Beyond Borders: Global biotechnology report 2010

Perspectives for the new normal
Efficiency and leverage
Alliances between biotech and pharma companies are
ubiquitous in our industry. While there have been thousands of
deals — and deal structures — over the years, the vast majority
of structures fall into one of two categories: collaborations in
which biotech companies provide research or other services,
and licensing transactions in which pharma companies in-license
intellectual property (IP) for use on an exclusive basis in speci c
therapeutic areas or targets. At Alnylam, we have instead
opened up a third path, one that is relatively rare: licensing our
platform on a non-exclusive basis to multiple partners, including
Novartis, Roche and Takeda.
How did we succeed in pursuing this approach? We bene ted
from a platform that is broadly applicable to different targets
and therapeutic areas — small interfering RNAs that can
target any gene. But our success was really enabled by our
focus on consolidating IP around our platform. This is rare in
an industry in which the IP related to many key technologies —
monoclonal antibodies, for instance — is highly fragmented. By
consolidating IP, we have been able to empower our partners
with an uncommonly comprehensive suite of capabilities. For
instance, we gave Roche access to Alnylam’s capabilities and
also transferred a large number of procedures and protocols.
With Takeda, we transferred most of our technologies so they
knew how to use our approaches and methods. Importantly,
we still retain the ability to get the upside bene ts seen
in more typical collaborations, including milestone-based
royalties from our partners’ efforts. With Takeda, we even have
the option to co-develop and co-promote products that they
commercialize in the US.
Efficiency and leverage
This approach has given us greater ef ciency and leverage.
With such a broad-based platform, we would be limited by our
own resources if we pursued targets using a more conventional
approach. Instead, with non-exclusive licensing, we are
leveraging the capabilities and resources of our partners. Our
R&D investment through alliances is several orders of magnitude
larger than our internal pipeline R&D spend. Not only do these
deals bring in revenue to fund our core activities — we’ve raised
more than US$675 million to date from partnerships — but we
also retain a stake in the upside from our partners’ efforts.
John Maraganore
Alnylam Pharmaceuticals
CEO
If we had instead done a series of exclusive deals, we would
likely have faced challenges around management work ow,
resource allocation and potentially diverging interests. And to
conduct R&D internally with pharma funding, we would have
had to add signi cant resources, which can reduce ef ciency
and create problems around transitioning those people when
alliances are dissolved.
While we could, in theory, enable companies to become our
competitors down the road (we don’t, for example, prevent them
from targeting genes we’re focusing on) it is remarkable how
very little intersection there has been so far on the targets we
are pursuing. Targets, like beauty, are in the eye of the beholder.
Lessons for the new normal
How replicable is our model? While not all rms will be able to
use this approach, there are other exciting platforms where
stories similar to Alnylam could be born. Several platform
companies are looking at our partnering model.
Companies considering a non-exclusive model need to start
by consolidating IP, which is what we focused on for our
rst 6 to 12 months. Already, other platforms with IP are
relatively consolidated — for instance, aptamer platforms and
stable-peptide platforms. But consolidation doesn’t have to
be focused on a technology; companies could consolidate IP
around a swath of biology instead.
Companies will need to focus next on validating their
technologies. At this stage, pragmatism will typically require
exclusive licenses, as in our early, highly validating alliance with
Merck. Companies should de ne clear boundaries about what’s
in and what’s out of the alliance, so that they are not prohibited
from doing broader, non-exclusive deals down the road. Finally,
it is critical to continually invest in improving the platform over
time. We still spend about 40% of our internal R&D on enhancing
our platform.
With these guiding principles, I fully expect that other
companies will be able to use non-exclusive licensing. Our
approach is ultimately about extracting the most value from a
valuable asset by leveraging the strengths of others — a relevant
principle in today’s trying times.
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