Associate

A hot young section of the industry is seeing some consolidation already, as Alnylam Pharmaceuticals Inc. merged with its counterpart in Germany, Ribopharma AG, and concurrently raised $24.6 million in private financing to build a bigger, stronger entity.

The merger first was considered in December when Alnylam CEO and President John Maraganore came aboard from Cambridge, Mass.-based Millennium Pharmaceuticals Inc., where he served as senior vice president, strategic product development. Around that time, Alnylam and Ribopharma arranged a meeting and "had a wonderful dinner and then some beer in the Rathskeller in Munich and got to know each other," said Maraganore, who will act as CEO and president of the merged company.

"In February, we got together and met here in the States, and what was becoming clear was that Ribopharma and Alnylam had superimposable visions for the mission of [a combined company]."

There was an opportunity present to make a more robust company, Maraganore realized, and the companies "started talking about that opportunity." Both were focused on using synthetically prepared siRNA to silence genes, providing a clear synergy. Although Ribopharma was founded in 2000 and raised €2 million through a convertible loan in January, it found itself on the cusp of a private round of financing, so the decision of whether to join the companies or forge on alone needed to be made quickly. The parties recognized "as one company, we'd be stronger," Maraganore said, and from there, the merger was on.

The boards of both privately held companies approved the agreement, which stipulates that shareholders exchange their holdings for stakes in the merged entity, to be called Alnylam Holding Co. The funding gives the newly merged company more than $40 million in cash. Former Ribopharma CEO and founder Roland Kreutzer will serve as chief operating officer at the Ribopharma operating unit in Kulmbach, Germany, and Stefan Limmer, a founder of Ribopharma and previously its chief science officer, will serve as chief technology officer of the combined company. The global headquarters will be in Cambridge, Mass., and Maraganore said he really isn't expecting any layoffs.

"No, we don't see any," he told BioWorld Today. "Clearly, there is overlap in projects that were going on before [the merger], but there has been a lot of thinking on how we are bringing the companies together." Combined, Alnylam Holding will have about 60 employees, with more than half coming from Alnylam.

The private financing included investments by Polaris Venture Partners, of Waltham, Mass.; Abingworth Management, of London; Cardinal Partners, of Princeton, N.J.; Atlas Venture, of Boston; and ARCH Venture Partners, of Chicago. Alnylam raised $15 million in its Series B round of financing in July 2002 and raised $2 million in its Series A round. Ribopharma received €1 million from the German Ministry of Education and Research in June 2002. (See BioWorld Today, Aug. 5, 2002.)

RNA interference as a technology is meant to silence gene expression. It has been growing in favor in the past year, causing some companies to bring aspects of it into their research, others to seek out intellectual property surrounding it and at least one to refocus entirely - Ribozyme Pharmaceuticals Inc. took up the name Sirna (for small interfering RNA), changed its ticker symbol to "RNAI," and promptly raised $48 million in a private placement. At the time, Sirna said it had filed 50 patents in RNA interference and had 30 issued on the chemistry, stabilization and synthesis necessary to use the approach for therapeutics. (See BioWorld Today, Feb. 13, 2003.)

The discovery of RNA interference first was made by Andrew Fire of the Carnegie Institute of Washington and Craig Mello of the University of Massachusetts Medical School. Given the location of the origination of the science, UMMS is seen by some as hallowed ground for RNA interference. CytRx Corp., of Los Angeles, certainly thinks so - it licensed in April a portfolio of applications for gene silencing technology in the areas of Type II diabetes, obesity and cancer, saying at the time UMMS had "probably the broadest platform of RNA technology in the world." (See BioWorld Today, April 22, 2003.)

And it might - in invertebrates, Maraganore said.

"The key [RNAi] work was done by Fire and Mello," he acknowledged, but added that their work was largely focused on invertebrates.

"In mammalian cells, work was done by two groups: Phil Sharp and Tom Tuschl," Maraganore said. "Tom's work is recognized as the key work in the States, though Stefan [Limmer] was doing complementary work at the same time."

Sharp and Tuschl, along with Paul Schimmel, David Bartel and Phillip Zamore, went on to found Alnylam in June 2002, and Limmer was a founder at Ribopharma. All together now, the merged company is taking its round of financing and forging ahead, perhaps all the way to the public markets.

"Our plan, based on our business model, is to do a number of pharmaceutical alliances," Maraganore said. "We plan to go on building the company without any additional private equity funding."

Although nothing is finalized yet, Alnylam expects to report partnering progress in the "not-too-distant future." The science itself is making strides, too, he said.

"It's early, but there has been a good bit of good progress," he said. "We've seen now both at Ribopharma and at Cambridge evidence of in vivo activity of siRNA-based drugs. We've done studies in both the cancer setting and in metabolic disease where we've been able to show siRNA's in vivo ability to produce a biological effect." Although not sure which program will advance first, he said the clinic should be just two or three years away.

When a scientific discovery rises to the top of the industry, it often launches a patent race. Although Maraganore said he views an intellectual property estate as "a value builder, not a basis for declaring war," he said his company has a rock-solid base, with its list of lofty names in the RNAi arena.

"We absolutely think so," he said. "Others have different opinions, but ultimately time will tell. We think this positions us as the leader in the space."