Merck & Co. Inc. / Sirna Therapeutics Inc.

Wet Age-Related Macular Degeneration (Lead Sirna-027 Indication)

Disease Overview

Wet age-related macular degeneration is a progressive retinal disease driven by abnormal choroidal neovascularization that damages central vision. By 2006 it was the leading cause of severe vision loss in older Americans. Anti-VEGF intravitreal injections were emerging as the new standard of care, and the eye was viewed as an ideal early indication for RNAi delivery because intravitreal injection bypasses systemic delivery problems.

Competitive Landscape

When Merck acquired Sirna in October 2006 for $1.1B at $13/share (~102% premium), the wet AMD landscape was being redefined by anti-VEGF biologics: Genentech's Lucentis (ranibizumab) had just won FDA approval in June 2006 and was rapidly displacing OSI/Pfizer's Macugen (pegaptanib, FDA 2004), with off-label Avastin already widely used. Sirna-027 was a chemically optimized siRNA targeting VEGF in Phase 2, partnered with Allergan. The strategic logic of the deal was less about Sirna-027 itself than about RNAi as a platform — Sirna also had a $700M GSK respiratory alliance and discovery programs in infectious disease, metabolism, CNS and dermatology. Industry skeptics flagged the unsolved siRNA delivery problem and noted Merck was paying for a long-dated platform bet. The skeptics were vindicated: Merck took a major impairment charge, and in January 2014 sold the residual Sirna assets to Alnylam for ~$175M up front plus milestones — about 16 cents on the deal-value dollar. The Sirna acquisition is now a canonical case study in paying biotech-bubble multiples for an unproven delivery platform.