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Alnylam, Dicerna Join Forces to Take on Arrowhead

Adopting the theory that two heads are better than one, a pair of former biotech rivals are teaming up to take on a third company that has a head start in the search for a treatment for a genetic disease that can cause lung and liver disease.

Alnylam Pharmaceuticals (NASDAQ:ALNY) and Dicerna Pharmaceuticals (NASDAQ:DRNA) have joined forces to challenge Arrowhead Pharmaceuticals (NASDAQ:ARWR) as well as two other companies working on a treatment, Intellia Therapeutics (NASDAQ:NTLA) and Vertex Pharmaceuticals (NASDAQ:VRTX).


Evidently, investors believe that a rising tide lifts all boats since shares of all five companies were up Monday, with Arrowhead leading the way with a more than 11% gain to nearly $29. That's still a long way from its $52-week high of nearly $74. Arrowhead is thought to be hurt the most by the Alnylam-Dicerna link up since it uses a similar technology.

Under the proposed agreement, Dicerna would spearhead clinical development--and cover its costs--for one or both of the companies' drugs, which are in the early to middle stages of clinical testing, according to an article in BioPharma Dive. After late-stage trials are completed, Alnylam would decide whether it wants non-U.S. rights to whichever drug Dicerna chose to bring to market.

Additionally, the companies agreed to cross-license some of the other's intellectual property centering on two experimental treatments for a rare metabolic disorder.

In an April 6 note to clients, SVB Leerink analyst said that by concentrating development onto one drug candidate, Alnylam and Dicerna are more likely to develop a treatment that will compete well against those being worked on by Arrowhead, Vertex and Intellia.

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The genetic disease which the companies are striving to address is called Alpha-1 antitrypsin deficiency (Alpha-1). According to the Liver Foundation, It is the most common genetic cause of liver disease in children. Adults can also be affected by Alpha-1 and may develop lung conditions such as emphysema as well as liver problems. The disorder affects about one in 1,500 to 3,500 individuals with European ancestry. About 15% of adults with the deficiency develop liver damage.

Last November, Dicerna closed its fifth research and development agreement on liver disease with a member of Big Pharma, agreeing with Novo Nordisk (NYSE:NVO) to look at more than 30 liver cell targets to develop medicines for cardiometabolic diseases such as Type 2 diabetes, nonalcoholic fatty liver disease and obesity. It's estimated that the deal could amount to billions of dollars depending on the number of drug candidates that advance.

Previous deals were with Boehringer Ingleheim, Alexion Pharmaceuticals (NASDAQ:ALXN), Eli Lilly and Co. (NYSE:LLY) and Roche (RHHBY).

Disclosure: The author holds a position in Eli Lilly.

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This article first appeared on GuruFocus.