Roche Joins RNAi Drug Fray

THE PRICE TAG for access to RNA interference (RNAi) technology, a potential route to treating disease by turning genes on and off, is getting hefty. Roche has agreed to pay upwards of $1 billion for access to Alnylam Pharmaceuticals' expertise in the field.

Cambridge, Mass.-based Alnylam has built a veritable fortress of intellectual property around the chemistry and delivery of RNAi-based therapeutics, and the deal gives Roche a nonexclusive license to use it. The companies will collaborate to discover RNAi drugs to treat cancer and respiratory, metabolic, and certain liver diseases.

Roche will pay Alnylam an initial $331 million, which includes an up-front fee and the purchase of less than 5% of the company's stock. Including milestone payments and royalties on any products that reach the market, Alnylam's bounty could rise to more than $1 billion. The company could reap even more payments if Roche decides to expand its RNAi research into new disease areas.

The initial payment includes $15 million for Alnylam's Kulmbach, Germany, research site. The Bavarian facility, with about 40 employees, will become Roche's research center for RNAi therapeutics discovery.

"This alliance only highlights the strong interest by pharma in platform technologies that can lead to innovative medicines, as well as the critical importance of biotechnology as the innovation engine of the future," Alnylam CEO John Maraganore said in a conference call with investors.

RNAi is "the new black," says Needham & Co. stock analyst Mark Monane in describing the drug industry's embrace of the technology. Over time, he says, the industry's attention has shifted from small molecules to proteins to antibodies, and its gaze is now focused on RNA. "The deal combines interest in being part of this new frontier with big pharma's need to find new drugs to fill its pipeline," Monane adds.

As RNAi technology becomes validated in the clinic—Alnylam is conducting Phase II trials on a treatment for serious respiratory tract infections—big drugmakers are increasing their commitment to the field. Though several companies have dabbled in RNAi research pacts in recent years, Merck set off a land grab in 2006 when it paid $1.1 billion to acquire Sirna Therapeutics.

Earlier this month, AstraZeneca got into the mix through a deal with Silence Therapeutics, a London-based firm that uses short-interfering RNA to induce gene silencing. As part of the deal, AstraZeneca took a $10 million stake in the biotech company.

The moves could also spur interest in companies that use antisense technology to target RNA in different ways. Isis Pharmaceuticals, which will get a $26.5 million slice of Roche's payment to Alnylam as part of a strategic partnership between the two biotech firms, could be the next to seal a major partnership, Monane says.