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Summary

  • Recently, two large pharmaceutical companies have shown their lack of confidence in RNAi and delivery of RNA therapeutics, an area in which Alnylam specializes.
  • It is doubtful whether these companies dropped RNA therapeutics solely for the stated reasons.
  • Alnylam has a robust pipeline and also professes that it has figured out a delivery system but it is a long road ahead.

A major blow was dealt to companies working on RNA therapeutics, when Fierce Biotech broke the news that the Swiss giant, Novartis (NYSE:NVS) was getting out of the technology. This was the second instance of Big Pharma showing lack of confidence in RNA interference (RNAi). Earlier, in January this year, Merck (NYSE:MRK) sold Sirna Therapeutics to Alnylam at a fraction of the price it had bought it. It was left to Alnylam Pharmaceuticals (NASDAQ:ALNY), one of the largest companies in RNA therapeutics, to take up cudgels on behalf of the technology.

This article examines Alnylam particularly in light of the response by company's President and CEO, Barry Greene.

Merck and Novartis pull back but Sanofi reiterates confidence

In January 2014, Merck took a big hit when it sold Sirna Therapeutics, a company it had bought for $1.1 billion in 2006, to Alnylam in a $175 million stock-cum-cash deal. On April 14, 2014, Fierce Biotech broke the news of Novartis pulling the shutter down on its once ambitious RNAi research that grew out of its partnership with Alnylam. Novartis cited "ongoing challenges with formulation and delivery" and there being very few potential applications of siRNA (small interfering RNA).

Earlier, in January 2014, the French drug maker, Sanofi had reiterated its confidence in RNA research when it pumped in $700 million, taking a 12% stake in Alnylam.

Without prejudice, it is also a reality that for Merck the deal was just another big write off as it was going through the process of deciding the kind of drug developer it wanted to be. In as far as Novartis is concerned the company's decision does not appear to be based entirely on the potential of RNAi therapeutics as it is in the process of restructuring and streamlining its R&D operations.

Not a new thing for Big Pharma, says Alnylam COO

Barry Greene stood up in defense of the nascent technology, which according to him holds enough promise for continuing development. He responded with a sharp critical comment on Big Pharma, in which he said "has been a miserable barometer of high impact technologies," and historically has "never been able to innovate" citing the story of recombinant DNA and monoclonal antibodies. In a telephone interview to CNBC, he said,

"They (Big Pharma) abandoned monoclonal antibodies in the '90s, claiming lack of commercial relevance, and didn't get back in until it was a major commercial reality. The same story's playing out with RNAi."

What's it all about?

Monoclonal antibodies are drugs that target specific disease-causing proteins. Currently, these drugs are a key element in the race to find a reliable cure for cancer. RNA interference, instead of targeting such proteins, goes a little back and aims to prevent creation of disease-causing proteins. It intervenes at the basic level of the biological process through which disease occurs in the body as RNA plays an essential role in protein synthesis and regulation of gene expression.

As of today, Kynamro of Isis Pharmaceuticals (NASDAQ:ISIS), approved last year, remains the only FDA approved RNA-focused drug. Potential diseases where RNA-based therapies are likely to be most effective include genetic and viral diseases and cancer.

Lead candidate

Alnylam's lead product, patisiran (ALN-TTR02) aims at silencing the TTR gene. TTR mediated amyloidosis is often secondary to chronic rheumatoid arthritis or tuberculosis or multiple myeloma and is marked by deposit of a waxy translucent complex protein resembling starch (amyloid), a result of expression of mutated TTR gene in the liver.

It is a rare disease with an estimated prevalence of 1/100,000. It is however endemic in two regions of Portugal with more than 1,000 people affected with the disorder. Also known as familial amyloid polyneuropathy (FAP), it is a degenerative condition, has a poor prognosis with treatment options limited to liver transplant.

Phase II data presented at the International Symposium on Familial Amyloidotic Polyneuropathy in November 2013, showed that multiple doses of patisiran demonstrated "robust and statistically significant knockdown of serum TTR protein levels of up to 96%, with mean levels of TTR knockdown exceeding 85%."

Phase III trial of the drug is intended for establishing efficacy and safety of patisiranin treating FAP and if successful, will be used for supporting marketing authorization.

Delivery of RNA Therapeutics - a major hurdle

Delivery of RNA therapies to the right sites in the body has been and is a major hurdle as it involves long and expensive research before development of a product. However, Alnylam says that it has almost perfected a delivery system - GalNAc-siRNA Conjugate Platform. Clinical data on the pharmacology of the delivery system demonstrated steady and long-term knockdown, achieved with long-term chronic dosing of GalNAc-siRNA conjugates.

The company has a pipeline that leverages its delivery platform, which is also being tested for a range of diseases that remain untreatable until now. The company's program for cardiovascular disease, ALN-PCSsc, is an RNAi therapeutic that targets PCSK9 for treatment of hypercholesterolemia. Another cardiovascular program, ALN-ANG, targets ANGPTL3, a protein that is a determinant factor in genetic forms of cardiovascular conditions such as abnormally high concentration of fats and high triglycerides in the blood.

The final word

Novartis's exit is a major setback for Alnylam even as it puts up a brave front. The stock is currently trading at nearly 46% discount to its 52-week high achieved in late February 2014. While that doesn't automatically make it a buy, the company has a robust pipeline.

Stacked on one side are Novartis's exit and the fact that the entire pipeline is in early clinical development stages. On the other side is the argument that RNAi therapeutics can replicate the success of monoclonal antibodies.

If one looks closely, the success of Alnylam's pipeline rests solely upon one thing - the capability of the company's delivery platform to deliver the RNA therapeutic to the right place. The company's claim that it has figured that out is adequately supported by clinical data demonstrating "potent and durable gene silencing."

While investment in biotech space is a binary bet, depending upon available information, I do not see any reason to doubt whether Alnylam will be able to deliver. The stock has lost more than 36 percent in the last three months and trading at nearly a 40 percent discount to its 52-week high. In my opinion, this should be taken as an opportunity to buy for the long haul.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.