Arrowhead’s Novartis RNAi Deal: Big Boost or ‘Stale Potato Chips’?

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“several venture-backed groups interested in building new companies around all those assets,” Anzalone said. Arrowhead decided to pay Novartis $7 million to buy some time; that allowed it to exclusively vet the RNAi work before making a final offer. “We wanted to make sure if we didn’t get the assets, it’s because we didn’t want them, not because” another company bought them “out from under us,” he added.

Over the past few months, Arrowhead took a look under the hood. “We were really excited about what we saw,” Anzalone said. “It was a deal we really felt we had to do.”

Arrowhead announced the purchase Thursday, saying it would pay Novartis an additional $3 million in cash and $25 million in stock for the RNAi assets. Arrowhead’s stock closed Thursday at $7.94 per share, up nearly 6 percent from the previous day’s close at $7.51.

Alnylam’s Maraganore doesn’t see the appeal. In an interview with Xconomy, he likened the deal to “buying a bag of stale potato chips.”

It would be easy to chalk up this difference of opinion to predictable posturing by a competitor. But the dynamics go much deeper than run-of-the-mill IP maneuvering, given the fractured alliance between Novartis and Maraganore’s company and the fact that he knows these Novartis assets better than most.

“We certainly had a lot of familiarity with the IP, and zero interest in acquiring any of it,” Maraganore said.

He also takes issue with Arrowhead’s assertion that the Novartis patents give it the ability to develop drugs that go beyond the 30 targets tied to the Alnylam IP. “That’s a statement that I think is a bit phantasmagorical,” he said. “At a very high level, these are patents that don’t overcome the early, broad patents in RNAi that only Alnylam has access to.”

Anzalone was left scratching his head at Maraganore’s reaction to the deal. “For him to scoff at the value of this is a little bit funny when a big part of this is a license to his IP for 30 targets,” Anzalone said. “That alone is quite valuable, we think.”

What’s more, Anzalone thinks Arrowhead has a better understanding of Novartis’ RNAi assets than Alnylam, thanks to the close look it got when vetting the technology. “We are better positioned to opine on the value of these assets than someone who hasn’t seen them up close,” he said.

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