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ALNYLAM PHARMACEUTICALS, INC. 8-K Report, Material Agreement (Nov 13, 2012)

Filed November 13, 2012For Securities:ALNY

Summary

Alnylam Pharmaceuticals, Inc. (ALNY) announced on November 13, 2012, a significant restructuring of its relationship with Tekmira Pharmaceuticals Corporation (TPC) and its subsidiary Protiva Biotherapeutics, Inc., along with a resolution of all ongoing litigation. This strategic move involves a new cross-license agreement for lipid nanoparticle (LNP) technology, crucial for the systemic delivery of RNAi therapeutics. Alnylam will now independently manufacture its LNP-based RNAi products, a key operational shift that removes previous manufacturing obligations to Tekmira. Furthermore, Alnylam has entered into agreements to significantly reduce future potential milestone and royalty payments for its ALN-VSP, ALN-PCS, and ALN-TTR programs. This buy-down was achieved through upfront payments totaling $65 million, which will be recognized as an operating expense in the fourth quarter of 2012. The company now projects ending 2012 with over $215 million in cash, a slight adjustment from previous guidance due to these payments. This restructuring aims to streamline Alnylam's operations, solidify its intellectual property position for LNP delivery, and clarify its financial obligations related to key pipeline assets.

Key Highlights

  • 1Alnylam has entered into a new Cross-License Agreement with Tekmira Pharmaceuticals Corporation (TPC) and its subsidiary Protiva Biotherapeutics, Inc., resolving all ongoing litigation between the parties.
  • 2Alnylam has elected to independently manufacture its lipid nanoparticle (LNP)-based RNAi therapeutic products, terminating prior manufacturing agreements with TPC.
  • 3The company made a $30 million payment to TPC to terminate all manufacturing obligations and gain the right to manufacture or have manufactured its LNP-based RNAi therapeutics.
  • 4Alnylam paid an additional $35 million to buy down future potential milestone and royalty payments for its ALN-VSP, ALN-PCS, and ALN-TTR programs.
  • 5Under the new agreement, Tekmira is eligible to receive a total of $10 million in contingent milestone payments for ALN-VSP and ALN-TTR, with specific triggers for Phase III initiation of ALN-TTR and ALN-VSP clinical trial material manufacture in China.
  • 6The overall payments of $65 million will result in a $65 million charge to operating expenses in the fourth quarter of 2012.
  • 7Alnylam now expects to end 2012 with greater than $215 million in cash, cash equivalents, and marketable securities.

Frequently Asked Questions

The new agreement resolves all litigation and restructures Alnylam's relationship with Tekmira regarding LNP technology. It allows Alnylam to independently manufacture its LNP-based RNAi therapeutics and significantly reduces future milestone and royalty payments for key programs (ALN-VSP, ALN-PCS, ALN-TTR). This provides Alnylam with greater operational control and clearer financial projections for these assets.

Alnylam and Tekmira are consolidating certain intellectual property related to LNP technology. Alnylam will assign specific patents (including the MC3 lipid family) to Tekmira but retains rights to use this IP for RNAi products and sublicensing. Tekmira grants Alnylam a worldwide license to its LNP technology, which is exclusive for up to eight designated targets and non-exclusive otherwise, with Alnylam holding sublicensing rights.

Alnylam is making upfront payments totaling $65 million ($30 million for manufacturing termination and $35 million for milestone/royalty buy-down). This will be recorded as a $65 million operating expense charge in the fourth quarter of 2012. Consequently, the company now forecasts ending 2012 with over $215 million in cash, slightly lower than previously anticipated due to these payments.

The buy-down specifically impacts Alnylam's ALN-VSP, ALN-PCS, and ALN-TTR programs. Under the new agreement, Tekmira is eligible for a total of $10 million in milestone payments for ALN-VSP and ALN-TTR (specifically, $5 million for the initiation of ALN-TTR Phase III trials and $5 million for the manufacture of ALN-VSP clinical trial material for use in China).