Two examples of companies seeking to develop drugs through “gene silencing”, which we discuss below, are Alnylam (NASDAQ:ALNY) and Isis Pharmaceuticals (ISIS). Both stocks have risen over 60% in the past 12 months: ISIS around 80% and ALNY 60%. Since its public offering in 2004 ALNY has risen over 250%. Both companies represent important examples of future drug innovation and could be the source of a new drug paradigm to rival monoclonal antibodies. However, we believe the better and less risky but still speculative play at the present time is ALNY, for the following reasons:
• ISIS could revert to the $6-$8 trading range and has given technical indications that it is headed that way. ALNY, on the other hand, has been more consistent.
• A failure with any of the antisense products in the clinic will have a major impact on ISIS, especially if more data granularity with ISIS 301012 proves disappointing in 2007.
• ALNY does not have the same issue with past failures and a “wounded” technology. It is cleaner and is more resistant to minor technological setbacks and its technology has more support from both the scientific and pharmaceutical communities.
• A failure in any one of ISIS’ products will have a major impact on ISIS but little on ALNY. A major failure in ALNY will impact ISIS significantly due to the patent relationship.
Gene targeting drugs designed against various diseases that require turning off genes and/or stopping protein production, especially defective proteins or proteins involved in cancer cell production, have been the hope of drug developers for almost twenty years. Monoclonals bind to cells and can be fairly unspecific with resulting side effects. The goal and hope of researches has been to be able to bind highly specifically to the target.
The first technology to evolve was called antisense. It was based on a naturally occurring phenomenon found in the way two strands of DNA bind to cause the well known double helix. These two strands are called the sense and antisense strands, bound together by a very specific mechanism. The drugs that were developed using this mechanism were called antisense based drugs; unfortunately the path to drug development has not been easy. A number of companies have had failed drugs in the clinic, and currently there are no systemic antisense drugs on the market. Failures have been due principally to the inability to deliver sufficient compound to the target in the human patient. Experiments in animals and special situations, with a number of modifications to short strands of natural DNA using the original structure of these compounds; have produced a number of clinical candidates. However, many of these candidates have failed the rigors of later stage clinical trials.
RNA interference [RNAi] is a promising new drug development paradigm. RNA, short for ribonucleic acid, is a messenger of deoxyribonucleic acid [DNA]. It carries the genetic instructions of the DNA out of a cell's nucleus and into the cell, where it creates proteins that become the building blocks of new cells. RNAi, or RNA interference, as the name suggests interferes with this process and silences the gene whether it is being used by an invading organism, such as a virus, or a defective internal genetic process, such as cancer or an inflammatory disease. The 2006 Nobel Prize for medicine was shared by Andrew Fire of Stanford University School of Medicine and Craig Mello of the University of Massachusetts Medical School. The two researchers, who helped determine that RNA molecules could silence specific genes, published their findings on their discovery eight years ago.
ISIS Pharmaceuticals (ISIS) is the leading company still focusing its drug discovery and development on the antisense approach. Its stock has been boosted recently by success in an initial Phase II trial for its compound ISIS 301012. The compound is being developed for elevated cholesterol (hypercholesterolemia) and for certain forms of familial hypercholesterolemia. ISIS has two other drugs in Phase II and a total of 15 drugs in clinical trials. A Phase III trial for its compound Afinitak, a so-called first-generation antisense produce for use against non-small cell lung cancer, failed to show improvement in chemosensitization and is no longer under development. ISIS 301012 is a second generation compound with changes to make the compound more stable and better able to reach the target. Due to the size of the market and the favorable results published so far, ISIS stock has risen significantly since results were announced in November. A number of milestones are expected in 2007 including further Phase II results from ISIS 301012.
ALNY is the leading US company pursuing the RNAi approach to drug development after the November 2006 purchase of Sirna (RNAI) by Merck. It has licensed more than 150 issued patents pertaining to chemical modification of oligonucleotides for therapeutic applications from ISIS for double-stranded RNAi therapeutics. The company has one clinical trial ongoing, a Phase I for RSV (respiratory syncytial virus). It expects result in 1H2007 and to start a Phase II in 2H2007. It intends to file an IND for ALN-FLU01 against pandemic influenza and ALN-PCS01 against hypercholesterolemia, in 2007. It is well funded and has a number of strategic relationships in place. It appears well managed and is clearly addressing the technology challenges of RNAi, especially in light of the failures with antisense.
ALNY/ISIS 1-yr comparison chart
Disclosure: Author has no position in the above-mentioned securities.