SAN FRANCISCO Genzyme, a unit of French drugmaker Sanofi, disclosed Monday that it will pay $700 million to buy 12 percent stake in Cambridge-based biotechnology company Alnylam Pharmaceuticals Inc. to tap its pipeline of rare-disease drug candidates.
Under the expanded strategic agreement to develop and commercialize treatments for rare genetic diseases, 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.
Sanofi is buying the Alnylam stake for about $80 a share, a 21 percent premium over Alnylam's closing share price of $66.21 on Jan. 10. The boards of both companies have approved the transaction, according to Sanofi.
The announcement, coming as the annual J.P. Morgan Healthcare Conference gets underway in San Francisco, underscores the commitment of Genzyme's corporate parent Sanofi SA, to build a more formidable portfolio of experimental treatments for rare genetic disorders just weeks after Genzyme suffered a major setback when the US Food and Drug Administration rejected its much-anticipated multiple sclerosis therapy.
"We've had some challenging times," said Genzyme's chief executive, David Meeker. "This sends a strong message that we're back trying to build a pipeline in rare genetic diseases, working with Alnylam."
Alnylam has emerged as a leader in the field of RNA interference therapeutics, or RNAi, which fights diseases by silencing genes that cause the unwanted overproduction of proteins in cells.
Meeker said Alynylam is "right on track" with its "5 by 2015" goal of advancing five therapies by next year.
The deal will give Genzyme a 12 percent stake in Alnylam with an option to buy up to 30 percent of the company at some point in the future.
It will also give Genzyme broad marketing rights to Alnylam's portfolio of clinical and preclinical drugs deploying RNAi technology..
Under the agreement, Genzyme will also gain the rights to commercialize patisiran in Eastern Europe, the Middle East, Africa, and Latin America, as well as Asia. Alnylam will retain the rights to market the drug in North America and Western Europe.
Each company will book revenues from sales in its territories, though Genzyme will pay Alnylam royalties from its sales of patisiran.
The deal builds on Sanofi's$20.1 billion 2011 acquisition of Genzyme, which ranked as the world's biggest maker of treatments for rare diseases.
The market for such drugs is forecast to grow at twice the pace of the pharmaceutical industry to $127 billion by 2018 from $83 billion in 2012, according to market-researcher Evaluate Ltd.
The partnership between Sanofi and Alnylam began in 2012, with Genzyme gaining the rights to market Alnylam's lead product, patisiran, in Japan and other Asian Pacific countries. Patisiran, which is in late-stage clinical trials, treats transthyretin-familial amyloid polyneuropathy, a rare life-threatening disease that damages the nervous system.
John Maraganore, chief executive of Alnylam, called the expanded deal with Genzyme "transformational," giving his company the capital to accelerate its development of more than a half-dozen drugs and putting the worldwide marketing muscle of Genzyme and Sanofi to work on Alnylam's behalf.
Alnylam, for its part, gains a deep-pocketed partner as it ramps up development of drugs to treat rare genetic disorders, ranging from hemophilia to porphyria, while remaining an independent company.
"The deal with Genzyme really positions us to expand our pipeline and accelerate the progress of RNAi therapeutics to the market," said Barry Greene, Alnylam's president and chief operating officer.
Genzyme's agreement with Alnylam has been approved by the boards of both companies, but it remains subject to regulatory approval.