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Roche enters major drug-discovery deal

Roche has entered into a large-scale deal with US-based biopharmaceutical company Alnylam Pharmaceuticals aimed at discovering therapies using RNA interference

Roche has entered into a large-scale deal with the Cambridge, Massachusetts-based biopharmaceutical company Alnylam Pharmaceuticals aimed at discovering therapies using RNA interference (RNAi).


The deal calls for Roche to pay Alnylam USD 331m in upfront cash payments and equity investment.

However, taking into account potential milestone and expansion payments, the partnership could be worth more than USD 1bn to Alnylam, even before adding in potential royalties on sales of any drugs resulting from the collaboration.

Alnylam has been stressing the size of the deal to the media and investors. In a conference call
this week, the companyís president and CEO, John Maraganore, said the firm believes the agreement with Roche represents ìthe largest drug-discovery alliance in biotech history.î However, the agreement certainly does not represent the first time that RNAi technology has attracted large amounts of money from big pharma.


Sirna Therapeutics, an Alnylam competitor that has an RNAi-based treatment for age-related macular degeneration in clinical trials, was acquired by Merck last year in a deal the companies said had a cash value of USD 1.1bn.


Under the agreement between Roche and Alnylam, Roche will be granted a non-exclusive license to

Alnylam's broad RNAi technology platform for hard-to-treat diseases in four therapeutic areas: oncology, respiratory diseases, metabolic diseases and certain liver diseases. The partners will work together on drug discovery in the same areas. The targets for the discovery efforts will be identified in the future and will be tied to milestone payments.


In addition, Switzerland-based Roche will acquire Alnylam's German research site and will transform it into the companyís Centre of Excellence for RNAi therapeutics discovery. The site currently has about 40 employees.


Alnylam is a five-year-old company entirely focused on working toward developing therapeutics based on harnessing RNAi, the process by which the body ìturns offî expression of certain genes.


The firmís most advanced product candidate is in phase II trials for the treatment of respiratory syncytial virus infection. The company already has alliances with major pharma firms such as Merck and Novartis, although those deals are smaller than the one announced with Roche. Although RNAi has yet to become a household term, many industry experts believe the technology could hold the key to sweeping advances in treating serious illnesses.

In an interview with PMLive, Doug Macron, editor of the trade publication RNAi News, acknowledged that the relatively early-stage technology does not mean much to the general public yet, ìalthough certainly the awarding of the Nobel Prize last year to Craig Mello and Andrew Fire (who pioneered RNAi) has done a lot to raise the profile.î


However, ìdrug companies themselves have been quite aware of the technologyís potential for a long time,î Macron said. ìAlready, there have been significant deals between big pharma and RNAi drug developers, and though none have been on the scale of Rocheís deal with Alnylam, itís likely only a matter of time before we see similar, if not even larger-scale, deals being made.î


Roche said it expected to commence the first clinical trials with RNAi-based drug candidates within two years, with the view to developing drugs for asthma and chronic obstructive pulmonary disease, according to Lee Babiss, Roche's head of global pharmaceutical research. He added that treatments for type 2 diabetes and colorectal cancer will be among the first human clinical trials of RNAi-derived drugs.


Kepler Equities analysts said that Roche had over paid for Alnylam, as the drug research was still early-stage and the market capitalisation of Alnylam was less than USD 600m.


In H1 2007, Roche has been active in its purchases of other companies, putting in a USD 3bn unsolicited bid for Ventana Medical Systems. The company also revealed plans to buy NimbleGen for USD 272.5m, while closing the takeover of US-headquartered diagnostics company BioVeris for USD 600m.

11th July 2007


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