Alnylam Responds to Amended Complaint by Tekmira

Last week, Alnylam responded to the Amended Complaint by Tekmira in which Tekmira disclosed the full scope of Alnylam’s alleged misappropriation and misuse of Tekmira technology and added Alnylam Canada, aka AlCana, as Co-Defendant (related blog entry here). The alleged transgressions included abusing insights into Tekmira trade secrets that Alnylam gained as a result of their collaborator status and by hiring ex-Tekmira employees to file for a battery of patents covering Tekmira technology, also to contest royalty obligations for ‘second-generation’ LNP formulations, disclosing them to Alnylam’s Big Pharma partners to circumvent Tekmira, and breaching the manufacturing agreement by providing Tekmira formulations to Alnylam partners.

Alnylam vague in Response

In its Response, Alnylam brushed aside Tekmira’s allegations that it took unfair advantage of insights into Tekmira trade secrets by simply stating that the written agreements would speak for themselves and gave them freedom to do so and that much of Tekmira’s technology had been in the public domain anyway. In doing so, Alnylam apparently attempts to hoodwink the court by failing to mention and address the significant limitations in the various agreements between the companies regarding the use of Tekmira trade secrets. These limitations stated that any use by Alnylam of Tekmira LNP delivery trade secrets for purposes other than advancing the agreements would have to be first blessed by Tekmira.

Perhaps realizing their failure to do so, Alnylam’s main defense with regard to the MC series of lipids that it now advertises to be its own and independent of Tekmira was based on a waiver to sue that was included in the Supplemental Agreement dated July 2009 between Tekmira, Alnylam, the University of British Columbia, and Alnylam Canada. For example (Fourth Affirmative Defense):

‘Tekmira has granted Alnylam a covenant not to sue on any contention that MC3 and other alleged “MC Trade Secrets” was misappropriated in an agreement to which it is a party.’ [emphasis mine].

See also:

‘15. The Supplemental Agreement and its attachments contemplated the research that ultimately led to the discovery of MC3 and other novel lipids.” [emphasis mine]

This defense, however, fails to address Tekmira’s allegations that the broader MC trade secrets were disclosed by Tekmira to Alnylam pursuant to the Research Plan of the Tekmira Agreement which pre-dates the Supplemental Agreement (and also Consultancy Agreement between the ex-Tekmira employees and Alnylam for that matter) whereas the waiver would only apply to actions carried out pursuant to the Research Program of the Supplemental Agreement and the Consulting Agreement. This distinction may become important as ownership over the broad MC series of lipids would affect the freedom-to-operate for MC3.

Alnylam's defense that Tekmira never realized that ‘MC’ constituted a series of lipids cannot be taken seriously as a) apparently some of the inventors of MC2 did realize this to be a series by filing for the MC3 patent application soon after their firing from Tekmira, b) the nomenclature implies a series (just as KC did before that), and c) Tekmira should easily be able to prove their disclosure of MC trade secrets via emails etc.

Tekmira statement of when MC trade secrets were disclosed to Alnylam (from the Amended Complaint):

‘34. Prior to its filing of the provisional patent application disclosing and staking its claim of ownership of the MC2 compound, Tekmira confidentially disclosed the MC Trade Secrets to Alnylam pursuant to the Research Plan of the Tekmira Agreement.’ [emphasis mine]

Waiver (from the Supplemental Agreement):

’12. Waiver; Non-suit Covenant. In consideration of the foregoing, Tekmira and Protiva hereby (a) waive all prohibitions and restrictions upon [**] (and any other UBC employee involved in the Research Program who was a former Tekmira employee) and each former Tekmira employee who is subject to the provisions of an Employment Agreement arising out of, under or in connection with their former employment by Tekmira, to the extent that any activities of such former Tekmira employee are carried out pursuant to the Research Program, the Consulting Agreements or in connection with the performance of obligations or the exercise of rights under this Supplemental Agreement; and (b) covenant not to sue Alnylam, UBC, AlCana or any of the former Tekmira employees employed by AlCana or UBC, for any cause of action relating to such activities that arises out of, under or in connection with the former employment by Tekmira of such former Tekmira employees. For clarity, a failure by any party to perform its respective obligations under this Supplemental Agreement shall not entitle any other party to sue any non-breaching party. Such former Tekmira employees are intended Third Party beneficiaries of this provision.’ [emphasis mine]

Therefore, even in the unlikely event that the waiver would be judged to allow for the broad misappropriation and use of Tekmira trade secrets and applied retroactive to the effective date of the Agreement (note that even the MC3 provisional was filed before July 2009), it has no bearing on what Alnylam did with the insights into other MC-related trade secrets. Note that the broad MC patent applications were filed by Alnylam alone- consistent with the timeline provided by Tekmira. To make this point clear, the Supplemental Agreement expressly states that it does not release the parties from liabilities arising from the other agreements:

‘19. Entire Agreement. This Supplemental Agreement is the only agreement between or among Tekmira and/or Protiva, on one hand, and any of Alnylam, UBC, and/or AlCana, on the other hand, bearing directly upon the Research Program and the Consultant IP. Except as expressly stated herein, neither this Supplemental Agreement nor any discussions, proposals or negotiations with respect hereto or otherwise with respect to the Research Program will alter the terms of, or constitute a waiver or release of any party’s rights or obligations under, any of the existing agreements between or among Tekmira and/or Protiva, on one hand, and Alnylam and/or UBC, on the other hand, including without limitation the provisions of such agreements regarding the termination of such agreements and the consequences thereof.’

Alnylam Admits to Providing Delivery Formulations and Tekmira Manufacturing Know-How to Novartis and Takeda

Much of the immediate financial damage to Tekmira and their investors arises from Alnylam allegedly stealing Tekmira’s manufacturing trade secrets and violating the manufacturing agreement by providing SNALP/LNP delivery formulations to Big Pharma companies with interest in RNAi Therapeutics. In its Response, Alnylam admits that it provided delivery solutions to Novartis and Takeda. Alnylam denies, however, that Tekmira took adequate care to protect its manufacturing trade secrets which was formalized, amongst other, in the September 2008 MBR agreement which limited Alnylam’s access to Tekmira trade secrets solely for the purpose of their regulatory obligations. Overall, with the Agreement and the Konys emails it should be relatively straightforward to prove this allegation which should be a key element in assessing the financial damage suffered by Tekmira.

The Big Picture Remains Unchanged: Alnylam Intent on Marginalizing Tekmira

If anything, Alnylam’s Response further emphasizes that it has been and still is intent on marginalizing Tekmira by having the audacity to claim ownership and control over Tekmira technology and to advertise itself to be leading in SNALP technology. It's the same company that 4 years ago along with Roche had to admit defeat and seek chemistry and manufacturing help from Protiva, and just 2 years ago still seemed to be learning the ropes of LNP delivery technology (see 2009 Molecular Therapy paper). To top it off, this company now claims that Tekmira’s work, including the newly disclosed lipids, is based on the misappropriation of Alnylam LNP trade secrets.

If that were not enough, Alnylam pretends to be an advocate of Tekmira shareholder interests by casually dropping in the Response that Tekmira failed to issue a financial regulatory filing due to Alnylam’s apparent notice to Tekmira that Tekmira lacked a license to its very own rights to the Semple-Wheeler patents, as well as the ISIS patent estate under its InterfeRx license from Alnylam!

From the Response:

‘23. Consistent with this pattern, Tekmira has failed to adequately disclose the limitations of its licenses to investors. Despite the clear terms of the license agreements and notice from Alnylam that it lacked licenses to the Semple & Wheeler patent series and Isis patents, Tekmira made representation to the contrary in its public filings with the SEC and in other documents provided to investors.’

Remember that Old Tekmira originally provided Alnylam the exclusive license to its rights to Semple-Wheeler for therapeutic RNAi and microRNA applications, in return for Alnylam RNAi target picks under InterfeRx, which includes ISIS, and the use of Old Tekmira SNALP-related IP for these target picks. Obviously, events have escalated and with the apparently unilateral revocation of the licenses Alnylam management apparently wants to cause additional pressure on Tekmira's share price hoping to outlast Tekmira financially, not based on arguments. I wonder which Alnylam top executive or lawyer came up with this admittedly innovative interpretation of the companies' agreements and would not be surprised if this move was also coordinated with Alnylam's connections to the financial world.

On the other hand, Tekmira has told Alnylam that it would not release certain data with regard to the hypercholesterolemia candidate ALN-PCS, for which guidance to submit an IND in H1 2011 has likely been missed, unless Alnylam gave added assurance that it would not use such information for purposes other than the clinical trial.

Why would Alnylam have problems agreeing to this measure and is willing to miss important guidances it gave to investors and resort to desperate acts like the Semple-Wheeler and ISIS stunt? Why does Alnylam not just pay off Tekmira and tell them to go away, as this would seem to be the least costly option to them at the moment? Is it really just greed that has been driving Alnylam’s actions? I cannot believe it and instead suspect that at the root of Alnylam’s conundrum are its deals with Big Pharma in which it took in over half a billion in non-dilutive funding, much of it quite obviously based on the strength of and access to Tekmira’s SNALP technology.

Tekmira continues to advance science

Despite the legal battle with top-heavy Alnylam (ironically it is Alnylam that tells Tekmira to focus on the science), Tekmira continues to make critical advancements in refining and expanding the uses of its LNP delivery technology. Following the recent conference report that it succeeded in generating defined LNPs for respiratory and directed delivery applications and the scale up of manufacturing to 1kg batches, a patent application (WO/2011/066651) by Tekmira published last month disclosed important advances in ensuring the long-term stability and therefore quality of its formulations. In order to avoid any confusion, some of the experimental examples involved MC3 (and MC4) to make it clear that the claims cover SNALPs independent of the specific lipid used. With this, Tekmira demonstrates that it continues to stay a step ahead and provides further reasons of why pharmaceutical companies would want to partner with Tekmira in order to practice SNALP delivery.

Related blog posts:

1) Tekmira Tells Alnylam 'Enough is Enough';

2) Alnylam Responds to Tekmira's Complaint;

3) Tekmira's Amended Complaint Suggests that Alnylam's Transgressions More Severe than Suspected