Alnylam Pharmaceuticals, Inc.
) and Tekmira Pharmaceuticals Corporation recently signed a new
licensing agreement and settled all existing litigation.
As per the new licensing agreement, some intellectual property
(IP) elements regarding lipid nanoparticle (LNP) technology for
ribo nucleic acid interference (RNAi) therapeutics have been
merged and clarified. Alnylam now has the full right to utilize
this IP to advance its RNAi therapeutics products in the
The company will also have the right to sublicense IP on a
product-by-product basis. However, the company has agreed to
allow five extra non-exclusive therapeutics licenses to
Alnylam will be making a one-time payment of $30 million to
Tekmira for acquiring tights to manufacture its LNP-based RNAi
therapeutic products independently or through a third party
contractor. Alnylam is expected to use its own Good Manufacturing
Practice (GMP) capabilities to further its phase III clinical
trial on ALN-TTR02. The company plans to initiate the trial by
the end of next year.
The agreement also allows Alnylam to buy-down some future
potential milestone payments along with a portion of future
potential royalties for its ALN-VSP, ALN-PCS, and ALN-TTR02
programs. Alnylam will be making a one-time payment of $35
million to Tekmira relating to the termination of the previous
license agreements between them. For Alnylam, this actually means
a significant reduction in milestone and royalty payments for
Tekmira is also eligible to receive an additional $10 million
(approximately) as contingent milestone payments for the
advancement of ALN-VSP and ALN-TTR02 products. The payment of $10
million represents the only probable milestones for ALN-VSP,
ALN-PCS and ALN-TTR02 products.
Alnylam will be required to pay Tekmira potential milestones
and royalties on all other probable LNP-based products on terms
identical to its previous license agreements. Meanwhile, Tekmira
will be required to pay milestones and royalties to Alnylam for
certain RNAi therapeutic products, which are developed under the
licenses from Alnylam on the previous license terms.
The companies have agreed to settle all their current
litigations including the resolution of interference proceeding
related to the siRNA component in ALN-VSP and Massachusetts and
British Columbia lawsuits. Along with signing the settlement
agreement, the companies also agreed to settle all future
disputes for the next three years with binding arbitration.
Alnylam also revised its financial guidance for the year
considering the extra $65 million of operating expenses during
the fourth quarter of 2012. The company now expects to exit 2012
with more than $215 million in cash.
We believe that the companies' decision to restructure their
relationship will be beneficial for both. We remind investors
that Alnylam generates revenues from research collaborations,
grants, and licensing of the RNAi technology. Alnylam has formed
major alliances with leading companies, such as
We currently have a Neutral recommendation on Alnylam. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
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