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Business

Roche Decision Reverbates

Pharmaceuticals: Drug firm’s exit from RNAi space hits Alnylam, Tekmira

by Lisa M. Jarvis
November 29, 2010 | APPEARED IN VOLUME 88, ISSUE 48

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Credit: Alnylam
Alnylam’s Cambridge labs lost a research contract with Roche.
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Credit: Alnylam
Alnylam’s Cambridge labs lost a research contract with Roche.

Roche’s decision to abandon RNAi drug research as part of extensive cuts across its business has investors worried that enthusiasm for the gene-silencing technique is waning. Shares of Alnylam and Tekmira, two leading RNAi technology firms, tumbled on the news.

After investing more than $500 million in less than three years to assemble an RNAi research effort, Roche is shutting down RNAi R&D at sites in Kulmbach, Germany; Madison, Wis.; and Nutley, N.J. (C&EN, Nov. 22, page 6).

Cambridge, Mass.-based Alnylam was the hardest hit by the news. In 2007, Roche handed Alnylam $331 million in a broad research pact covering RNAi drugs. The deal included the purchase of the Kulmbach site, which became Roche’s “center of excellence” for RNAi research. Alnylam received a nice chunk of funding each year from Roche. Last year, for example, it reported $57 million in research revenues from the collaboration. It also would have enjoyed royalties on any drug that reached the market.

For Alnylam, the setback comes just weeks after Novartis declined to opt in to a technology licensing clause in a five-year research pact. Novartis’ decision cost Alnylam a $100 million payment, and the biotech firm subsequently said it would cut 25–30% of its employees.

Tekmira, meanwhile, loses out on a licensing deal signed just last year. Roche paid $18.4 million to formulate its RNAi products using Tekmira’s lipid nanoparticle delivery technology. Roche expected the pact would enable it to put its first RNAi-based drug into human studies by the end of this year.

Despite the bad news for RNAi, industry observers are not convinced that the drug industry has given up on the technology. “We believe this was a move that had mainly to do with internal resource allocation decisions and not a reflection on the progress made by Roche or their confidence in the space,” says Simos Simeonidis, a stock analyst with Rodman & Renshaw. In his view, the company made cuts in technology areas where spending was high but commercial products were still years away.

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