Roche RNAi Assets Go To Arrowhead

A year after deciding to end research in the field of RNA interference, the Swiss drug giant Roche has transferred its RNAi assets to the small drug discovery firm Arrowhead Research.

The deal lifts a pall that settled over the RNAi field after Roche’s November 2010 announcement that it was exiting the field. At the same time, it shows how far the value of assets in the RNAi business has fallen.

Roche spent roughly a half-billion dollars to amass its position in RNAi, including $331 million paid to Alnylam Pharmaceuticals in 2007 for access to RNAi technology and $125 million for the purchase of Mirus Bio in 2008. Arrowhead, in contrast, is paying Roche no money for these and other assets; instead it is giving the Swiss firm an ownership stake of just under 10%.

Arrowhead now owns the former Mirus R&D facility in Madison, Wis., which employs a team of 40 scientists. Arrowhead also gets licenses from several leading firms, including Tekmira Pharmaceuticals for RNAi delivery technology and Alnylam for RNAi intellectual property and short-interfering RNA structures.

“This acquisition is transformational for us and important for the broader field of RNAi,” Arrowhead CEO Christopher Anzalone told investors on a conference call. “Combined with our existing advanced RNAi delivery technologies, we believe we are now the most comprehensive RNAi therapeutics company in the world.”

To help pay for the development of the Roche assets, Arrowhead has closed on about $10 million in new financing. It also has an agreement with Lincoln Park Capital to provide up to $15 million to support the new operations in Madison.

Even with the new financing, investors on the conference call questioned whether Arrowhead has the financial capability to turn the Roche assets into new drugs. Anzalone replied that the combination of the Roche assets with the drug delivery technology in Arrowhead’s Calando Pharmaceuticals subsidiary will be very appealing to potential partners with deeper pockets.