Alnylam and RNAi: The Truth Hurts

Many readers will well remember when Merck (MRK) bought the RNA-interference company Sirna in 2006. They paid over a billion dollars for them, and made the whole RNA area an even bigger field for speculation than it was already.

Another big player in that field is Alnylam (ALNY), who have been making deals all over the place. Many shareholders have been waiting for someone to buy ALNY for a similarly hefty premium, but the wait has been long (and all those agreements make such an acquisition harder and harder to realize).

As that post (and this one, and this one from 2004)) should make clear, I've been a bit cooler on the prospects for RNA therapies. I think the current RNA field is full of extremely interesting things, wonderful discoveries, fascinating research tools which could lead to all sorts of things - but I don't necessarily think it's full of new drugs per se. Nucleic acid-based therapies are just nightmarish to administer, and unless a real breakthrough in doing that appears, I think that (as drugs) they're always going to have their ankles tied together.

Well, Jonas Alsenas at Leerink Swann agrees, and he's not afraid to say so. According to Mike Huckman at CNBC, the firm initiated coverage of Alnylam with Alsenas, saying that he thought the stock should be trading at about half its current value, and that he didn't see them developing any products for many years, if ever. And he went on to this statement, which I don't think anyone in the industry can deny:

The pharmaceutical industry is often swept by new technology fads. They are caused by sincere enthusiasm, fears of being left behind, and desperation to fill chronically depleted development pipelines, in our view.

I'm sure that the ALNY investors are not going to take this well, but hey, the truth hurts. For now, I continue to agree that modern RNA techniques are extraordinary research tools - but not drugs, not in almost every case.

Comments

[buffoontycoon:]

I couldn't agree more with the Leerink view. The list of "fad" technologies is long (monoclonal antibodies, NO, antisense, . . .) but the results are few. That is not to say that RNAi is a "fad" or that it will never work. But as Leerink points out, the stock is priced on hype right now, not on probabilities. I like ALNY, but I wouldn't pay more than $20 for it now.

2008 Aug 21 11:39 AM

[MKS:]

I've been in biotech since the beginning in California at UCSF. although breakthrough technologies have always suffered the same myopic viewpoints as those being expressed about siRNA there is a MAJOR difference.
The major difference for companies like Alynylam is that PRECISELY because they have so many deal insures the survival of the firm. Moreover, it speaks to the viewpoint that this technology can lead to new, first in class, therapeutic agents in a number of disease targets.
Beware the "chicken little" syndrome so prevalent with breakthrough technologies in biotech.
It's taken DNA almost 20 years to find products. They've succeeded despite many predictions of their technology's demise

2008 Aug 21 12:05 PM

[CrimsonLabRat:]

"Another big player in that field is Alnylam (ALNY), who have been making deals all over the place. Many shareholders have been waiting for someone to buy ALNY for a similarly hefty premium, but the wait has been long (and all those agreements make such an acquisition harder and harder to realize)."

Read up on Alnylam's takeover defense mechanisms. These are the reasons Alnylam has not been acquired, not because of lack of interest. Alnylam realizes its IP can best be validated both internally and in the labs of its big pharma partners...not trapped under one roof. Trading at just over 2X cash, Alnylam is far from "bubble" territory.... but that is just my opinion. Factor in the next couple of deals that Alnylam will sign over the coming 18 months and I look for them to be sitting on 800mm cash. As MKS mentioned above, Alnylam has the tools to see this thing through to the end/beginning (depending on your take).

Nevertheless, I enjoy your blog.... and time will prove one of us right!

P.S. I speculate Roche will have some RNAi INDs sooner rather than later.

2008 Aug 21 01:24 PM

[GaryD:]

Buffoontycoon thinks that monoclonal antibodies are a fad. Let's see here...www.pharmaweek.com/Exc...

He must be more buffoon than tycoon!

In all seriousness, it takes a long time to get all the details of a new drug technology worked out. Monoclonal antibody technology was invented in the 1970s but drugs based on these technologies took another 20 to 30 years to come to market. Now, they are hugely important and profitable.

Alnylam has a long road ahead of it and admittedly it might fail, but it has an unbelievable scientific and business team behind it, is very well funded, and has collaborations from here to China. They have completed a Phase II study of their lead drug for respiratory syncytial virus infection of the lungs (ALN-RSV01: clinicaltrials.gov/ct2...) and have initiated a second one (see clinicaltrials.gov/ct2...).

To see the kind of hurdles that Alnylam must clear, you can read this article: www.rnainews.com/issue...

RNAi is a very exciting and promising technology. I own ALNY and hope very much that they are able to commercialize this incredibly promising technology. Humanity will be better off if Alnylam is successful.

2008 Aug 21 11:17 PM

[animalkgb:]

I understand and completely agree with the statements about the pharma industry and the emotional drivers that force many of them to follow in a similiar direction, but the views on siRNA technology itself are simply incorrect.

First monoclonal antibodies are certainly not a fad. They are an incredibly powerful, targeted approach to treatment. the problem was that not much was known about how to produce them reliably and in a consistent formulation. siRNA has a much higher specificity and potency and is much easier to produce. These short RNAs are actually reusable when they are inside cells. The bodies own proteins use these guiding molecules to breakdown mRNA, the precurser to protein, and thus stop the specific biological process (a bit of an oversimplification). The key is that these molecules can be "re-used" and therefore can be used in much smaller amounts, minimizing adverse effects and allowing for higher "relative" dosing while actually using less material. This is essentially the opposite for antisense molecules, which need to be in a high enough ratio in the cells to outcompete the production of mRNA and find its place before a ribozome can make protein.

There is no problem getting these molecules into cells. The problem is getting them to the right cells in the body before our immune cells grab them. That is why Alnylam has chosen their targets wisely. RSV infects the lungs...the most accessible layer of the lungs. The liver is also another viable target in that lipids are sent there relatively intact...so basically they are covering the siRNA molecules with oil. Cholesterol is produced in the liver...

i will admit that the problem with the lungs may be a delivery method...one would likely require an inhaler (which has shown some problems with other types of medicines; though I don't know anything about it), and the liver drug has been injected...which is not very appealing to a patient who can take a small statin every day. Though making a daily pill coated in oil is not a big deal...I take one every day. THey injected a monkey once and reduced cholesterol levels lasted for a month.

getting these molecules in cells is the least of their worries. I have even heard of collision transfection where the sheer force of combination can get nucleic acid into cells. Imagine that...your doctor throws your drug at you once a day!

2008 Aug 22 12:25 PM

[Neuromics:]

I concur with MKS.

Yes there are issues with delivery as there are with antisense, another RNA based drug development platform. Despite this, Isis Pharmaceuticals, Inc's., an antisense based drug development company, stock is trading near its 52 week high with several Drugs in phase III. If several receive FDA approval this would bode well for ALNY.

At Neuromics, we have experience marketing antisense and siRNA based platforms for gene expression analysis research. siRNA delivered in cases where antisense failed.

2008 Aug 26 02:59 AM