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Tekmira Pharmaceuticals Corporation Message Board

  • danlukehart danlukehart Feb 15, 2012 1:53 PM Flag

    Alny Lawsuit Revisited in light of current events

    Alnylam has made it clear this far that they will fight the lawsuit to the bitter end. Every action they have made seems to support this.

    I suspect ALNY has tried settling the case at a price they find justified and Tekmira responds with a counter offer that enrages Alnylam. Neither company wants the litigation on their record but their perception of a fair settlement can find no common ground. Their reaction has been to go on the attack and to play hardball.

    With that said, win or lose this is a headache for them. Ideally they would like to have unchallenged control of delivery - and the ability to produce LNP for themselves without having to rely on 3rd parties. A buyout on favorable terms to ALNY would be good news for ALNY shareholders indeed.

    It seems as though Alnylams strategy is simply to outlast Tekmira by making litigation as lenghty and costly as possible. Tekmira will need to raise money soon and their cash runway only gets them so far. It will not carry them through a long trial. A Tekmira that trades under $1.00 would look like a wonderful hostile takeover attempt on terms unfavorable to Tekmira. It could easly go that way for Tekmira PPS as well.

    Alnylam truley believes that MC3 is theirs. Their legal position over MC3 doesnt look terrible - though in the court of public opinion it might look worse.

    Alcana being caught red handed stealing documents was unexpected on both sides. Alnylam knows that this develoment will only hurt their defense, but it may be more difficult to legally connect it back to Alnylam - which is where the cash is. Alnylam can always plead ignorance without further evidence and leave Alcana hanging out to dry. I think this was an unforseen development for Alnylam. Tekmiras share price saw quite a bump that has managed to sustain itself since. They replied by going more on the offensive by filing their own lawsuit - not uncommon in situations as these - but it was clearly to go back on the offensive in the court of public opinion.

    The baulcombe patient in my view was the reason behind Alnylams restructuring and refocusing of their pipeline. On conference calls I got the impression they still had not decided as to which road they wanted to go with their good results. The baulcombe patient probably aided in their decision of becoming leaner - something they were probably thinking about anyway. Restructuring was probably not related to saving for a settlement/buyout or negative outcome.

    With all of that that said, I think the LNP patient is a much bigger deal than people have given it credit for in the context of the lawsuit. I am not somebody who thought that a buyout was just around the corner but I believe changes the landscape dramatically for commercial viability for ALNY pipeline - similar to the baulcombe patient. This patent effects them just as much as baulcombe. I think they have a real desire to go after this patient. Their actions have said they view tekmira as a disposable and replaceable....though they are still bound together at this point by contracts. The patient changes their evaluation of the company in my view. Alny's IP estate looks very weak now.

    I think in light of the recent share offering (which was shelved BEFORE this turn of events), I actually do think the exact timing of it may have been a reaction to this patent. They money was probably going to be used for general research with an emphasis on unchallenged delivery methods. With every lipid covered by tekmira, I see one of 3 reactions. Buyout, legal challenge to the patient, or strong investment in non LNP delivery.

    As of now, I see a Tekmira buyout as the most likely outcome. A hostile one at that. Probably 2.90-3.10 area. It does solve quite a few problems for them. I dont think it will happen as fast as some others who think it is only days away. They will probably try and get a read on how the litigation is going and let TKMRs PPS cool off a little.

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    • mai-inv: In Tekmira's recent press release, the CEO said of the 060 patent: "We believe all LNP-based RNAi therapeutic products currently in clinical development fall under this patent." Since mc-3 is incorporated in some of those products, it appears to be Tekmira's view that Alnylam's mc-3 patent does not constitute, or enable it to claim, a proprietary delivery system. So your point makes a distinction, but perhaps not a difference in the IP precedence of competing claims. As a practical matter, I'd be interested to know what Tekmira thinks it can win. At year end, Alnylam had about $70 million of net working capital. It recently raised an additional $90 million via a secondary offering, but had a 2011 burn rate of about $80 million, which may be reduced somewhat this year but is certainly going to be substantial. Tekmira is asking $1 billion in damages. So where would Alnylam get the money to pay a big judgement; the answer is it can't possibly pay, and might declare bankruptcy to void the award. I certainly hope Tekmira has an outcome scenario in mind that, while taking these realities into account, will still allow it to strengthen it's business and financial position to an extent that is at least a 2X multiple of the attorney and management cost of the litigation.

      • 1 Reply to davidsandler123
      • I'm not sure if we are talking about the same, but MC3 is a type of lipid, which ALNY claims.
        The TKMR patent is a ratio and formulation of lipids, which can be with MC3, or another.
        If ALNY uses MC3 with a certain ratio/formulation, it needs both patents. If ALNY has a license to the ratio/formulation patent it can claim a proprietary delivery system, just like they didn't invent RNAi, but got the exclusive license.

        The billions in damages is always based on winning every claim and a multiple, almost never happens.

    • Thank you for the interesting post. Please proofread before posting; multiple errors create confusion and raise questions about your credibility. I would appreciate it if you would elaborate on the baulcombe patent; I'm not familiar with that. I'm sure you've noticed both sides claim their recently won patents cover mc-3. I've tried to get a clarification from Tekmira on how they see it, but have had no response. Do you view the litigation as a patent infringement case, or a breach of contract suit? If the former, it's hard to conceive a judge would be able to understand the scientific issues in the case. If it goes that far, he'll undoubtedly knock heads for a settlement. If the latter, Alnylam may be in a tough position. Did they pass Tekmira's technology around? Probably. I think your range of a buy-out price is way too low; the stock is too thinly traded not to soar given a whiff of buying pressure. Also, it may be Tekmira has a lot more financial staying power than you give it credit for. The Ebola work is a cash cow, and the Talon deal could turn into a windfall. David Sandler

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