Satellite Company Collaborations
Achaogen, Inc.
In 2006, we exclusively licensed toAchaogen, Inc. specific know-how, patents and patent applications
relating to aminoglycosides. In exchange, Achaogen agreed to certain payment obligations related to
aminoglycosides Achaogen developed. Aminoglycosides are a class of small molecule antibiotics that inhibit
bacterial protein synthesis and that physicians use to treat serious bacterial infections. Achaogen is developing
plazomicin, an aminoglycosideAchaogen discovered based on the technology we licensed toAchaogen.
Plazomicin has displayed broad-spectrum activity in animals against multi-drug resistant gram-negative bacteria
that cause systemic infections, including E. coli. Plazomicin has also demonstrated activity against
methicillin-resistant staphylococcus aureus, or MRSA.
In connection with the license, Achaogen issued to us $1.5 million of Achaogen Series APreferred Stock.
Since early 2009, we have earned $7 million in milestone payments fromAchaogen, including a $4 million
milestone payment we earned in September 2014 whenAchaogen initiated a Phase 3 study of plazomicin in
patients with serious multi-drug resistant, gram-negative bacterial infections. If Achaogen successfully develops
and commercializes two drugs under our agreement, we will receive payments totaling up to $42.3 million for
the achievement of key clinical, regulatory and sales events. We will earn the next payment of $7.5 million if
Achaogen obtains regulatory approval for plazomicin in a major market. We are also eligible to receive royalties
on sales of drugs resulting from the program. Achaogen is solely responsible for the continued development of
plazomicin.
During 2014 we earned $4 million in revenue from our relationship withAchaogen. During 2013 and 2012,
we did not earn any revenue from our relationship withAchaogen. During 2014, we sold all of theAchaogen
stock we owned resulting in net proceeds of $1.3 million.
AlnylamPharmaceuticals, Inc.
InMarch 2004, we entered into a strategic alliance withAlnylam to develop and commercialize RNA
interference therapeutics. Under the terms of the agreement, we exclusively licensed toAlnylam our patent estate
relating to antisense motifs and mechanisms and oligonucleotide chemistry for double-stranded RNAi
therapeutics in exchange for a $5 million technology access fee, participation in fees fromAlnylam’s partnering
programs, as well as future milestone and royalty payments fromAlnylam. InAugust 2012, we expanded the
license to include double-stranded RNAi technology for agricultural products.
For each drugAlnylam develops under this alliance, we may receive up to $3.4 million in substantive
milestone payments, including up to $1.1 million for the achievement of development milestones and
$2.3 million for regulatory milestones. In December 2014, we earned a $0.4 million milestone payment from
Alnylam for the initiation of a Phase 1 study. We will earn the next milestone payment of $0.4 million if
Alnylam initiates a Phase 1 study for a drug inAlnylam’s pipeline. We also have the potential to earn a portion
of payments that Alnylam receives from licenses of our technology it grants to its partners plus royalties.
Through February 2015, we have earned a total of $50.8 million fromAlnylam resulting from licenses of our
technologyAlnylam has granted to its partners, including $9.5 million we earned in 2014. We retained rights to a
limited number of double-stranded RNAi therapeutic targets and all rights to single-stranded RNAi, or ssRNAi,
therapeutics.
In turn, Alnylam nonexclusively licensed to us its patent estate relating to antisense motifs and mechanisms
and oligonucleotide chemistry to research, develop and commercialize single-stranded antisense therapeutics, or
ssRNAi therapeutics, and to research double-stranded RNAi compounds. We also received a license to develop
and commercialize double-stranded RNAi drugs targeting a limited number of therapeutic targets on a
nonexclusive basis. If we develop or commercialize an RNAi-based drug usingAlnylam’s technology, we will
payAlnylam up to $3.4 million in milestone payments for specified development and regulatory events plus
royalties. To date, we do not have an RNAi based drug in clinical development. Our Alnylam alliance provides
us with an opportunity to realize substantial value from our pioneering work in antisense mechanisms and
oligonucleotide chemistry and is an example of our strategy to participate in all areas of RNA-targeting drug
discovery.
In January 2015, we andAlnylam entered into a new alliance in which we formed an intellectual property
cross-license with reciprocal economic terms on four therapeutic targets. Under the terms of the agreement, we
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