Did Alnylam Patent News Send CytRx Shares Down 14%?

It should not come as a surprise that Alnylam today announced that the previously allowed Tuschl II covering siRNAs was granted in Europe. The fact, however, that another year has passed and Tuschl II keeps on sailing through the worldwide patent offices while the Tuschl I patent application is being delayed, further cements the impression that it is Tuschl II that is the key patent for siRNAs, not the related Tuschl I.

Tuschl I, co-exclusive to CytRx, Sirna/Merck, and Alnylam, is thought to have been a major motivation for Merck to buy Sirna in late 2006. Like Tuschl II, it covers gene silencing in mammalian cells, but interestingly the classical siRNA features, 19-21 base-pair double-stranded RNAs with 3’ overhangs, are claimed only in Tuschl II, whereas Tuschl I generally claims ~21-23 nucleotide silencing RNAs and their precursors, thus somewhat landing it in between antisense and RNAi.

Needless to say, the perceived value and potential of CytRx, or its RNAi spin-out RXi for that matter, as a Sirna-like takeover candidate by Big Pharma much depends on the fate of Tuschl I. So today’s 14% fall in CytRx shares on expanded volume, while those of Alnylam gained 2%, may be directly linked to today's patent announcement. Further delays in the registration of RXi as a publicly listed company and the recent shelf offering should have contributed to the sinking feeling CytRx shareholders must have felt today.

It then looks like 2008 could also be a defining year in terms of who owns the IP in RNAi, as the number of core RNAi Therapeutics companies is about to peak and funding gets directed to those with strong IP positions as investors become more discerning in their RNAi investment decisions. CytRx, Nastech, Benitec, and Silence Therapeutics will be under particular pressure to prove themselves as they return to the markets for funding.

Tuschl I patent application:
http://www.wipo.int/pctdb/en/wo.jsp?wo=2001075164&IA=WO2001075164&DISPLAY=STATUS

Tuschl II patent:
http://www.wipo.int/pctdb/en/wo.jsp?WO=2002%2F044321&IA=WO2002%2F044321&DISPLAY=STATUS