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The Deal: Sanofi to Take 12% of Alnylam

LONDON (The Deal) -- French drug giant Sanofi on Monday, Jan. 13, expanded a rare-disease alliance with Alnylam Pharmaceuticals (ALNY - Get Report) that would leave the French drug giant with a minority Alnylam stake and access to the target's portfolio through 2020.

Sanofi, of Paris, said it would pay $700 million, or about $80 per share, to buy 12% of Cambridge, Mass.-based Alnylam. The price is a 21% premium to the stock's Friday close.

The deal was struck through Sanofi's Genzyme biotech division, which it bought in 2011 for $20.1 billion. The agreement builds on a 2012 cooperation in which Genzyme is pitching in on the development and marketing in Asia Pacific of Alnylam's patisiran treatment for a rare nervous system disorder.

Sanofi will now have the right to market patisiran, which passed Phase II testing in November for the treatment of transthyretin (TTR)-familial amyloid, everywhere but western Europe and North America. The two will also co-develop a similar treatment for another nervous system disorder -- familial amyloid cardiomyopathy -- in North America and western Europe while Genzyme has exclusive rights to sell the drug in other regions.

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The deal also gives Sanofi the right of first refusal on future Alnylam drugs to treat rare genetic diseases for development and commercialization outside of North America and Western Europe through to 2020.

"This collaboration is an important building block for our future. It strengthens our pipeline and provides us with the opportunity to meet the needs of patients with rare diseases around the world," said Genzyme CEO and President David Meeker in a statement.

Sanofi is just the latest drug company to tie up with Alnylam. The company creates treatments based on an RNAi technology that, when discovered in the last decade, won the scientists the 2006 Nobel Prize for Medicine. The treatments prohibit the production of proteins within a cell, most notably the faulty proteins that cause disease.

Novartis and Switzerland's Roche were early believers in the company. Novartis bought 13.3% as part of a five-year, 2005 deal while Roche picked up 5% in 2007. Both bailed just years later, rattling Alnylam, which championed other cooperations where it was sharing its technology with major drug companies such as Sanofi.

Sanofi investors pushed the company's shares down 1.7%, or 1.27 euros, to 72.74 euros ($99.35) in morning trading in Paris.

Although Phase II trials of Alnylam products look promising, the skepticism over the future of RNAi technology can be seen the price paid in a recent acquisition by Alnylam itself.

Earlier this month, the company agreed to acquire rival Sirna Therpeutics from Merck for as much as $290 million, whereas Merck bought the company in 2006 for $1.1 billion.

-- Written by Andrew Bulkeley

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