Business & Tech

Two Cambridge biotechs settle dispute over alleged theft of trade secrets

Douglas Farmbrough III, chief executive of Cambridge biotech Dicerna Pharmaceuticals Inc.
Douglas Farmbrough III, chief executive of Cambridge biotech Dicerna Pharmaceuticals Inc.

Dicerna Pharmaceuticals Inc. on Friday said it will pay a much bigger rival, Alnylam Pharmaceuticals Inc., $15 million plus stock to resolve litigation alleging misappropriated trade secrets and unfair business practices.

The two Cambridge biotech companies settled the matter three days before a suit by Alnylam and countersuit by Dicerna were to go to trial in state court. Under the terms, Dicerna will pay Alnylam $2 million up front, plus 983,208 shares of Dicerna stock. Dicerna will pay Alnylam an additional $13 million over the next four years.

“With today’s announcement of a settlement with Alnylam, we are now able to focus the entirety of our resources on the advancement of our key clinical and discovery programs,” said Douglas Fambrough III, president and chief executive of Dicerna.

Advertisement

The company said it will now pursue its technology as planned. But Dicerna, Alnylam said, will be restricted in its development of certain drug-delivery systems for periods ranging from 18 months up to four years. Those systems were central to the suits.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Neither company admitted wrongdoing.

Alnylam sued Dicerna in 2015, accusing it of stealing trade secrets that Alnylam had acquired when it bought a third drug company’s subsidiary for $175 million. Dicerna fired back with a suit of its own. It accused Alnylam, one of biotechnology’s most closely watched firms, of using a bogus claim to try to crush a smaller competitor.

Both companies are trying to develop medicines that rely on RNA interference, a cutting-edge, Nobel Prize-winning technology that drug makers hope to use to turn off disease-causing genes.

RNAi, also known as gene silencing, has generated enthusiasm and billions of dollars in investments for more than a decade, but companies have struggled to parlay it into an approved treatment.

Advertisement

The trial that had been scheduled in Middlesex Superior Court hinged on a new potential delivery system for such medicines.

The technology belonged to Sirna Therapeutics Inc., a subsidiary of the industry giant Merck & Co. Alnylam and Dicerna submitted rival bids to buy Sirna from Merck in 2013 after getting an overview of the technology and promising Merck not to disclose confidential information. In 2014, Alnylam outbid Dicerna and bought the subsidiary for $175 million.

In November 2014, Dicerna announced a new delivery system for gene-silencing drugs. Alnylam said Dicerna owed its breakthrough to trade secrets it had schemed to obtain at least two ways, Alnylam said. First, Dicerna had used confidential information
that it had reviewed from
Merck — even though both bidders had signed agreements saying they wouldn’t do that.

Second, Alnylam said, Dicerna hired six scientists from the Merck subsidiary’s site in West Point, Pa., who had worked on the RNAi technology for Sirna but were let go around the time of the sale to Alnylam.

Dicerna vehemently denied misappropriating trade secrets and said it developed its delivery system “through many long years of effort and without any taint from Merck trade secret information.” Indeed, Dicerna disputed that the technology in question was a trade secret at all.

Jonathan Saltzman can be reached at jsaltzman@globe.com