RNAi Firms Unite Rather than Fight

In the hot new field of RNAi research, both Alnylam Pharmaceuticals and Ribopharma felt they controlled vital intellectual property. To end uncertainty offputting to potential partners and investors, and leverage the commercial head-start of Ribopharma, the companies decided to merge and go forward as Alnylam.

Young companies bickering and battling over intellectual property (IP) tend to have a hard time getting ahead in life. Potential partners shy from the risk inherent in uncertain legal standing, and investors get spooked too. Who wants to bet on a firm that may eventually have the rug pulled out from under it? This recognition helped spark the early July merger of Alnylam Pharmaceuticals Inc. of Cambridge, MA, and Ribopharma AG of Kulmbach, Germany (to create Alnylam Holding Co. ) [See Deal].

Both firms felt they held important IP in the new and hot field of research based on a phenomenon known as RNAi. Alias for RNA interference, RNAi is the term for a natural process whereby cells utilize pieces of double-stranded RNA to inhibit the expression of specific genes. The recently discovered mechanism may be a sort of ancient immune system—as well as a starting point for brand-new, highly specific human therapeutics. (See "RNAi Revs Up," START-UP, October 2002 (Also see "RNAi Revs Up" - Scrip, 1 Oct, 2002.).)

Instead of spending time, energy and money fighting each other, Alnylam and Ribopharma decided to merge into one firm that will proceed under the name Alnylam. "In other fields where patent estates are fragmented, that has delayed partnering discussions. So consolidation of the IP puts us in a much stronger position," notes Peter Barrett, a partner with Atlas Venture, one of Alnylam's backers, and a member of the company's board. Questions about how RNAi molecules will be delivered, and who might own rights to enabling technology for that, remain outstanding. But Alnylam can only benefit from having broader patent coverage. Barrett notes that the merger wasn't only about IP: "Their scientists have been working towards commercialization longer than ours."

Ribopharma CSO Stefan Limmer, PhD, says he's well pleased with the deal, explaining that his firm, founded in 2000 with financing help from the German government, was the first to focus on the commercial application of RNAi, and to receive an issued patent with a priority date. Alnylam, he says, is "associated with eminent and brilliant scientists" who laid the foundations in the basic science of RNAi and RNA more generally. Limmer figures the combination makes Alnylam "the first address for Big Pharma deals. Now there are no more doubts about who holds fundamental patents."

IP aside, the Germans see other benefits to the merger. Limmer sees Boston as a world center of science and technology, and thus finds Cambridge an appealing place for company headquarters. It will be "easier to address the US market, which is the most important, and to exploit biotech and academic connections from there than from Kulmbach," he says.

Operations will continue in Kulmbach, "with comparative levels of investment and staffing at both sites," emphasizes Ribopharma's CEO, Roland Kreutzer, PhD. He says that the two companies have "preliminarily divided areas of expertise," so that Kulmbach will continue focusing on oncology and virology, while Cambridge will pursue metabolic, CNS and immune diseases. Currently each firm employs about 30 people.

The merger coincides with a new round of private financing [See Deal]: $24.6 million that Barrett says is being given to strengthen cash reserves, so that potential Big Pharma partners will sense the company is strong. To secure a partner, Alnylam is working to demonstrate that RNAi actually is therapeutically valid. The method is known to be good for target validation in vitro, but efficacy in humans remains to be shown, Barrett acknowledges. Still, he notes, as with any new technology, "some companies are willing to get in early, with the hope that if it is successful, they'll be at the forefront."

Alnylam's fortification changes dynamics for other companies working in the field to some extent, but patents have never guaranteed success. Victory will go to those that can channel RNAi technology into products. Perhaps it will favor Sirna Therapeutics Inc. (formerly Ribozyme Pharmaceuticals Inc.), a publicly traded company that in February received a $48 million bolus of private financing meant to resuscitate the ailing firm and support a push forward in RNAi [See Deal]. The firm has some patents, and many years of experience working with RNA. (See "IP vs. Know-How: In RNAi, the Battle Is Joined," START-UP, February 2003 (Also see "IP vs. Know-How: in RNAi, the Battle Is Joined" - Scrip, 1 Feb, 2003.).) Limmer won't comment on the competition: "It is none of our business to judge the patent portfolios of others—they have to live with what they have, and we with ours, and we are confident with our position," he says.

Although Alnylam's focus remains on development of therapeutics, the company appears to be preparing to throw its weight around in a way that could impact other firms' drug discovery efforts. The patent granted to Ribopharma in Europe late last summer claims use of RNAi technology for target validation, Kreutzer points out, so now Alnylam is thinking of leveraging that asset by launching a licensing business. Ribopharma had considered such a move on its own he says, explaining, "We don't want license fees from academic institutions, only from companies using our patented technology in-house to validate targets."

New legal tangles are bound to crop up as the field progresses—but the merger of Alnylam and Ribopharma promises to allow at least these players to step free from major snarls that would have impeded their pursuit of products. As START-UP went to press in late July, Alnylam announced further measures to support its bid to produce RNAi therapeutics. The firm licensed additional IP from the Cancer Research UK 's Cancer Research Technology and from the Massachusetts Institute of Technology .