Roche Holding has signed a deal worth up to $1 billion with Alnylam Pharmaceuticals, giving the Swiss drugmaker access to the U.S. firm's skills in the new science of silencing genes to fight disease.
Shares of Alnylam Pharmaceuticalssurged 55% to $23.50 in early Nasdaq trade on the news.
The agreement was one of the largest drug discovery partnership to date in the field of RNA interference, or RNAi, which involves blocking disease-causing proteins.
Shares of CytRx and Isis Pharmaceuticals, biotech companies working in related areas, rose by 12% and 7% respectively.
Roche will pay Alnylam $331 million upfront in a cash and equity investment, which will include Roche taking a stake of 1.975 million Alnylam shares at $21.50 each, or just under 5% of Alnylam's outstanding common stock, the two firms said on Monday.
Denise Anderson, an analyst with Kepler Equities, said cash-rich Roche was paying a high price, given that the drug research is still early-stage and the market capitalization of Alnylam was less than $600 million at Friday's close.
The deal makes Basel-based Roche a co-investor in Alnylam with Swiss rival Novartis , which bought a 19.9% stake in 2005 for $11.11 a share.
For its investment Roche gets a non-exclusive license for Alnylam's technology platform. The alliance will initially focus on oncology, respiratory diseases, metabolic diseases and certain liver diseases.
Roche will also acquire Alnylam's European research site at Kulmbach, Germany, which will become the Swiss group's Center of Excellence for RNAi therapeutics discovery.