SEC Company Response from ALNYLAM PHARMACEUTICALS, INC. (ALNY) (CIK 0001178670) (ALNY) — Jan 22, 2009
ALNYLAM PHARMACEUTICALS, INC. (ALNY) (CIK 0001178670)
Date: Jan. 22, 2009 · CIK: 0001178670 · Accession: 0000950135-09-000379
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-50743
Referenced dates: December 9, 2008
Letter
Re:
January 22, 2009
By EDGAR Transmission
Securities and Exchange Commission
Division of Corporate Finance
100 F Street, N.E., Mail Stop 6010
Washington, D.C. 20549
Attention: Christine Allen
Alnylam Pharmaceuticals, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
File No. 000-50743
Ladies and Gentlemen:
On behalf of Alnylam Pharmaceuticals, Inc. (the “Company”), I am writing in response to comments contained in the letter dated December 9, 2008 (the “Letter”) from Jim B. Rosenberg of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”). The responses set forth below are keyed to the numbering of the comments and the headings used in the Letter.
Material Agreements
1.
We note that you refer to several agreements throughout your Form 10-K and proxy statement, most notably the agreements with Tekmira Pharmaceuticals Corporation and the Massachusetts Institute of Technology. It appears that these agreements may be material to your business, but they are not filed as exhibits to your Form 10-K. Please explain why you do not believe that these agreements are material to your business, or, alternatively, please file them as exhibits to your 10-K.
Response:
The Company analyzes each of its agreements for materiality when it enters into the agreement. With respect to the Company’s agreements with Tekmira Pharmaceuticals Corporation (“Tekmira”) and Massachusetts Institute of Technology (“MIT”), the Company has determined that neither agreement is a material contract required to be filed as an exhibit under Regulation S-K Item 601(b)(10). The Company is actively working to extend its capabilities to advance the development and commercialization of its product candidates. As part of this business plan and as a means of obtaining resources and funding, the Company enters into technology license and collaboration agreements, such as the Tekmira and MIT agreements, in the ordinary course of business. Neither the Tekmira nor the MIT contract falls within any of the enumerated categories under Item 601(b)(10)(ii) that would disqualify them from the ordinary course exception. Notwithstanding the Company’s determination that the Tekmira and MIT agreements are not material under Item 601(b)(10), the Company believes that disclosure of these agreements in
300 Third Street • Cambridge MA, 02142 • main 617.551.8200 • fax 617.551.8101 • www.alnylam.com
Securities and Exchange Commission
January 22, 2009
Page 2
its Form 10-K and other filings provides meaningful information for investors regarding the Company’s third-party collaboration efforts.
Strategic Alliances, page 13
2.
Please revise your disclosure in this section to include the following material terms:
Roche, pages 13-14
•
the other therapeutic areas that Roche may expand the license to and the amount of additional payments they may receive to do so
•
the aggregate development and sales milestone payments
•
the expiration date of the last-to-expire patent covered under the license agreement
Novartis, pages 14-15
•
aggregate potential research payments and milestone payments
•
additional payments to be made by Novartis upon exercise of the integration option
•
explanation of the operation of the integration option
•
funding commitments from Novartis for pandemic flu alliance
Biogen Idec, page 16
•
aggregate milestone payments
•
duration and expiration of the agreement
Isis, page 16
•
aggregate developmental and regulatory milestone payments and license fee
•
duration and expiration of the agreement
Response: Roche
•
In response to the Staff’s comment regarding the other therapeutic areas that Roche may expand the license to and the amount of additional payments associated with doing so, the Company intends to revise its disclosure regarding the Roche license and collaboration agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“In July 2007, we and, for limited purposes, Alnylam Europe AG, or Alnylam Europe, entered into a license and collaboration agreement with Roche. Under the license and collaboration agreement, which became effective in August 2007, we granted Roche a non-exclusive license to our intellectual property to develop and commercialize therapeutic products that function through RNAi, subject to our existing contractual obligations to third parties. The license is initially limited to the therapeutic areas of oncology, respiratory diseases, metabolic diseases and certain liver diseases, and may be expanded to include up to 18 additional therapeutic areas, comprising all other fields of human disease, as identified and agreed upon by the parties, upon payment to us by Roche of an additional $50.0 million for each additional therapeutic area, if any.”
Securities and Exchange Commission
January 22, 2009
Page 3
•
In response to the Staff’s comment regarding the aggregate development and sales milestone payments, the Company intends to revise its disclosure regarding the Roche license and collaboration agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“In consideration for the rights granted to Roche under the license and collaboration agreement, Roche paid us $273.5 million in upfront cash payments. In addition, in exchange for our contributions under the collaboration agreement, for each RNAi therapeutic product successfully developed by Roche, its affiliates or sublicensees under the collaboration agreement, if any, we are entitled to receive milestone payments upon achievement of specified development and sales events, totaling up to an aggregate of $100.0 million per therapeutic target, together with royalty payments based on worldwide annual net sales, if any. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated with drug development, we may not receive any milestone or royalty payments from Roche.”
•
In response to the Staff’s comment regarding the expiration date of the last-to-expire patent covered under the Roche license and collaboration agreement, the Company intends to revise its disclosure regarding such agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“The term of the license and collaboration agreement generally ends upon the later of ten years from the first commercial sale of a licensed product and the expiration of the last-to-expire patent covering a licensed product. We estimate that our principal issued patents covered under the license and collaboration agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available.”
Novartis
•
In response to the Staff’s comment regarding the aggregate potential research payments and milestone payments, the Company intends to revise its disclosure regarding the Novartis collaboration and license agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“The collaboration and license agreement includes terms under which Novartis will provide us with research funding and development and sales milestone payments as well as royalties on annual net sales of products resulting from the collaboration, if any. The amount of research funding provided by Novartis under the collaboration and license agreement during the research term is dependent upon the number of active programs that we are collaborating with them on at any given time and the number of our employees that are working on those programs, in respect of which Novartis
Securities and Exchange Commission
January 22, 2009
Page 4
reimburses us at an agreed upon rate. Under the terms of the collaboration and license agreement, Novartis has the right to select up to 30 exclusive targets to include in the collaboration, which number may be increased to 40 under certain circumstances. For RNAi therapeutic products successfully developed under the agreement, if any, we would be entitled to receive milestone payments upon achievement of certain specified development and annual net sales events, up to an aggregate of $75.0 million per therapeutic target. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated with drug development, we may not receive any milestone or royalty payments from Novartis.
Under the terms of the collaboration and license agreement, we retain the right to discover, develop, commercialize or manufacture compounds that function through the mechanism of RNAi, or products that contain such compounds as an active ingredient, with respect to targets not selected by Novartis for inclusion in the collaboration, provided that Novartis has a right of first offer with respect to an exclusive license for additional targets before we partner any of those additional targets with third parties.”
•
In response to the Staff’s comment regarding additional payments to be made by Novartis upon exercise of the integration option, the Company intends to revise its disclosure regarding the Novartis collaboration and license agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“In connection with the exercise of the integration option, Novartis would be required to make additional payments to us totaling $100.0 million, which payments would include an option exercise fee, a milestone based on the overall success of the collaboration and pre-paid milestones and royalties which could become due as a result of future development of products using our technology.”
•
In response to the Staff’s comment regarding operation of the integration option, the Company intends to revise its disclosure regarding the Novartis collaboration and license agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“The collaboration and license agreement also provides Novartis with a non-exclusive option to integrate into its operations our intellectual property relating to RNAi technology, excluding any technology related to delivery of nucleic acid based molecules. Novartis may exercise this integration option at any point during the research term, as defined in the collaboration and license agreement. The research term expires in October 2009 and may be extended until October 2010 at Novartis’ election. In connection with the exercise of the integration option, Novartis would be required to make additional payments to us totaling $100.0 million, which payments would include an option exercise fee, a milestone based on the overall success of the collaboration and pre-paid milestones and royalties which could become due as a result of future development of products using our technology. The license grant under the integration option, if exercised by Novartis, would be structured similarly to our non-exclusive platform licenses with Roche and Takeda.”
Securities and Exchange Commission
January 22, 2009
Page 5
•
In response to the Staff’s comment regarding funding commitments from Novartis for the pandemic flu alliance, the Company intends to revise its disclosure regarding the Novartis collaboration and license agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“In February 2006, we entered into the Novartis flu alliance. Under the terms of the Novartis flu alliance, we and Novartis have joint responsibility for the development of RNAi therapeutics for pandemic flu. This program was stopped and currently there are no specific resource commitments for this program.”
Biogen Idec
•
In response to the Staff’s comment regarding the aggregate milestone payments under the Biogen Idec license and collaboration agreement, the Company intends to revise its disclosure regarding the agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“We received an upfront $5.0 million payment from Biogen Idec. In addition, upon the successful development and utilization of a product resulting from the collaboration, if any, Biogen Idec would be required to pay us milestone payments, totaling $51.0 million, and royalty payments on sales, if any. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated with drug development, we may not receive any milestone or royalty payments from Biogen Idec.”
•
In response to the Staff’s comment regarding the duration and expiration of the Biogen Idec license and collaboration agreement, the Company intends to revise its disclosure regarding the agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“Unless earlier terminated, the collaboration and license agreement will remain in effect until the expiration of all payment obligations under the agreement. Either we or Biogen Idec may terminate the agreement in the event that the other party breaches its obligations thereunder. Biogen Idec may also terminate the agreement, on a country-by-country basis, without cause upon 90 days prior notice.”
Isis
•
In response to the Staff’s comment regarding aggregate developmental and regulatory milestone payments and license fee, the Company intends to revise its disclosure regarding the Isis collaboration and license agreement in its
Securities and Exchange Commission
January 22, 2009
Page 6
Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“Under the terms of the Isis agreement, we paid Isis an upfront license fee of $5.0 million. We also agreed to pay Isis milestone payments, totaling up to approximately $3.4 million, upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product that we or a collaborator develops using Isis intellectual property.
Isis has agreed to pay us, per therapeutic target, a license fee of $0.5 million, and milestone payments totaling approximately $3.4 million, payable upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product developed by Isis or a collaborator that utilizes our intellectual property. Isis initially had the right to elect up to ten non-exclusive target licenses under the agreement and has the right to purchase one additional non-exclusive target per year during the term of the collaboration. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated with drug development, we may not receive any milestone or royalty payments from Isis or be required to make any milestone or royalty payments to Isis.”
•
In response to the Staff’s comment regarding the duration and expiration of the Isis collaboration and license agreement, the Company intends to revise its disclosure regarding the agreement in its Form 10-K for the year ended December 31, 2008. Such revised disclosure will be substantially similar to that set forth below:
“The term of
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January 22, 2009
By EDGAR Transmission
Securities and Exchange Commission
Division of Corporate Finance
100 F Street, N.E., Mail Stop 6010
Washington, D.C. 20549
Attention: Christine Allen
Re:
Alnylam Pharmaceuticals, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
File No. 000-50743
Ladies and Gentlemen:
On behalf of Alnylam Pharmaceuticals, Inc. (the “Company”), I am writing in response to comments
contained in the letter dated December 9, 2008 (the “Letter”) from Jim B. Rosenberg of the Staff
(the “Staff”) of the Securities and Exchange Commission (the “Commission”). The responses set
forth below are keyed to the numbering of the comments and the headings used in the Letter.
Material Agreements
1.
We note that you refer to several agreements throughout your Form 10-K and proxy statement,
most notably the agreements with Tekmira Pharmaceuticals Corporation and the Massachusetts
Institute of Technology. It appears that these agreements may be material to your business,
but they are not filed as exhibits to your Form 10-K. Please explain why you do not believe
that these agreements are material to your business, or, alternatively, please file them as
exhibits to your 10-K.
Response:
The Company analyzes each of its agreements for materiality when it enters into
the agreement. With respect to the Company’s agreements with Tekmira Pharmaceuticals
Corporation (“Tekmira”) and Massachusetts Institute of Technology (“MIT”), the Company
has determined that neither agreement is a material contract required to be filed as an
exhibit under Regulation S-K Item 601(b)(10). The Company is actively working to
extend its capabilities to advance the development and commercialization of its product
candidates. As part of this business plan and as a means of obtaining resources and
funding, the Company enters into technology license and collaboration agreements, such
as the Tekmira and MIT agreements, in the ordinary course of business. Neither the
Tekmira nor the MIT contract falls within any of the enumerated categories under Item
601(b)(10)(ii) that would disqualify them from the ordinary course exception.
Notwithstanding the Company’s determination that the Tekmira and MIT agreements are not
material under Item 601(b)(10), the Company believes that disclosure of these
agreements in
300 Third Street • Cambridge MA, 02142 • main 617.551.8200 • fax 617.551.8101 •
www.alnylam.com
Securities and Exchange Commission
January 22, 2009
Page 2
its Form 10-K and other filings provides meaningful information for investors
regarding the Company’s third-party collaboration efforts.
Strategic Alliances, page 13
2.
Please revise your disclosure in this section to include the following material terms:
Roche, pages 13-14
•
the other therapeutic areas that Roche may expand the license to and the amount
of additional payments they may receive to do so
•
the aggregate development and sales milestone payments
•
the expiration date of the last-to-expire patent covered under the license
agreement
Novartis, pages 14-15
•
aggregate potential research payments and milestone payments
•
additional payments to be made by Novartis upon exercise of the integration
option
•
explanation of the operation of the integration option
•
funding commitments from Novartis for pandemic flu alliance
Biogen Idec, page 16
•
aggregate milestone payments
•
duration and expiration of the agreement
Isis, page 16
•
aggregate developmental and regulatory milestone payments and license fee
•
duration and expiration of the agreement
Response: Roche
•
In response to the Staff’s comment regarding the other therapeutic
areas that Roche may expand the license to and the amount of additional payments
associated with doing so, the Company intends to revise its disclosure regarding
the Roche license and collaboration agreement in its Form 10-K for the year ended
December 31, 2008. Such revised disclosure will be substantially similar to that
set forth below:
“In July 2007, we and, for limited purposes, Alnylam Europe AG, or Alnylam Europe, entered into a
license and collaboration agreement with Roche. Under the license and collaboration agreement,
which became effective in August 2007, we granted Roche a non-exclusive license to our intellectual
property to develop and commercialize therapeutic products that function through RNAi, subject to
our existing contractual obligations to third parties. The license is initially limited to the
therapeutic areas of oncology, respiratory diseases, metabolic diseases and certain liver diseases,
and may be expanded to include up to 18 additional therapeutic areas, comprising all other fields
of human disease, as identified and agreed upon by the parties, upon payment to us by Roche of an
additional $50.0 million for each additional therapeutic area, if any.”
Securities and Exchange Commission
January 22, 2009
Page 3
•
In response to the Staff’s comment regarding the aggregate development
and sales milestone payments, the Company intends to revise its disclosure
regarding the Roche license and collaboration agreement in its Form 10-K for the
year ended December 31, 2008. Such revised disclosure will be substantially
similar to that set forth below:
“In consideration for the rights granted to Roche under the license and collaboration agreement,
Roche paid us $273.5 million in upfront cash payments. In addition, in exchange for our
contributions under the collaboration agreement, for each RNAi therapeutic product successfully
developed by Roche, its affiliates or sublicensees under the collaboration agreement, if any, we
are entitled to receive milestone payments upon achievement of specified development and sales
events, totaling up to an aggregate of $100.0 million per therapeutic target, together with royalty
payments based on worldwide annual net sales, if any. Due to the uncertainty of pharmaceutical
development and the high historical failure rates associated with drug development, we may not
receive any milestone or royalty payments from Roche.”
•
In response to the Staff’s comment regarding the expiration date of the
last-to-expire patent covered under the Roche license and collaboration agreement,
the Company intends to revise its disclosure regarding such agreement in its Form
10-K for the year ended December 31, 2008. Such revised disclosure will be
substantially similar to that set forth below:
“The term of the license and collaboration agreement generally ends upon the later of ten years
from the first commercial sale of a licensed product and the expiration of the last-to-expire
patent covering a licensed product. We estimate that our principal issued patents covered under
the license and collaboration agreement will expire both in and outside the United States generally
between 2016 and 2025, subject to any potential patent term extensions and/or supplemental
protection certificates extending such term extensions in countries where such extensions may
become available.”
Novartis
•
In response to the Staff’s comment regarding the aggregate potential
research payments and milestone payments, the Company intends to revise its
disclosure regarding the Novartis collaboration and license agreement in its Form
10-K for the year ended December 31, 2008. Such revised disclosure will be
substantially similar to that set forth below:
“The collaboration and license agreement includes terms under which Novartis will provide us with
research funding and development and sales milestone payments as well as royalties on annual net
sales of products resulting from the collaboration, if any. The amount of research funding provided by
Novartis under the collaboration and license agreement during the research term is dependent upon
the number of active programs that we are collaborating with them on at any given time and the
number of our employees that are working on those programs, in respect of which Novartis
Securities and Exchange Commission
January 22, 2009
Page 4
reimburses us at an agreed upon rate. Under the terms of the collaboration and license
agreement, Novartis has the right to select up to 30 exclusive targets to include in the
collaboration, which number may be increased to 40 under certain circumstances. For RNAi
therapeutic products successfully developed under the agreement, if any, we would be entitled to
receive milestone payments upon achievement of certain specified development and annual net sales
events, up to an aggregate of $75.0 million per therapeutic target. Due to the uncertainty of
pharmaceutical development and the high historical failure rates associated with drug development,
we may not receive any milestone or royalty payments from Novartis.
Under the terms of the collaboration and license agreement, we retain the right to discover,
develop, commercialize or manufacture compounds that function through the mechanism of RNAi, or
products that contain such compounds as an active ingredient, with respect to targets not selected
by Novartis for inclusion in the collaboration, provided that Novartis has a right of first offer
with respect to an exclusive license for additional targets before we partner any of those
additional targets with third parties.”
•
In response to the Staff’s comment regarding additional payments to be
made by Novartis upon exercise of the integration option, the Company intends to
revise its disclosure regarding the Novartis collaboration and license agreement in
its Form 10-K for the year ended December 31, 2008. Such revised disclosure will
be substantially similar to that set forth below:
“In connection with the exercise of the integration option, Novartis would be required to make
additional payments to us totaling $100.0 million, which payments would include an option exercise
fee, a milestone based on the overall success of the collaboration and pre-paid milestones and
royalties which could become due as a result of future development of products using our
technology.”
•
In response to the Staff’s comment regarding operation of the
integration option, the Company intends to revise its disclosure regarding the
Novartis collaboration and license agreement in its Form 10-K for the year ended
December 31, 2008. Such revised disclosure will be substantially similar to that
set forth below:
“The collaboration and license agreement also provides Novartis with a non-exclusive option to
integrate into its operations our intellectual property relating to RNAi technology, excluding any
technology related to delivery of nucleic acid based molecules. Novartis may exercise this
integration option at any point during the research term, as defined in the collaboration and
license agreement. The research term expires in October 2009 and may be extended until October
2010 at Novartis’ election. In connection with the exercise of the integration option, Novartis
would be required to make additional payments to us totaling $100.0 million, which payments would
include an option exercise fee, a milestone based on the overall success of the collaboration and pre-paid
milestones and royalties which could become due as a result of future development of products using
our technology. The license grant under the integration option, if exercised by Novartis, would be structured
similarly to our non-exclusive platform licenses with Roche and Takeda.”
Securities and Exchange Commission
January 22, 2009
Page 5
•
In response to the Staff’s comment regarding funding commitments from
Novartis for the pandemic flu alliance, the Company intends to revise its
disclosure regarding the Novartis collaboration and license agreement in its Form
10-K for the year ended December 31, 2008. Such revised disclosure will be
substantially similar to that set forth below:
“In February 2006, we entered into the Novartis flu alliance. Under the terms of the Novartis flu
alliance, we and Novartis have joint responsibility for the development of RNAi therapeutics for
pandemic flu. This program was stopped and currently there are no specific resource commitments for
this program.”
Biogen Idec
•
In response to the Staff’s comment regarding the aggregate milestone
payments under the Biogen Idec license and collaboration agreement, the Company
intends to revise its disclosure regarding the agreement in its Form 10-K for the
year ended December 31, 2008. Such revised disclosure will be substantially
similar to that set forth below:
“We received an upfront $5.0 million payment from Biogen Idec. In addition, upon the successful
development and utilization of a product resulting from the collaboration, if any, Biogen Idec
would be required to pay us milestone payments, totaling $51.0 million, and royalty payments on
sales, if any. Due to the uncertainty of pharmaceutical development and the high historical
failure rates associated with drug development, we may not receive any milestone or royalty
payments from Biogen Idec.”
•
In response to the Staff’s comment regarding the duration and
expiration of the Biogen Idec license and collaboration agreement, the Company
intends to revise its disclosure regarding the agreement in its Form 10-K for the
year ended December 31, 2008. Such revised disclosure will be substantially
similar to that set forth below:
“Unless earlier terminated, the collaboration and license agreement will remain in effect until the
expiration of all payment obligations under the agreement. Either we or Biogen Idec may terminate
the agreement in the event that the other party breaches its obligations thereunder. Biogen Idec
may also terminate the agreement, on a country-by-country basis, without cause upon 90 days prior
notice.”
Isis
•
In response to the Staff’s comment regarding aggregate developmental
and regulatory milestone payments and license fee, the Company intends to revise
its disclosure regarding the Isis collaboration and license agreement in its
Securities and Exchange Commission
January 22, 2009
Page 6
Form 10-K for the year ended December 31, 2008. Such revised disclosure
will be substantially similar to that set forth below:
“Under the terms of the Isis agreement, we paid Isis an upfront license fee of $5.0 million. We
also agreed to pay Isis milestone payments, totaling up to approximately $3.4 million, upon the
occurrence of specified development and regulatory events, and royalties on sales, if any, for each
product that we or a collaborator develops using Isis intellectual property.
Isis has agreed to pay us, per therapeutic target, a license fee of $0.5 million, and milestone
payments totaling approximately $3.4 million, payable upon the occurrence of specified development
and regulatory events, and royalties on sales, if any, for each product developed by Isis or a
collaborator that utilizes our intellectual property. Isis initially had the right to elect up to
ten non-exclusive target licenses under the agreement and has the right to purchase one additional
non-exclusive target per year during the term of the collaboration. Due to the uncertainty of
pharmaceutical development and the high historical failure rates associated with drug development,
we may not receive any milestone or royalty payments from Isis or be required to make any milestone
or royalty payments to Isis.”
•
In response to the Staff’s comment regarding the duration and
expiration of the Isis collaboration and license agreement, the Company intends to
revise its disclosure regarding the agreement in its Form 10-K for the year ended
December 31, 2008. Such revised disclosure will be substantially similar to that
set forth below:
“The term of