Regeneron and Alnylam collaborative agreement will benefit these firms so why the selloff of both?

Founded, and led for 30 years, by physician-scientists Regeneron Pharmaceuticals (REGN) demonstrates an exceptional ability to translate science into medicine. Working diligently Regeneron succeeded in putting seven treatments in the hands of specialists in clinics around the world. Additionally, the firm managed to build a rich pipeline of numerous investigational products all of which were created in its laboratories. Its products aim at treating eye disease, heart disease, allergic and inflammatory diseases, pain, cancer, infectious diseases and rare diseases. 

Regeneron & Alnylam Improving Future Treatments of Disease

As a result of the unprecedented revolution in life-sciences a lot of information reached researchers leading to a rapid improvement in understanding the body’s physiology and pathology at the molecular level. Prepared scientists are using the information to improve the treatment of diseases and others are learning ways to solve problems that defeat most attempts in treating debilitating and life-threatening diseases in specific organs.

Scientists, with prepared minds, at Regeneron Pharmaceuticals realized their breakthrough technologies alone cannot bring improved treatments of some diseases in some organs and systems, including the eyes and the central nervous systems. It did not take long for Regeneron to delve into Alnylam Pharmaceuticals’ (ALNY) history and pipeline products, and appreciate what it observed. This led both firms to announce a collaboration agreement aimed at the discovery, development and commercialization of new RNA interference (RNAi) therapeutics for a broad range of diseases, by addressing disease targets expressed in the eye and central nervous system (CNS).

The collaboration will build on Alnylam’s recent pre-clinical data which demonstrated a potent and highly durable delivery of RNAi therapeutics to achieve target gene silencing in the eye and in the CNS

Regeneron Has Six Approved Products for Various Diseases, Including:

– Rheumatoid arthritis (2 different products),

– Atopic dermatitis,

– Cryopyrin-Associated Periodic Syndromes (CAPS), including Familial Cold Autoinflammatory Syndrome (FCAS) and Muckle-Wells Syndrome,

– Metastatic cutaneous squamous cell carcinoma (CSCC) or locally advanced CSCC who are not candidates for curative surgery or curative radiation and

– Heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease, who require additional lowering of LDL-C.

The Regeneron & Alnylam Agreement Stated the Following:  

– While Alnylam will work exclusively with Regeneron to discover RNAi therapeutics for eye and CNS diseases Regeneron will lead development and commercialization for all programs targeting eye diseases. Alnylam will be entitled to potential milestone and royalty payments.   

– Designing and developing a select number of RNAi therapeutic programs to target genes expressed in the liver which can influence a wide variety of diseases throughout the body. These programs include a joint effort evaluating anti-C5 antibodysiRNA combinations for C5 complement-mediated diseases, including evaluating the combination of Regeneron’s pozelimab (REGN3918) which is being developed in Phase 1 in combination with Alnylam’s cemdisiran, currently in Phase 2 development.

Alnylam will retain control of cemdisiran monotherapy development and Regeneron will lead combination development.

– The firms will equally share investment and potential future profits on the monotherapy program.

–  Alnylam will receive royalties on any potential combination product sales.

Alnylam is eligible to receive up to an additional $200 million in milestone payments upon achievement of certain criteria during early clinical development for the eye and CNS programs.  

Regeneron will make a $400 million upfront payment to Alnylam.  

– Regeneron will purchase $400 million of Alnylam equity at a price per share of $90.00 based on the volume-weighted average price over the last fifteen-trading-day period.

Alnylam and Regeneron plan to advance programs directed at 30 targets and introduce many into clinical development during the initial five-year discovery period which includes an option to extend. For each program Regeneron will provide Alnylam with $2.5 million in funding, at program initiation, and an additional $2.5 million at lead candidate identification. Translating to the potential for approximately $30 million in annual discovery funding to Alnylam as the alliance reaches steady state.

The alliance and equity-related agreements are subject to customary closing conditions and clearances, including clearance under the Hart-Scott Rodino Antitrust Improvements Act.

Nonalcoholic Steatohepatitis (NASH)

The companies will continue their previously-announced collaboration towards identifying RNAi therapeutics for NASH based on novel RGC findings.

Alnylam retains broad global rights to all of its other un-partnered liver-directed clinical and pre-clinical pipeline programs.

Prohost Observations

Contrary to our expectations Regeneron experienced a selloff which we believe was caused by traders’ applying the rule of thumb, stating that any penny a company tries to spend is bad news for shareholders. Explaining the value of the agreement, George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer of Regeneron, stated that the collaboration enables Regeneron to reach targets inside the cell complementing the company’s expertise in antibodies, which are ideal for targets outside the cells and those on the cell surface. Dr. Yancopoulos said that Regeneron researchers are already identifying additional targets that may be well-suited for RNAi-based drug development, particularly with regard to the eye and the CNS.

John Maraganore, Ph.D., Chief Executive Officer of Alnylam, said that the collaboration with Regeneron is expected to significantly accelerate Alnylam’s efforts in bringing RNAi therapeutics to patients. The alliance structure enables Alnylam to continue to build its industry-leading pipeline of RNAi therapeutics while retaining significant product rights. The near-term payments, under this new agreement, will strengthen Alnylam’s balance sheet with over $2 billion in pro forma cash upon closing of the transaction; supporting the firm’s  global efforts to develop and commercialize multiple products as potential breakthrough medicines and advance Alnylam’s profile toward sustainable profitability.

Alnylam’s first U.S. FDA-approved RNAi therapeutic is ONPATTRO® (patisiran) lipid complex injection available in the U.S. for polyneuropathy of hereditary transthyretin-mediated (hATTR) amyloidosis in adults.

In Europe ONPATTRO is approved for the treatment of hATTR amyloidosis in adults with stage 1 or stage 2 polyneuropathy.

Alnylam has a deep pipeline of investigational medicines; five of them are in late-stage trials.

Alnylam is continuing to execute on its “Alnylam 2020” strategy of building a multi-product, commercial-stage bio-pharmaceutical company with a sustainable pipeline of RNAi-based medicines to address the needs of patients who have limited or inadequate treatment options.

We believe Alnylam will benefit a great deal from the Regeneron collaboration.   

Regarding Regeneron we believe it is a first class bio-pharmaceutical firm that took long to put products on the market but once there they demonstrated superiority.

The investigational pipeline comprises 25 products for various diseases, including immunotherapy for cancer, cancer products, infection and many other diseases.

We like the firm’s collaboration agreement with Alnylam and we are believers in Regeneron’s science and its management; we are bullish on its stock.  

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