CAMBRIDGE, Mass.—In looking for a partner for its ALN-RSV program for the treatment of respiratory syncytial virus (RSV),
Alnylam Pharmaceuticals Inc. went just 15 minutes down the road to Lexington, Mass.-based
Cubist Pharmaceuticals Inc. What isn't precisely clear—to Wall Street at least—is whether the partnership was good matchup or a pairing of convenience that indicates the bloom might be off the RNAi therapeutic rose, at least as far as Big Pharma is concerned.
The collaboration, announced Jan. 9, is structured as a 50-50 co-development and profit-sharing arrangement in North America, and a milestone- and royalty-bearing license arrangement in the rest of the world outside of Asia, where ALN-RSV is partnered with
Kyowa Hakko Kirin Co. Ltd. Alnylam will receive an upfront payment of $20 million and also is eligible to receive development and sales milestone payments from Cubist that could total $82.5 million—as well as double-digit royalties on net sales outside of North America and Asia. After achieving certain development milestones, Alnylam could convert the North American co-development and profit share to a royalty-bearing license with development and sales milestones. Cubist will have sole rights for commercialization of the ALN-RSV program worldwide outside of Asia, subject to the cost and profit sharing in North America.
Neither company could be reached for comment by publication time, and views were a bit mixed among analysts.
Robert W. Baird & Co. issued a "Morning Meeting Report" Jan. 12 that continued to recommend purchase of Cubist stock and maintained an "Outperform" rating for the company.
The report noted of the deal, "We like it, another disciplined deal," noting that up-front investment is small, future costs are levered to success and the potential opportunity is large. Baird also points out that Cubist might be able to contribute significantly to the success of this collaboration by leveraging its current infrastructure for its injectible antibiotics Cubicin and Merrem.
On the other hand,
Piper Jaffray analyst Edward A. Tenthoff called the deal's terms "disappointing," saying in a research note: "In comparison, Kyowa paid $15 million up front plus $78 million in potential milestones last June for Asian rights, indicating that the value of the RSV program has declined."
In fact, it is the potential decline of interest in RNAi therpaeutics themselves, in addition to any possible decline in Alnylam's RSV therapeutics' value, that seems to have some worried. As Brian Orelli of
The Motley Fool wrote Jan. 9, while Cubist is a good company, it isn't a powerhouse. He suggests that the fact Alnylam didn't land a bigger fish after previous substantial deals with
Biogen Idec,
Medtronic,
Merck and
Novartis may mean "the reality of the risk of failure for RNAi drugs has finally set in for Big Pharma." The potential for RNAi therapy remains strong, he says, but evidence that it works in humans is still too slim, and he concludes with: "I may be reading more into Alnylam's deal than I should, but it looks to me like Big Pharma has finally come to its senses and passed on RNAi, at least with this one."
However, Alnylam has reported that one of the main reasons Cubist was the choice—after a reportedly broad range of discussions with companies from large multinationals to local pharmas—was because of its expertise in acute care and infectious disease products. RSV is a highly contagious virus that causes infections in both the upper and lower respiratory tract. It infects nearly every child at least once by the age of two years—and has been linked to the development of childhood asthma—and it is a major cause of hospitalization due to respiratory infection in children and people with compromised immune systems, among others.
"We have tremendous respect for the Cubist team, and have been impressed with the development and ongoing commercial success they have had with their lead anti-infective program, Cubicin," said John Maraganore, Ph.D., chief executive officer of Alnylam, in a news release about the deal. "Partnering this program brings additional critical mass to the advancement of ALN-RSV01 and/or second-generation RSV-specific RNAi therapeutics in our broader program which we aim to advance through ongoing preclinical studies toward potential clinical studies as early as 2010. The partnership also provides Alnylam with yet additional financial flexibility to invest beyond RSV in the multiple product opportunities represented by our growing pipeline of novel RNAi therapeutics."
