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Alnylam, Nastech Report Higher Q1 Losses on Drug Development Costs; Alliances Seen as Key to Growth

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Alnylam Pharmaceuticals reported this week its financial results for the first quarter, posting an increased net loss as significantly higher revenues only partially offset rising expenses associated with the company's drug-development programs.

The company also provided updates on its two pipeline candidates — a preclinical pandemic flu therapy and the phase I respiratory syncytial virus treatment ALN-RSV01 — while President and CEO John Maraganore said that its third program, which will be unveiled before year end, would be for a proprietary indication rather than one developed with a partner.

Maraganore, speaking during a conference call, added that securing new partners — something Alnylam has been very successful at thus far — would continue to be a priority for the company, but he did not provide specifics on any discussions or timing.

RNAi drugs newcomer Nastech Pharmaceutical also released its first-quarter results, reporting last week higher losses on increased expenses, in part related to its acquisition of Galenea's RNAi assets in February (see RNAi News, 2/23/2006).

During a conference call discussing Nastech's first quarter performance, President and CEO Steven Quay also indicated that RNAi collaborations would be key for the company, but didn't provide additional details.


"Partnerships are a current and future strategy for how we will build our business, and we expect to enter into many additional partnerships with pharmaceutical companies, biotechnology companies, and reagent companies in the future."

Alnylam

Alnylam's net loss in the quarter jumped to $8.9 million, or $0.30 per share, from $6.6 million, or $0.32 per share, a year earlier. Driving the losses was a surge in operating costs to $15.5 million in the quarter, compared with $8.3 million in the same period last year.

First-quarter research and development spending more than doubled to $11.9 million from $5.3 million, reflecting clinical trial and manufacturing-related costs associated with the company's phase I respiratory syncytial virus program. Also driving up expenses were higher external service costs related to Alnylam's RNAi therapeutic programs and costs related to an increase in R&D headcount over the past year.

Partially offsetting the increased spending was a drop in expenses related to the company's age-related macular degeneration program, which was shelved last September (see RNAi News, 9/23/2005).

Alnylam's revenues in the first quarter jumped to $5.7 million from $1.6 million in the year-ago period as the company recognized $4.4 million in cost reimbursement and amortization revenues related to its multi-target collaboration with Novartis, signed in September last year (see RNAi News, 9/92005). Alnylam also received $800,000 in cost reimbursement from Novartis under the firms' pandemic flu collaboration (see RNAi News, 2/23/2006), and $300,000 in cost reimbursement and amortization revenues from its Merck collaborations (see RNAi News, 9/12/2003 and 7/2/2004).

Alnylam ended the first quarter with about $132.3 million in cash, cash equivalents, and marketable securities, and said it expects its cash, cash equivalents, and marketable securities to total more than $115 million by the end of the year. Barry Greene, COO of Alnylam, noted during a conference call discussing the company's first-quarter results that Alnylam anticipates pulling in "over $15 million in alliance-based funding throughout the year."

During the call, Maraganore noted that Alnylam remains on track to meet its previously disclosed goals of launching a phase I study of an inhaled formulation of ALN-RSV01 in the second half of 2006, following positive data from two phase I studies on an intranasal formulation (see RNAi News, 5/4/2006).

He added that the company is "aiming to initiate an experimental infection, or viral-challenge, study later in the year … [and that] we expect these efforts will enable us to initiate a phase II trial in naturally infected RSV patients in the first half of 2007."

Additionally, Alnylam continues to expect to file an investigational new drug application to begin clinical testing of a pandemic flu therapy "as early as the end of this year."

During the conference call, Maraganore also reiterated Alnylam's goal of announcing its third formal drug-development program in the second half of the year, but added that it will be a "proprietary" program.

"We have programs that are ongoing with our partners … but we want to be clear that the next program we discuss in terms of what Alnylam will do will be an Alnylam-proprietary program," he said. "[This is] not to say that there aren't very exciting programs that are moving along [with our partners] … but I want to be clear that it really is a program that, from the investor standpoint, is going to be an Alnylam-proprietary program."


The RNAi field "continues to draw major interest from large pharmaceutical companies, as has been indicated by the recent deal activity in this space and feedback from our business-development team."

Maraganore did not provide any clues as to what indication the third program will focus on or whether it will be a systemically or directly administered drug, but comments he made during the call left the door open for the possibility that the company may be ready to tackle systemic delivery.

Citing the recent publication of a paper in Nature describing the intravenous administration of apoB-targeting siRNAs to reduce cholesterol levels in cynomolgus monkeys (see RNAi News, 3/30/2006), he reiterated Alnylam's expectation that it can "advance systemic RNAi opportunities toward clinical development within the next 18 to 24 months."

He also highlighted new data, presented at the American Pain Society annual meeting earlier this month, "demonstrating in vivo efficacy for RNAi therapeutics targeting sodium channel V1.8 … [which] is recognized as playing a significant role in chronic neuropathic pain and is well-validated as an important target in this indication, but [which is] an undruggable target by conventional approaches."

Although he ruled out a partnered program as being next up in Alnylam's formal pipeline, Maraganore did stress that "partnerships are a current and future strategy for how we will build our business, and we expect to enter into many additional partnerships with pharmaceutical companies, biotechnology companies, and reagent companies in the future. These … will include partnerships on pipeline programs that we have taken to later stages of development … as well as drug-discovery partnerships on specific targets or groups of targets."

Nastech

Nastech, meantime, posted a net loss of $7.8 million, or $0.38 per share, up from a year-ago loss of $6.1 million, or $0.34 per share.

Revenues in the quarter jumped to $6.7 million from $3.3 million last year, reflecting the recognition of about $3.7 million in previously deferred revenue from a now-terminated non-RNAi collaboration with Merck.

Nastech's first-quarter operating costs surged to $15.4 million from $9.7 million a year earlier, largely due to an increase in quarterly R&D spending, to $11.8 million from $4.6 million, as the company recorded in-process R&D expenses related to the Galenea technology acquisition and added to its R&D staff.

Nastech ended the first quarter with roughly $63 million in cash, cash equivalents, and short-term investments.

During a conference call last week discussing the first quarter, Nastech's Quay said that the company is" making rapid advancements in our [siRNA] preclinical programs and [in] the integration of Galenea's technologies and programs."

Philip Ranker, Nastech's CFO, noted during the call that the company believes "a significant return on these assets can be achieved through one or more collaborative arrangements with a large pharma or biotech partner."

Quay added that the RNAi field "continues to draw major interest from large pharmaceutical companies, as has been indicated by the recent deal activity in this space and feedback from our business-development team," but did not provide any details on where Nastech's efforts to secure a partnership stand.

Nastech officials were not available for comment by press time.

— Doug Macron ([email protected])

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