The billion-dollar deal between Roche and Alnylam Pharmaceuticals reflects the promise of the nascent technology known as RNA interference, as well as the ongoing pressures on big pharma companies to fill their pipelines. But the agreement also throws attention to a handful of other companies working to overcome the barriers of turning RNAi into therapeutics.

RNAi is a natural process for turning off genes. It is also seen as a basis for a promising new class of drugs, which could potentially treat everything from cancers to infectious disease by enlisting a biological process to silence genes that produce disease-causing proteins. Pharmaceutical companies have embraced RNAi as they have entered into big dollar deals to gain access to the technology, which can open a world of new therapeutic targets, but significant barriers remain to being able to develop RNAi products that can act like drugs.

The Roche deal with Alnylam, announced this week, follows Merck's $1.1 billion acquisition of the San Francisco-based RNAi company Sirna Therapeutics in 2006. The Swiss pharma giant will pay Cambridge, Massachusetts-based Alnylam $331 million in upfront payments and equity investment. It is acquiring nearly 2 million shares of Alnylam's common stock at $21.50 a share. That will give them just less than 5 percent of the company. Milestone payments could push the value of the deal to in excess of $1 billion.

Roche obtained a non-exclusive license to Alnylam's technology platform for developing RNAi therapeutics. The alliance will initially cover four therapeutic areas: oncology, respiratory diseases, metabolic diseases and certain liver diseases. Alnylam and Roche also will collaborate on RNAi drug discovery for one or more disease targets in these therapeutic areas. As part of the agreement, Roche will acquire Alnylam's European research site located in Kulmbach, Germany, which will be re-dubbed the Center of Excellence and dedicated to RNAi therapeutics discovery.

The rich price for what remains an unproven if promising technology is seen as a reflection of the ongoing pipeline problems faced by big pharma.

"The R&D programs within big pharma have not been as productive as they need to be," said Ralph Christoffersen, a partner with Morgenthaler Ventures and former CEO of Ribozyme Pharmaceuticals, a precursor to Sirna Therapeutics. "They are discovering that both products and platforms are available in biotech companies that could provide important sources of new products, and they are attempting to buy their way back into R&D productivity."

Delivery the Overwhelming Issue
Traditional small molecule drugs work by binding to proteins underlying a disease. Pharmaceutical companies are hoping to harness the power of RNAi to prevent the production of the deleterious proteins in the first place. RNAi is triggered by so-called short-interfering RNA or siRNAs, double stranded RNA molecules consisting of 20 to 25 nucleotides.

The problem is that they don't have the characteristics of conventional, small-molecule drugs, such as easy delivery and stability. The challenge RNAi companies are working to overcome is how to deliver these substances to where they need to go to have therapeutic benefit, stabilize them and get them to stay around long enough to have their desired effect without creating unwanted effects.

"Delivery is the overwhelming issue. Unless it is resolved, the technology is going to languish," said James Barrett, general partner with New Enterprise Associates in Baltimore and chairman of Nucleonics, an RNAi company for which his firm led the most recent financing round. "The more broad issue is that regardless of these short-term issues, big pharma believes there's something to this technology. I suspect they are feeling that they will take a position and solve the delivery problem or not, but they surely don't want to be left behind if it is solved."

Systemic Solutions
Sirna, Alnylam and others have sought to chemically modify lab-produced siRNAs to give them drug-like characteristics, but the most advanced programs in the area of RNAi have been in diseases where these can be delivered directly, such as injections of siRNAs in the eye for age-related macular degeneration or inhalation of siRNAs in the lung for the treatment of respiratory syncytial virus infection. Two privately-held companies, though, are working on ways to systemically deliver RNAi therapeutics. If successful, they could provide a major breakthrough to turning the technology into one that is broadly applicable to a wide range of diseases.

Mohammad Azab, president and CEO of Palo Alto, California-based Intradigm, said the problem is that RNA has none of the properties people think of good drugs as having. They need to be stable, have good distribution in the targeted tissues and access the targeted tissue. None of that applies to RNA.

"It doesn't really act as a drug," he said. "There is really no consensus currently on what is the best way to make these RNA molecules drug-like."

Intradigm has developed nanoparticles that protect the siRNAs. By attaching a molecule to the nanoparticle, the company can target delivery for specific cell types. Its lead product, which hasn't entered the clinic yet, is an anti-angiogenic that works by choking off the blood supply to tumors. The company is in talks with several companies to make its technology available for use in targets and diseases they are not pursuing.

"Intradigm is one of the few companies focused on the multiple challenges of RNAi because we feel that's really an enabling field," said Azab. "The companies making these big deals are still working on the delivery challenge. So far there has not been a single program in the clinic using systemic delivery of these RNAi drugs. This problem is still largely unsolved."

Work To Be Done
That may soon change. Within the month, Horsham, Pennsylvania-based Nucleonics expects to begin a trial of its RNAi therapy for chronic Hepatitis B. Rather than inject RNAi into a patient, Nucleonics relies on plasmids—circular, double-stranded DNA molecules—that turn cells into factories for desired siRNAs. A single plasmid can be designed to cause the production of multiple siRNAs. In the case of the company's Hepatitis B treatment, it produces four siRNAs that target all of the gene products of the Hepatitis B virus.

But Nucleonics isn't looking for any pharmaceutical alliance near-term. The company, which has raised more than $50 million through two venture rounds, plans to carry its product through a mid-stage proof-of-concept trial. Burrill & Company, a part owner of this publication, is an investor in Nucleonics.

Robert Towarnicki, president and CEO of Nucleonics, said the Roche deal with Alnylam reflects the greater attention big pharma is paying to biotech and the promise of RNAi, but that work still needs to be done.

"The fact that big pharma is paying this kind of money for access speaks to the power of this technology," he said, "but we shouldn't underestimate the challenges that are still in front of us."