Novartis AG Unloads RNAi Portfolio to Arrowhead Research Corporation for $35 Million

Published: Mar 06, 2015

Novartis AG (NVS) Unloads RNAi Portfolio toArrowhead Research Corporation (ARWR) for $35 Million
March 5, 2015
By Jessica Wilson, Breaking News Staff

Arrowhead Research Corporation , a biopharmaceutical company developing targeted RNAi therapeutics, announced today that it has purchased the entire RNAi research and development portfolio of Novartis AG for $35 million.

The deal is part of Novartis AG ’ plan to wind down its presence in the RNAi field, a decision the company made in April 2014. Novartis’ decision to leave the RNAi field, first reported by Fierce Biotech in April 2014, was correlated with significant drops in the stocks of several players in the field, CNBC noted at the time.

The week Novartis discussed its exit from the field, share prices of companies working in RNAi therapeutics, including Alnylam Pharmaceuticals , Isis Pharmaceuticals, Inc. , Regulus Therapeutics, Inc. , Dicerna Pharmaceuticals and Tekmira sunk by more than 12 percent as compared with a six percent drop for the Nasdaq biotech index that week.

The market volatility surrounding RNAi therapeutics reflects the rollercoaster ride of research in the field. RNAi, also referred to as RNA interference, is a technique that silences genes that produce specific disease-causing proteins using specially designed RNA molecules. It was discovered in 1998, and in 2006 the researchers who made the discovery were awarded the Nobel Prize for medicine. A feeding frenzy commenced that saw several large pharmaceutical companies vying to enter the market. For example, Merck & Co. bought one of the first biotech companies working in the field, Sirna Therapeutics, for $1 billion in October 2006.

Buy 2010, however, the tide had begun to turn. In 2010, Roche axed its RNAi program after spending three years and more than $500 million on the program’s development.

“The momentum now seems to be heading a bit against RNAi,” said Alan Carr, an analyst at Needham & Company, an investment-banking firm in New York, reported Nature in 2010. That same year, “Novartis AG declined to spend $100 million to extend a partnership with Alnylam, a prominent RNAi company based in Cambridge, Massachusetts,” according to Nature.

The cause of these change-of-hearts was a hang-up in the research. The RNA molecules are fragile and difficult to target. “Getting these molecules exactly where we want them to go is a little more difficult than originally thought,” Michael French, chief executive of Marina Biotech, Inc. , an RNAi company based in Bothell, Washington, told Nature in 2010.

Not much had changed by spring 2014, according to Novartis, who said its decision to exit the field was “driven by ongoing challenges with formulation and delivery and the reality that the current range of medically relevant targets where siRNA may be used is quite narrow,” in a statement to Fierce Biotech.

Not surprisingly, Arrowhead remains optimistic about the research and the market for RNAi therapies. The purchase of Novartis’ RNAi portfolio will provide the company with “substantially expanded freedom to operate, proprietary technology that appears to enhance the activity of RNAi triggers, access to non-delivery Alnylam RNAi IP for 30 targets, and three programs that went through the rigorous Novartis vetting process,” said Christopher Anzalone, president and chief executive officer of Arrowhead.

“It's a complicated and unsettled IP landscape and we have just increased our freedom here,” Anzalone said in a statement to Reuters.

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Last week controversy erupted over the compensation package for Sanofi’s new CEO, Olivier Brandicourt, with several French government officials decrying the amount, calling it "incomprehensible." Brandicourt could walk off with as much as $4.5 million in a “golden handshake” payment in addition to making $4.76 million a year. That base figure is comprised by a fixed annual salary of $1.36 million a year, which is supplemented by a performance-related bonus of between 150 to 250 percent, as well as stock options and performance shares.

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