Alnylam to Pay Tekmira $65M to Settle RNAi Delivery Dispute

Alnylam to Pay Tekmira $65M to Settle RNAi Delivery Dispute

[Updated: 11:27 pm ET] Cambridge, MA-based Alnylam Pharmaceuticals has agreed to pay Vancouver, BC-based Tekmira Pharmaceuticals $65 million upfront, and potentially another $10 million next year, to settle a legal dispute over technology that enables Alnylam’s RNA interference drugs to be delivered where they are supposed to go inside cells.

Alnylam (NASDAQ: ALNY) and Tekmira (NASDAQ: TKRM) released separate statements today (see Alnylam’s here and Tekmira’s here) that said they have agreed to resolve all their ongoing litigation, and that the companies have restructured and clarified their relationship, so that Alnylam still has a license to Tekmira’s lipid-nanoparticle delivery technology.

As part of the deal, Alnylam has agreed to pay $30 million to terminate a contract manufacturing agreement with Tekmira, plus another $35 million to terminate previous license agreements to use Tekmira’s RNAi drug delivery technology. The new licensing agreement provides Tekmira with lower future milestone payments and royalties on three Alnylam products in development—ALN-VSP, ALN-PCS, and ALN-TTR02—although the altered financial terms weren’t disclosed in today’s announcements.

Besides the $65 million payment—which Tekmira said it expects to get within 10 days—it is also eligible to receive an additional $10 million in milestone payments expected in 2013. Alnylam has agreed to make a $5 million payment that will be triggered when Alnylam’s second-generation drug for transthyretin-mediated amyloidosis (TTR) enters a pivotal clinical trial, plus another $5 million payment to Tekmira when clinical trials of the liver cancer drug ALN-VSP start in China. The deal was reached just as the dispute was scheduled to go to a jury trial on Wednesday, says Alnylam spokeswoman Cynthia Clayton. [Updated to add comment about timing of the trial.]

The settlement brings to a close a bitter dispute that started when Tekmira filed a lawsuit in March 2011 which accused Alnylam of “relentless and egregious” misappropriation of its trade secrets, and asked for $1 billion in damages. Alnylam CEO John Maraganore said he was blindsided by the accusation, which he only learned of when Tekmira CEO Mark Murray sent him an e-mail informing him of the suit. The suit was a high-risk move for Tekmira, which had much less cash in the bank to sustain such an expensive, and high-risk legal battle.

Now that the settlement has been reached, it provides a big financial lift for Tekmira. The little company had just $6.9 million of cash left in the bank at the end of June, and it said in that quarterly report it only had enough money to operate into the second half of 2013.

Mark Murray, CEO of Tekmira Pharmaceuticals

“Today’s announcement provides assurances for our stakeholders that we accomplished what we set out to do when we initiated this litigation. We now have clarity around the intellectual property that protects our lipid nanoparticle (LNP) technology and a cash payment that will enable us to continue the execution of our business plan into 2015” Murray said in a statement.

The stakes in this dispute were so high because delivery of RNAi treatments remains one of the major challenges that must be solved for this field to reach its potential in fighting diseases that aren’t adequately treated by today’s small molecules or protein therapies. Alnylam, a leading developer of RNA interference molecules, has long sought help from a network of scientific collaborators to help it solve this central challenge for the field.

Tekmira, which makes lipid nanoparticles that serve as delivery vessels for RNAi, agreed to provide Alnylam with access to its technology in 2007. That deal was followed by a further manufacturing supply deal in 2009.

Over time, Tekmira alleged, Alnylam misused the information it obtained under the agreements. Tekmira claimed that Alnylam abused its status as a collaborator by attempting to copy the Tekmira methods for its own proprietary delivery technology, and by sharing Tekmira’s delivery technology with a third party without Tekmira’s consent.

By breaking off the manufacturing relationship with Tekmira, Alnylam will now have to manufacture the lipid nanoparticles on its own, or find another partner to help it produce sufficient batches for clinical trials … Next Page »

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