Calando Pharmaceuticals Inc. licensed access to intellectual property from Alnylam Pharmaceuticals Inc. to develop an RNAi-based drug for cancer.

Specific terms of the deal were not disclosed, but Calando agreed to pay Alnylam up-front, annual and milestone payments, as well as royalties on any products covered by the agreement. Calando also has the option to add a license for a second target.

Founded as a majority-held subsidiary of Arrowhead Research Corp. in February 2005, Calando focuses on developing RNAi-based therapeutics that can be delivered through its systemic, nonviral delivery system. To date, the company has raised about $14 million and has a staff of nine.

Calando, of Pasadena, Calif., began working on an RNAi drug directed toward an unspecified cancer target, when it decided to seek a license from Alnylam.

"They had the IP we needed to enable us to move forward," said John Petrovich, president and CEO of Calando, which included Alnylam's patents related to the Tuschl I and Tuschl II estates.

"We thought it would be a good idea to secure rights to those," he told BioWorld Today, especially since the first product "we are putting on a path toward preclinical development is an unmodified siRNA."

Calando's delivery technology was licensed from affiliate Insert Therapeutics Inc., also a majority-held subsidiary of Arrowhead. Insert's Cyclosert technology is a variant of Calando's that focuses on small-molecule drugs instead of RNAi.

The technology is described as a linear cyclodextrin polymer combined with a siRNA. Because the polymer delivery is designed to "encapsulate it and protect it in the bloodstream from degradation," the siRNA does not have to be chemically modified to survive intravenous injection and enter target cells.

If Calando's upcoming preclinical work proceeds as planned, the company hopes to enter the clinic with its first product by the end of next year.

In the area of RNA interference (RNAi), Alnylam is one of two companies - the other being San Francisco-based Sirna Therapeutics Inc. - that hold much of the relevant IP related to the gene-silencing mechanism.

To take advantage of the far-reaching IP, Alnylam created its InterfeRx program, a licensing vehicle designed to grant target-specific rights to its RNAi-based intellectual property for therapeutic areas outside Alnylam's focus. Calando is the fourth partner signed under InterfeRx.

Last year, Alnylam shaped deals with Kamakura, Japan-based GeneCare Research Institute Co. Ltd., as well as St. Lucia, Australia-based Benitec Ltd. and Bothell, Wash.-based Nastech Pharmaceutical Corp. (See BioWorld Today, July 21, 2005.)

Its own RNAi-based pipeline leads with ALN-RSV01, a drug aimed at respiratory syncytial virus infection that is designed to be delivered directly into a patient's lungs to silence a viral gene in infected lung cells. That product has completed two Phase I trials.

Alnylam, which reported a net loss of $9.9 million, or 31 cents per share, for the second quarter, had a about $123.3 million in cash at the end of June. Its shares (NASDAQ:ALNY) gained 27 cents Monday to close at $13.39.