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Alnylam Pharmaceuticals (NASDAQ: ALNY) is a biotechnology company that focuses on a cutting edge technology known as RNA interference (RNAi). The basic difference between RNA inhibition and more traditional protein inhibition is that RNAi can actually prevent the production of particular harmful proteins in patients' cells, which can be extremely powerful in the right circumstances. Alnylam focuses on the development of therapies for particularly difficult diseases where RNAi does what traditional inhibitors cannot.

Currently investors are focusing on Alnylam's development programs for amyloidosis - a disease where changes in protein structure cause massive buildups of these proteins in the body. These growths are known as amyloids, and can be very dangerous when they interfere with normal body function.

The specific type of amyloidosis that is being targeted by Alnylam is TTR-mediated amyloidosis (also known as ATTR), which is caused by mutation of a protein called transthyretin. A mutation of the gene that codes for transthyretin causes changes in the protein structure, which changes the solubility of the protein and leads to buildups of transthyretin in unwanted places.

After a recent Phase I top-line data release by Alnylam for its ALN-TTRsc development program, shares hit a new 52-week high of $51/share. This specific program is developing a subcutaneously administered RNAi therapeutic for TTR mediated amyloidosis, which can be targeted through inhibition of the transthyretin (TTR) gene. In the Phase I trial, the company reported a statistically significant (p<0.01) knockdown of TTR concentration in the serum of over 80% of patients, implying that the RNA interference mechanism of action is still working as intended.

The program's intravenous TTR Amyloidosis product, ALN-TTR02, saw similar results in its own Phase I and II trials. The most recent Phase II data showed a sustained drop in transthyretin comparable to that of the subcutaneous data, which gives the company the green light to move into Phase III development. The commercial potential of ALN-TTR02 and ALN-TTRsc is enormous - expected to be in the $1-2 B range. Based on this, it seems that the bulk of Alnylam's $2.8 B valuation is based on its amyloidosis programs.

The strong ATTR data also builds the case for the rest of Alnylam's 5x15 pipeline, which aims to have five late-stage compounds by 2015. This pipeline includes ALN-AT3 for the treatment of hemophilia and rare bleeding disorders, ALN-AS1 for the treatment of acute intermittent porphyria (AIP), ALN-PCS for hypercholesterolemia and ALN-TMP for beta-thalassemia and iron-overload disorders. Of these other programs, it seems that the hypercholesterolemia program is attracting the most attention as it is already in clinical development. The commercial potential of potent hypercholesterolemia therapies has also been established with the commercial success of Aegerion Pharmaceuticals' (NASDAQ: AEGR) Juxtapid (lomitapide) and Isis pharmaceuticals' (NASDAQ: ISIS) Kynamro (mipomersen), which cost $295,000 and $176,000 per year, per patient, respectively.

Alnylam equity is mostly held by institutional investors (rather than retail investors), and this includes Novartis (NYSE: NVS) which still owns 4 million shares as part of a partnership arrangement that fell through years ago. The company has become quite expensive after the most recent move, although the company should continue to receive support from its investors due to its success in data (up to this point) along with the unknown potential of RNAi technology far into the future. We also believe that there are a large number of indications outside of the current pipeline that can be hit with RNAi (many of which are orphan status indications), which makes Alnylam a very possible acquisition target once the company reaches late-stage development with its TTR Amyloidosis therapeutics.

Source: Alnylam Targets New Highs On Data Supporting RNAi

Additional disclosure: I am long via short put options