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Alnylam Nets $26 Million in Less-Than-Spectacular IPO; Nucleonics Ups Series B


After almost three months it finally happened — the first initial public offering in the RNA interference sector. Alnylam’s long-awaited IPO went through last Friday, albeit on a much less grander scale than once anticipated, with the company floating its shares for $6 each.

Alnylam first announced its intention to go public in March, stating that its stock offering could be worth up to $86.3 million. Then last month, the company said it intended to float 5 million shares (as well as an additional 750,000 granted to the offering’s underwriters to cover overallotments) at a price of between $10 to $12 each, bringing the total value of the offering down to a more reasonable, but still lofty, range of $57.5 million to $69 million (see RNAi News, 5/14/2004).

If it had occurred at the $10 to $12 range, Alnylam’s offering would have put the company’s coffers at the top of the money pile, surpassing the $48 million private placement that already-public rival Sirna Therapeutics closed last year (as well as the commitment for $49.2 million that Nucleonics has secured through a Series B financing round).

On the day the IPO was expected to happen, however, Alnylam cut the target price of the offering almost in half to a range of $6 to $8 per share. Ultimately, Alnylam’s stock debuted at the low end of this scale on the NASDAQ under the symbol “ALNY”.

Although it remains uncertain what led to the decision to lower the offering price (Alnylam remains in a US Securities and Exchange Commission-mandated quiet period and was unavailable for comment), it appears that the company may have simply over-estimated the market’s appetite for a cutting-edge, but still untested, biotechnology. As early as March when Alnylam first registered to go public, people following the RNAi sector were expressing doubts as to whether a young biotech company, without a product on the market or even in human testing, could successfully float its shares at all, let alone at a price of $10 to $12 each (see RNAi News, 3/5/2004).

Still, the Alnylam IPO did go through, giving the company an estimated $26 million in net proceeds (exclusive of the $4.2 million that would be netted should the IPO’s underwriters exercise their over-allotment option).

In a filing with the US Securities and Exchange Commission, Alnylam said that it intends to apply $10 million to $12 million of the offering’s proceeds to support its systemic RNAi research and development programs, including the company’s liver disease projects. Between $8 million and $10 million is expected to go to Alnylam’s age-related macular degeneration and other direct RNAi programs, with the remainder likely to be used to support acquisition, licensing, and intellectual property protection efforts, as well as for working capital, capital expenditures, and other general corporate purposes.

In the first quarter, Alnylam reported expenses of $13.5 million, including a $5 million payment to Isis as part of the companies’ recent licensing deal (see RNAi News, 3/19/2004). As of March 31, Alnylam had about $21.6 million in cash and cash equivalents.

Additionally, while Alnylam’s stock has not experienced the rapid rise in price that has been known to accompany hot IPOs, it is holding on to a lead over its peers: Shares of Alnylam have traded as high as $9.50 since the IPO and were trading around $7.50 on Thursday. Meanwhile, Sirna’s stock has been hovering around $3, near a 52-week low of $2.80 and well-off a 52-week high of $11.44, while CytRx, beleaguered by accounting issues and news of an ongoing ethics inquiry (see RNAi News, 5/21/2004), saw its stock trading around $1.50 on Thursday, off a 52-week high of $2.93.

The top money-maker prize, however, goes to Nucleonics, which said this week that it had received an additional $8.3 million from new investor Quaker BioVentures and existing investors New Enterprise Associates and SR One as part of its Series B round of financing. With the additional capital, Nucleonics has raised a total of $49.2 million in the round.

Bob Towarnicki, Nucleonics’ president and CEO, told RNAi News that with the additional equity, the Series B financing round has officially closed.

“We had a few stragglers that couldn’t close on the March 31 date,” but were interested in getting in on the round, he said. One of them, Quaker, ended up taking so large of a stake that “we had maxed out of the shares [and] had to … cut out some other smaller players.”

Towarnicki noted that NEA and SR One, the company’s two largest shareholders, were allowed to purchase additional equity in order to maintain their existing mid-to-high teens ownership percentages.

In announcing the additional Series B financing money, Nucleonics also said that Jim Barrett, NEA general partner and member of Nucleonics’ board, has assumed the role of the company’s chairman. According to Towarnicki, Barrett replaces Elaine Jones, who recently left SR One for venture capital firm EuclidSR Partners.

Jones “was no longer an investor in the company so she resigned the chairmanship and we elected Jim as the chairman at the first [board] meeting post the first closing,” he said.

Giovanni Ferrara, a director at Nucleonics investor Burrill & Co., has also joined Nucleonics’ board.

With the financing out of the way — for real, this time — Nucleonics is prepared to “hunker down” and advance its RNAi drug programs, Towarnicki said.

To that end, he said that the company has selected 18 to 20 siRNAs that have proven to be the most potent on their own against hepatitis B in mouse models, and is in the process of determining which of these will be expressed by the plasmid that is to be the company’s hepatitis B drug candidate.

“We would hope by year end to have that fully defined so that we have the final plasmid construct, if you will, defined for the [investigational new drug application],” he said. An IND is expected to be filed with US regulators as early as the first quarter next year.

Helping this process along are six new researchers just hired on, pushing the number of Nucleonics employees to 18, Towarnicki said. The company is still on the lookout for a vice president of regulatory affairs and a director of quality assurance as it grows to an expected 32 people during 2004.

Nucleonics is also preparing to move to a new 40,000-square-foot facility located in Horsham, Pa. in “the next week or so, Towarnicki added. “We’re actually moving into what was my old building” when I was president and CEO of Cell Pathways, he said.

— DM


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