

Why there is no investor in 1 year? Other Pre-clinical company worth Billions.
AAVL, ONCE they came from same place and see where they are.

Look at voyagertherapeutics, even being Pre-clinical company and private, how much money they have now? Why because they have data and it works. ddRNAi is fussssssssss.

In hotcopper.com.au/asx/blt/ forum you will never find except these bashers. If you post something which is not in fav of benitec your post will be removed, so pathetic.

Coolstocks, Blane66, Artephius, seanl, Japes, jsimonj, SmokeyNYY, drafter, doctorwho2, RCH68, seanl, LAKings2014, Risiko, Maxineamillion and Hoyland. This is list of bashers. I bet some of them are from BLT management. Whole day they do one thing how to bost about benitec no other work. I have been following hotcopper BLT forum for 2 years i never seen other then these guys.

Look what Dr Kss Says -
ddRNAi has not established itself as safe or effective yet. ARWR and BTEBY were out of the gate at the same time, but look at where they are now. ddRNAI is not appealing to the industry because it is not a recurring therapy (it is vaccine like). The ddRNAi assets have almost a negative value because we are looking at AT LEAST $5B from here to get one product to market.

A year ago, things were different, players and postures and what cards they held, these were different. A year is a long time in biotech. Benitec has not run itself ably, and the only customers it have wanting to license its method are doing so for one reason: it is practically giving ddRNAi away.


tufulipo said...

Doesn't seem to matter what Dirk writes. Anonymous always turns it into a Benitec thang.

Anonymous said...

Do not compare Bluebird Bio and alnylam with Benitec.
ALNY have money and have brain and data.
They know how to do business and how to make money.

Let me tell you for your kind info. Guy who created ALNY is Dr. Allen.

Dr. Allen is one of our greatest living scientists. In the 90s, he won the Nobel Prize for a different biotechnology, something called gene splicing.

“He’s also a professor at MIT and a member of the prestigious Royal Society of London, which once included Sir Isaac Newton among its members.

“But beyond his many scientific credentials, Dr. Allen is also an incredible businessman. In the late 70s, he founded a company we’ll call ‘Bio-Inc.’

“It was a tiny start-up at the time, but today that company has over $2 billion in annual revenue.

“You’ll be interested to know that Bio-Inc’s stock is up more than 7,547% since Dr. Allen founded it.”

It owns nearly all the patents related to RNA Interference… over 700 granted patents worldwide for RNA Interference. In total, it has over 300 granted or issued patents in the world’s major pharmaceutical markets – the United States, E.U., Japan… No other company comes this close to completely controlling this technology….

it’s arranging 30 licensing deals with pharmaceutical and biotech companies right now.

Dr - Phillip Allen Sharp - http://en.wikipedia.org/wiki/Phillip_Allen_Sharp

Story does not end here.

Dr Andrew Fire who won Nobel Prize in Physiology or Medicine (2006) was his student. http://en.wikipedia.org/wiki/Andrew_Fire


Now do not even compare Benitec with alnylam. Alnylam is a brand and group of people who know what are they doing.
They have brains and solid team investor trust alnylam.

Who trust Benitec ? Hotcopper team ?

Anonymous said...

tufulipo - Its not Dirk, it me who is throwing light on BLT. Dirk is PHD and respectful person and he knows also what he is writing.

You and your team in hotcopper does not know what they are doing or even what to do!

Anonymous said...

This is an absolute joke. Benitec have nothing but upside. Their tax credits and cash equal more than the companies market cap. But hey, feel free to invest in bubble-territory companies like Bluebird and Juno with multi-billion dollar market caps when they are only in PI/II(a). What do I care?

Anonymous said...

I agree with some posters here that companies such as Alnylam cannot be compared to Benitec at the moment. Current cash at hand and revenues indicate this.

However RNAI and DDRNAI are not one and the same. Multi dose tech vs single dose.

But yes, Benitec is not 'yet' proven but when/if they are - then the potential can be properly discussed. There is no disputing the potential of the science and opening the discussion.

However, some people just seem very protective about whichever companies are in their portfolios.

Anonymous said...

Benitech is joke with no data well if others are in bubble territory, Why your beloved blt is not moving at all.
Do you know even how much it cost to bring one rnai medication in market ? 2 to 5 billion.
What blt have, tt-034 for hcv ?

Gild is killing all of them and I am predicting by the time tt-034 will be ready there will be no business for blt.
I see one bigger problem, tt-034 will not even see phase 3 . I would say to hotcopper team keep dreaming with your handful of stocks of the blt.

Good luck.

Anonymous said...

You can always tell when idiots have lost money playing with stocks they don't understand. TT-034 doesn't have to take on Gilead or even go into PIII to prove that ddRNAi works. It isn't priced in, so why worry.

Anonymous said...

Working of ddrnai is not enough to make money.
So far there is no evidence it works. It can work it may not work. As invester My point is why you guys are comparing blt with ALNY and blue?

Let's talk about beloved tt-034 , blt have to proof 100% effectiveness, that is bottomline. If it can not proof 100% it will be really hard to find invester.

Where is data of third patient, 14 months and 3 patients have been dosed. Except David who are scientist working?

Where are other program in terms of progress. Here is the difference between blt and alny. Look at progress and data of alny they are presenting every 2 to 3 months.

What about blt ?




Anonymous said...

Not that there was ever much substance with it to begin with... but what an absolute crock load of s&*t this blog has become! Hasn't everyone got anything better to do than slag each other off?

"Dirk is PHD and respectful person and he knows also what he is writing".... What a load of rubbish!

Anonymous said...

Does this deal impact ALNY's 5x15 strategy at all?

Anonymous said...

Om from Gumshoe, Truliapro from HC, You are a complete KSS psychophant, you are pathetic in your blind following. All you do is parrot him and actually copy and paste his comments. Until you can make sense in English, just stop, go back to your native language and leave BLT, TT-034 ..the entire space alone. What good are you doing? Are you trying to save us? ddRNAi was SUPER BOILER ROOM touted by KSS last year that if anyone is on the hook for being a pump and dumper it is him with all of his misleading info in regards to this company. He has it out for PF and the company due to things we are not going to bring up here. Keep being an asshole Om/Truliapro with you ddRNAi website and I will make it my mission to out KSS on every stock board including Gumshoe as the Doctor who was banned in two states TX and ND, who now has to work in podunk TN appalachia due to erratic behavior. Remember when Vivian Lewis caused him grave physical and emotional suffering, like a little spoiled baby? Give it a rest Om or your buddy MWS will be outed and will go into hibernation again.

He is out of the stock, so he claims, so drop it, move on . .... let it go. Enough!

Anonymous said...

Yeah! Take that. You've been told now. Don't mess with anonymous or there really will be trouble.

Dirk, what have you started with all this ARWR buys Novartis assets talk?

It appears as if there is no corner of the internet safe from the BLT vigilantes. They will hunt you down wherever you are if you have an opinion that doesn't match theirs.

Seidler said...

I'll watch for the updates, it will be interesting to see how this continues to unfold.

Anonymous said...

ARWR v TKMR deal making skills.

Which is the better team?

One gives away half the company to a middleman hiding out in a tax haven for not a lot that is limited to just one disease.

The other gives away 5% and bit of cash to get up to 30 targets on an exclusive basis plus whatever else from a world class pharmaceutical company that has pioneered the field.

Dirk, which one should I invest in?

Anonymous said...

To Anonymous at March 6, 2015 at 12:43 PM, who exactly is it you think is demonstrating the erratic behaviour?

The kettle is always the blackest of them all. Must be the soot.

Anonymous said...

Good on you Dirk for twittering Benitec's 4th patient dosing. 5th to come in the week or so. Results of Patients 6, 7, and 8 in the 3rd cohort will be where it's at. If good, then HCV could well fall to Benitec, HBV templates off that, then onto the cancers via an extremely well funded and advanced ddRNAi programme for lung cancer. Calimmune curing HIV a side plate only.

Anonymous said...

Looks like one of the acquired patents is Patent No. 8,293,718. Appears to be a blockbuster ($100B+) patent if HSF1 can be knocked-down. Thoughts on this patent?

Anonymous said...

Not only that patent but also the one that governs oral delivery, i.e. that area TKMR were working on. Remember the "balls of grease" analogy?

Oral delivery of GalNac?


Novartis Patent for Short interfering ribonucleic acid (siRNA) for oral administration
United States Patent 8,957,041
Natt , et al. February 17, 2015

Short interfering ribonucleic acid (siRNA) for oral administration

Abstract
Short interfering ribonucleic acid (siRNA) for oral administration, said siRNA comprising two separate RNA strands that are complementary to each other over at least 15 nucleotides, wherein each strand is 49 nucleotides or less, and wherein at least one of which strands contains at least one chemical modification. Less

Anonymous said...

Don't say you weren't warned about VLA Dirk.

It will make your churlish boasts look like churlish boasts.

Anonymous said...

What is Benetec?

Anonymous said...

DIRK, any comments?
Regards,
Stefan

http://www.bioasis.ca/2015/03/16/bioasis-releases-results-from-an-ischemic-stroke-model-with-transcend-bbb-carrier-peptide-mtfp-mtfp-%C2%AD%E2%80%90sirna-reduces-both-the-damage-caused-by-infarct-and-significantly-improves-neurolo/

Anonymous said...

Has this transaction closed yet?

Robert Zack said...

The ipo on nasdaq will get us to pIII

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