Novartis and Alnylam Pharmaceuticals, Inc. have signed a major multi-year alliance focused on the discovery of innovative therapeutics based on RNA interference (RNAi). The alliance will combine the research expertise and understanding of disease mechanism and pathway biology of Novartis with Alnylam's leading position in the field of RNAi.

RNAi is a natural process for selective gene silencing found in all cells. By utilizing the RNAi mechanism, RNAi therapeutics have the potential to treat human disease in a fundamentally new way through the silencing of disease- causing genes. During the term of the agreement, the collaboration will focus on the joint discovery of new therapeutics using RNAi across multiple disease areas in the Novartis research portfolio.

“RNAi holds great promise as a new therapeutic modality for treating many diseases. In particular, this exciting new area of biology has potential to target diseases that cannot be addressed by traditional approaches. This collaboration complements our robust small molecule and antibody-based research programs and will advance our efforts to develop innovative medicines for patients," said Dr. Mark Fishman, President of the Novartis Institutes for BioMedical Research.

According to the release, Novartis and Alnylam will form a Scientific Strategy and Advisory Group to review the overall strategy for the relevant science and clinical applications of the collaboration. The Advisory Group will be co-chaired by Dr. Fishman and Alnylam founder and director Phillip A. Sharp, Institute Professor of MIT and 1993 Nobel Laureate in Physiology or Medicine.

Dr. John M. Maraganore, President and Chief Executive Officer of Alnylam Pharmaceuticals said, "Our collaboration will utilize significant resources and capabilities to place Novartis and Alnylam in a unique position to build RNAi therapeutics as a major class of drugs in the biopharmaceutical industry."

Under the agreement Novartis will make initial payments of approximately $56.8 million to Alnylam, consisting of upfront payments and the purchase of approximately 4.2 million shares of Alnylam common stock at a price of $11.11 per share. The number of shares of Alnylam common stock to be purchased by Novartis will be determined prior to closing and will equal 19.9% of the outstanding common stock of Alnylam on the closing date. Following receipt of certain approvals, Novartis will purchase at a price of $11.11 per share an additional number of shares of Alnylam common stock so that Novartis holds an equity interest equal to 19.9% of the total outstanding common stock of Alnylam after giving effect to the purchases by Novartis. In addition, Alnylam is eligible to receive, across multiple programs, research and early development funding, progress milestones, pre-clinical and clinical development milestones, sales milestones and royalty payments.