Alnylam Pharmaceuticals Soars on Roche Holding Collaboration

Roche Holdings (RHHBY.PK) took a major stake in the RNAi space yesterday by announcing a non-exclusive license to Alnylam Pharmaceuticals' (ALNY) technology in oncology, respiratory diseases, metabolic disease and certain liver disease. They announced they will collaborate on one or more disease targets in these areas. In addition Roche will acquire Alnylam’s European research site in Germany.

We have discussed RNAi and ALNY in the past (Eye on Alnylam: Silencing the Gene) and flagged ALNY as the most promising of the companies in the gene silencing field. Having taken a less than 5% stake for apparent regulatory reporting reasons, but at a significant premium, they gave ALNY investors a great present yesterday. ALNY stock rose by just under $8 or 52% on the day. ISIS Pharmaceuticals (ISIS), a related company by IP licensing and underlying approach, rose by over 18% on the day.

Although some distance remains to an economic product this is a great deal for ALNY and may prove a catalyst in the area of using drug silencing methods in drug development.

The cash inflow has a calculated effect on the stock price of between $8 and $8.50, which was realized yesterday. The reaming milestones and payments amounting to about $1 billion dollars have a discounted value of between $2 and $3. Any price less than $25 to $26 is a buy for ALNY, in our opinion. The stock closed at $23.12 yesterday.

ALNY 1-yr chart:

Disclosure: none