Still Bullish on Alnylam - Analyst Blog

We have maintained an Outperform rating on Alnylam Pharmaceuticals, Inc ( ALNY ) with a target price of $8.25 per share following appraisal of third quarter 2011 results.

Alnylam Pharmaceuticals Inc. is a biopharmaceutical company developing novel therapeutics based on a biological breakthrough technology known as RNA (Ribo Nucleic Acid) interference (RNAi). Alnylam is currently utilizing this know-how to build a pipeline of drug candidates for the treatment of a wide array of diseases.

Alnylam's third quarter 2011 loss of 31 cents per share was narrower than the Zacks Consensus Estimate of a loss 36 cents per share. Lower operating expenses led to the narrower loss despite lukewarm revenues in the quarter. The loss was, however, wider than the year-ago loss of $0.23 per share. Revenues for the reported quarter fell 24.9% from the prior year to $20.8 million. Revenues were, however, slightly above the Zacks Consensus Estimate of $20 million.

We like the company's newly launched "5X15" initiative and are pleased with the progress of the company's pipeline. Alnylam's core product strategy, Alnylam 5x15, is aimed at developing RNAi therapeutic products for the treatment of genetically defined diseases addressing major unmet medical needs. Alnylam expects to have five such RNAi therapeutic programs in advanced clinical development by the end of 2015. Four programs are in pre-clinical/clinical stages of development including ALN-PCS (for hypercholesterolemia), second generation ALN-TTR (transthyretin (TTR) mediated amyloidosis or ATTR), ALN-HPN (refractory anemia) and ALN-APC (hemophilia). The fifth program is expected to be selected later in 2011.

In late November 2011, Alnylam presented data from the trial at a scientific conference in Japan which showed that ALN-TTR01 (a systemically delivered RNAi therapeutic that employs a first-generation lipid nanoparticles formulation) led to statistically significant reductions in serum TTR protein levels for the treatment of ATTR. Overall, the candidate has proved to be well tolerated with no serious adverse events observed in the study. We believe this data will serve as a positive catalyst for the stock. This is the first time an RNAi has silenced a disease-causing gene in clinical trials, thus highlighting the potential of RNAi as a new class of therapeutics.

Furthermore, the company is developing ALN-RSV01 for the treatment of respiratory syncytial virus, or RSV, infection; ALN-VSP for the treatment of liver cancers; and ALN-HTT for the treatment of Huntington's disease, or HD, through existing or future partnerships.

To conclude, we believe the fag end of 2011 and 2012 will be an important period for the company due to significant clinical catalysts. Data from an early stage trial of ALN-PCS is slated for presentation by the end of 2011 and is a much awaited event for investors. For ALN-HPN, an investigational new drug ( IND ) application is expected to be filed in 2012. Pre-clinical data from the program is expected to be presented by the end of 2011. Data from a mid-stage study of ALN-RSV01 in RSV-infected lung transplantations is expected in mid 2012.

Alnylam also generates revenues from research collaborations, grants, and licensing of the RNAi technology outside its core focus area. The company has collaborations or deals with some big pharmaceutical players such as Roche ( RHHBY ), Biogen ( BIIB ), Medtronic ( MDT ), Takeda, Kyowa Hakko Kirin, Cubist Pharmaceuticals ( CBST ) and Isis Pharmaceuticals ( ISIS ) to further develop and utilize its core technology. In early November 2011, Alnylam collaborated with yet another pharma giant GlaxoSmithKline ( GSK ) in vaccine development and production, including influenza, utilizing its new VaxiRNA technology. The partnerships with major players further validate the potential and viability of the RNAi approach.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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