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Alnylam Becomes First RNAi Company to Appear in Nasdaq s Biotechnology Index

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About a year and a half after becoming the first RNAi drugs firm to launch an initial public offering, Alnylam Pharmaceuticals has been added to the Nasdaq Biotechnology Index, a listing of some of the top biopharmaceutical firms as determined by market value, daily trading volume, and "seasoning" as a public company.

Alnylam is the first RNAi-based drugs developer to be added to the NBI. It won't be alone for very long, however: Sirna Therapeutics is set to be added to the index next week, according to Rebecca Galler Robison, senior director of corporate strategy for Sirna.

"We believe our inclusion in this index reflects the increased awareness in the investment community of the potential of RNAi for therapeutic applications," John Maraganore, president and CEO of Alnylam, said in a statement.

But even though inclusion in NBI can help boost a company's profile among investors, Andrew McDonald, a research analyst for ThinkEquity Partners, stressed that most institutional investors who trade in biotech stocks would likely already be aware of RNAi and the key players in the space.

To be eligible for listing on the index, a company must, among other things, have a market capitalization of at least $200 million; must have shares with an average daily trading volume of at least 100,000; and must be "seasoned" on the Nasdaq or another recognized market for at least six months.


"It's one of these bellwether indices … [and] those of us in the investment community track the overall valuation … and health of the industry … [but doesn't speak to what Nasdaq feels the future health of the company is going to look like. It's more looking in the rearview mirror."

By tracking the performance of the listed shares, the Nasdaq — as well as industry analysts — uses the index to gauge the health of the biotech sector. "It's one of these bellwether indices … [and] those of us in the investment community track the overall valuation … and health of the industry," McDonald told RNAi News this week, adding that being listed on the index is "pretty much all based on stock [performance and] doesn't communicate the overall health of the company.

"You have to make the link between the performance of the stock and the health of the company," he said. Listing on the index "doesn't speak to what Nasdaq feels the future health of the company is going to look like. It's more looking in the rearview mirror."

Not a Stamp of Approval

A key benefit of being listed on the NBI, McDonald said, is that it can be a requirement for inclusion in certain investment portfolios that will "only invest in certain companies that are included in the NBI. Also, some portfolio managers say, 'I'm going to pick a basket of stock in the NBI and I'm not going to do any real fundamental research into any particular company [since] I think the sector is going to perform well — I'll just buy up 50 companies in the NBI.'"

He pointed out, however, that a company's shares are unlikely to get any kind of significant boost from being listed on the NBI. "In my experience, for a company that gets included, you don't see a real lift" in stock price, he said. "Most of the institutional investors that play in biotech are extremely savvy and aren't even going to invest large amounts of money into a company until they dig in" to examine a firm's fine points.

Alnylam's stock closed up 2.2 percent in lighter-than-usual trading on the day it disclosed its inclusion in the NBI, but lost most of that ground the following day.

Additionally, "the majority of investors are aware of siRNA or RNAi," McDonald said. "You have both Alnylam and Sirna with market caps over $200 million, so it's on most biotech investors' radar screens — they're aware of it at this point."

As an industry-watcher, McDonald said that he doesn't view the NBI listing for Alnylam as a "stamp of approval." Rather, the listing is more a sign that the company has been able to keep its shares trading at a pace and at price levels on par with its peers in the broader biotech sector.

While getting its shares on the NBI is an encouraging sign for a pre-clinical company based on a relatively new technology, McDonald said that for Alnylam the listing is ancillary to such milestones as its $26 million initial public offering in June last year (see RNAi News, 6/4/2004) or its discovery and development partnership in September with Novartis, which took a 19.9-percent stake in Alnylam under the deal (see RNAi News, 9/9/2005).

"You could look at other events like the IPO as a huge event," he said. "You could also look at the big pharma deal with Novartis … as a huge catalyst. So on the relative scale, I would put inclusion into the NBI on the marginal side."

McDonald said that although ThinkEquity has a banking relationship with Alnylam — it was one of the banks that brought the RNAi firm public — he as an analyst operates "completely independently of what the banking side [of ThinkEquity] does." He added that he does not own shares in Alnylam

— Doug Macron ([email protected])

Alnylam Provides Update on Preclinical Neurological Programs

Alnylam Pharmaceuticals provided this week an update on its preclinical drug-development programs in Parkinson's disease, Huntington's disease, and neuropathic pain. The company said it presented data from the three programs at the 35th Annual Society for Neuroscience meeting held in Washington, DC, this week.

The company said research under its Parkinson's disease program, which is targeting the alpha-synuclein gene, has found that siRNAs are stable in cerebrospinal fluid and can potently silence the alpha-synuclein gene in neurons in vitro. SiRNA candidates are currently being tested in vivo, and preliminary data indicates that the oligos are taken up by central nervous system neurons and can be transported to brain regions distant from the site of injection.

Alnylam is conducting its Parkinson's disease program in collaboration with Medtronic and the Mayo Clinic.

In Huntington's disease, Alnylam said its researchers are applying the company's technology to siRNA, identified by collaborators from the University of Massachusetts Medical School, that silence the gene huntingtin. Preclinical data indicate that siRNAs administered into the brain were taken up by the same type of neurons that are most affected in the early stages of Huntington's disease. Ongoing studies are examining the effect these siRNAs have in inhibiting the disease process in animal models of Huntington's disease, the company said.

Alnylam also said that it presented preclinical data showing that siRNAs can be used to silence targets associated with neuropathic pain. In one set of experiments, Alnylam collaborators at the University of Arizona evaluated siRNAs, administered via intrathecal injection, targeting the gene for NPY, a pain-associated peptide. Over the course of treatment, results showed significant pain relief, the company said.

In a second study, the company evaluated siRNAs targeting NaV1.8, which encodes an ion channel and has been associated with chronic neuropathic pain. Preclinical data from these experiments demonstrated that siRNAs targeting NaV1.8 administered by intrathecal injection can provide nearly complete pain relief, Alnylam said.

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