Sanofi-Aventis (SNY) and Regulus Therapeutics Inc. recently joined forces to discover, develop, and commercialize microRNA (micro-RiboNucleic Acid) therapeutics. The initial focus of the alliance will be in the area of fibrosis – a group of diseases that cause scarring inside organs. MicroRNA molecules treat diseases by turning parts of genes on or off.
 
The deal, which could be worth more than $750 million, allows Sanofi-Aventis and Regulus to collaborate on microRNA drug discovery and preclinical development in up to four microRNA targets, including Regulus’ lead fibrosis program targeting microRNA-21. Preclinical studies have suggested that microRNA-21 leads to the improvement of cardiac function in fibrotic impaired mice.
 
Under the terms of the deal, Regulus – a joint venture between Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals, Inc. (ISIS) – would receive a $25 million upfront fee and a potential $10 million equity investment at a mutually agreed price. Regulus is also entitled to receive milestone and royalty payments.
 
Furthermore, Sanofi, which will bear all research support costs for the next three years, has the option to expand its alliance for two more years beyond the first four targets. That would amount to a payment of an additional $50 million over three years.
 
Moreover, the deal entitles Isis and Alnylam to $1.8 million each (from Regulus) from the upfront payment received by Regulus. Furthermore, the companies are eligible to receive a similar percentage of any future milestone payments. Regulus is also collaborating with GlaxoSmithKline PLC (GSK) on four potential inflammatory disease therapies.
 
Our Take
 
We believe that the partnership with a big player like Sanofi provides a big boost to the development of Regulus’ microRNA therapeutics, which are in pre-clinical development. If these are successfully developed, we believe Sanofi’s marketing muscle will result in successful commercialization of the drugs.
 
Currently, we are Neutral on Alnylam Pharma. Even though Alnylam’s RNA technology is potentially revolutionary, we remain skeptical about its success in drug development application. A very limited number of drug candidates based on RNAi discovery have been tested in animals or humans. Furthermore, we are also concerned about the early stage of development. We are Neutral on Isis Pharmaceuticals and Sanofi-Aventis.
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