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Novartis and Alnylam create major alliance to discover


Basel, Switzerland, and Cambridge, MA, September 7, 2005 – Novartis (NYSE:NVS), and Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), announced today a major multi-year alliance focused on the discovery of innovative therapeutics based on RNA interference (RNAi). The alliance will combine the research expertise and understanding of disease mechanism and pathway biology of Novartis with Alnylam’s leading position in the field of RNAi.

RNAi is a natural process for selective gene silencing found in all cells. By utilizing the RNAi mechanism, RNAi therapeutics have the potential to treat human disease in a fundamentally new way through the silencing of disease-causing genes. During the term of the agreement, the collaboration will focus on the joint discovery of new therapeutics using RNAi across multiple disease areas in the Novartis research portfolio.

“This collaboration underscores Novartis’ commitment to forging strategic alliances with partners at the forefront of scientific discovery. RNAi holds great promise as a new therapeutic modality for treating many diseases. In particular, this exciting new area of biology has potential to target diseases that cannot be addressed by traditional approaches. This collaboration complements our robust small molecule and antibody-based research programs and will advance our efforts to develop innovative medicines for patients,” said
Dr. Mark Fishman, President of the Novartis Institutes for BioMedical Research.

Novartis and Alnylam will form a Scientific Strategy and Advisory Group to review the overall strategy for the relevant science and clinical applications of the collaboration. The Advisory Group will be co-chaired by Dr. Fishman and Alnylam founder and director Phillip A. Sharp, Ph.D., Institute Professor of MIT and 1993 Nobel Laureate in Physiology or Medicine.

“We believe that our technology is one of the most significant innovation-based drug discovery approaches available,” said Dr. John M. Maraganore, President and Chief Executive Officer of Alnylam Pharmaceuticals. “Our collaboration will utilize significant resources and capabilities to place Novartis and Alnylam in a unique position to build RNAi therapeutics as a major class of drugs in the biopharmaceutical industry.”

The agreement is subject to customary regulatory approvals, including antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act.

About RNA Interference (RNAi)
RNA interference, or RNAi, is a naturally occurring mechanism within cells for selectively silencing and regulating specific genes. Since many diseases are caused by the inappropriate activity of specific genes, the ability to silence genes selectively through RNAi could provide a new way to treat a wide range of human diseases. RNAi is induced by small, double-stranded RNA molecules. One method to activate RNAi is with chemically synthesized small interfering RNAs, or siRNAs, which are doubled-stranded RNAs that correspond to a specific disease-associated gene. The siRNA molecules are used by the natural RNAi machinery in cells to cause highly targeted gene silencing.

Terms of the agreement
Novartis will make initial payments of approximately $56.8 million to Alnylam, consisting of upfront payments and the purchase of approximately 4.2 million shares of Alnylam common stock at a price of $11.11 per share. The number of shares of Alnylam common stock to be purchased by Novartis will be determined prior to closing and will equal 19.9% of the outstanding common stock of Alnylam on the closing date. Following receipt of certain approvals, Novartis will purchase at a price of $11.11 per share an additional number of shares of Alnylam common stock so that Novartis holds an equity interest equal to 19.9% of the total outstanding common stock of Alnylam after giving effect to the purchases by Novartis. In addition, Alnylam is eligible to receive, across multiple programs, research and early development funding, progress milestones, pre-clinical and clinical development milestones, sales milestones and royalty payments.

The collaboration agreement has an initial three-year term that may be extended for two additional one-year periods. If the collaboration is successful and multiple products are developed and commercialized, collective payments to Alnylam could exceed $700 million, not including royalties. This figure includes payments that Alnylam would be eligible to receive if Novartis exercises a non-exclusive option to integrate Alnylam’s RNAi therapeutics platform into its internal efforts, in which case Alnylam would be eligible to receive future milestones and royalties on products resulting from those efforts. Alnylam will also have an opportunity to co-invest and share profits for a defined number of products resulting from the collaboration. Alnylam retains the rights to develop its own proprietary pipeline of RNAi therapeutics, including its respiratory syncytial virus (RSV) program and other unpartnered and partnered programs, while Novartis will have a right of first offer, subject to prior agreements, should Alnylam seek additional partnerships.

About Novartis
Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group’s businesses achieved sales of USD 28.2 billion and pro forma net income of USD 5.6 billion. The Group invested approximately USD 4.2 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 81,400 people and operate in over 140 countries around the world.

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About Alnylam
Alnylam is a biopharmaceutical company seeking to develop and commercialize novel therapeutics based on RNA interference, or RNAi. Growing from its foundation as the world’s first company focused on RNAi therapeutics, the company’s leadership in the field of RNAi is supported by its preeminent founders and advisors and its strengths in fundamental patents, technology, and know-how that underlie the commercialization of RNAi therapeutics. Alnylam is developing a pipeline of RNAi products using Direct RNAi™ to treat ocular, central nervous system, and respiratory diseases and Systemic RNAi™ to treat a broad range of diseases, including oncology, metabolic, and autoimmune diseases. The company’s global headquarters are in Cambridge, Massachusetts. For additional information, please visit

Novartis Forward Looking Statements
This release contains certain “forward-looking statements”, relating to the Company’s business, which can be identified by the use of forward-looking terminology such as “will be”, “are to be”, “will lead”, “is committed to developing”, “to provide”, “to maintain”, or similar expressions, or by express or implied discussions regarding the potential development and commercialization of new products or regarding potential future sales from any such products. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results to be materially different from any future results, performances or achievements that may be expressed or implied by such forward-looking statements. There can be no guarantee that the aforementioned research will lead to the development or commercialization of any new products in any market, or that any such products will reach any particular sales levels. Any such commercialization or sales can be affected by, among other things, uncertainties relating to product development and clinical trials, regulatory actions or delays or government regulation generally, the ability to obtain or maintain patent or other proprietary intellectual property protection and competition in general, as well as factors discussed in the Company’s Form 20-F filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.


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