Genzyme Expands Alliance With Alnylam Pharma, To Invest $700 Mln For 12% Stake

(RTTNews) - Genzyme, a Sanofi company (SNY), and Alnylam Pharmaceuticals, Inc. (ALNY) Monday said they have significantly expanded their strategic agreement to develop and commercialize treatments for rare genetic diseases. As part of the expanded relationship, Genzyme will invest $700 million to become a major Alnylam shareholder.

Under the new agreement, Genzyme will have significant rights to Alnylam's portfolio of clinical and pre-clinical stage drug candidates.

Alnylam will retain most product rights in North America and Western Europe, and will have significantly expanded development and commercial opportunities for its genetic medicine pipeline through Genzyme's established global infrastructure in rare diseases.

David Meeker, Genzyme's President and CEO, said, "This collaboration is an important building block for our future. It strengthens our pipeline and provides us with the opportunity to meet the needs of patients with rare diseases around the world through our well-established global organization."

In 2012, Alnylam and Genzyme formed an exclusive alliance to develop and commercialize Alnylam's lead product, patisiran, which is in Phase 3 development for the treatment of transthyretin or TTR-familial amyloid polyneuropathy, a rare life-threatening disease that damages the nervous system.

In the new alliance, Alnylam benefits from Genzyme's proven global capabilities, enabling the firm to accelerate and expand market access for its 'Alnylam 5x15' products.

In the new relationship, Genzyme will obtain expanded rights to patisiran. Under the original agreement from 2012, Genzyme had rights to commercialize patisiran in Japan and the broader Asia-Pacific region where this disease has a disproportionately high prevalence.

Under the expanded agreement, Genzyme will now commercialize patisiran in all territories outside of North America and Western Europe, which are retained by Alnylam for their commercialization.

Secondly, Genzyme will obtain rights to commercialize worldwide three products in Alnylam's pipeline. Genzyme and Alnylam will co-develop and co-commercialize ALN-TTRsc, a product currently in Phase 2 development for the treatment of familial amyloid cardiomyopathy, in North America and Western Europe, while Genzyme commercializes the product in the rest of world.

Genzyme will have the rights to two additional products after the completion of early clinical trials. The firm will be able to choose between full global rights or co-commercialization rights, depending on the product.

Genzyme will have the option up until 2020, which could be extended through the end of 2021, to develop and commercialize outside of North America and Western Europe all products being developed to treat rare genetic diseases from Alnylam's pipeline.

Alnylam will retain its rights to co-develop and co-commercialize its genetic medicine pipeline in North America and Western Europe.

Genzyme will become a major Alnylam shareholder with a stake of around 12 percent through a $700 million investment at a price of $80 per share, which represents a 27 percent premium considering the average share price over the last 30 days.

In addition, starting from January 1, 2015, Alnylam will receive R&D funding for programs where Genzyme has elected to opt-in for development and commercialization. Further, Alnylam is eligible to receive milestones and royalties.

This transaction has been approved by the boards of both companies.

Alnylam in a separate statement announced a transformational alliance between the two firms for the development and commercialization of RNAi therapeutics as genetic medicines.

According to the company, this alliance significantly bolsters its balance sheet to over $1 billion in cash, enabling an increased investment in the company's RNAi therapeutics pipeline. It is expected to secure Alnylam's financial independence through to multiple product launches.

Genzyme will buy around 8.8 million shares of Alnylam. The company has the right to purchase up to, but not more than, 30 percent of Alnylam stock during the term of the active development and commercial collaboration.

For "regional" programs where Genzyme will develop and commercialize in their ROW territory, Genzyme will pay 20 percent of global development expenses. For "co-develop/co-promote" programs, Genzyme will pay 50 percent of global development expenses.

For "global" programs, Genzyme will meet 100 percent of global expenses. In addition, Alnylam is eligible to receive milestones totaling up to $75 million per product for regional and co-develop/co-promote programs.

In the case of global Genzyme programs, Alnylam is eligible to receive up to $200 million in milestones per product. Alnylam is also eligible to receive tiered double-digit royalties up to 20 percent on net sales on all products commercialized by Genzyme in its territories.

In the case of Genzyme's co-develop/co-promote products in the Alnylam territory, the parties will share profits equally and Alnylam will book net sales revenues.

Sanofi settled down 0.6 percent on Friday at 74.01 euros. ALNY added 2.1 percent to close at $66.21.