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Alnylam Posts Q4 Profit on Revenues from Partners, Expects Alliance for RSV Drug

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Alnylam Pharmaceuticals last week reported a profit in the fourth quarter on sharply increased revenues from collaborators including Roche (see RNAi News, 7/12/2007). However, a company official warned that profitability isn’t expected in the near term.
 
“While we are pleased to have achieved a profitable quarter, we expect to continue in the near term with significant investments in our technology and our pipeline as a development-stage company,” Patricia Allen, Alnylam’s vice president of finance, said during a conference call to discuss the financial results.
 
“Indeed, we do expect to be in an investment mode for the foreseeable future and would expect to see an increase in quarterly [research and development] expenses in 2008” that would drive losses, she noted, adding that Alnylam’s fourth-quarter income “should not be viewed as a consistent trend.”
 
Also during the conference call, Alnylam’s management provided new details on the status of the respiratory syncytial virus drug candidate ALN-RSV01, for which positive phase II data were recently announced, and suggested that a partnership arrangement for the drug could be just around the corner.
 
Late last month, Alnylam announced that top-line results from a phase II study in experimentally infected adults showed ALN-RSV01 to be safe and well-tolerated. The company also said that the drug demonstrated statistically significant antiviral activity. Complete results from the trial will be presented in Singapore at the upcoming International Symposium on Respiratory Viral Infections.
 
In light of these positive data, Alnylam said that the drug remains on track to enter a phase II study in naturally infected adults in the first half of this year. Although the exact design of the trial has not been publicly disclosed, Alnylam’s Vice President of Clinical Research Akshay Vaishnaw noted during the conference call that the company is considering a number of different patient populations for the upcoming trial.
 
“The adult population [of RSV patients] … is a high unmet need population, particularly when we look at important segments like immunocompromised patients [such as] bone marrow [transplant] patients, lung transplant patients, and other immunosuppressed populations,” he said. “All of them, when they get RSV, have high morbidity and mortality.”
 
In addition, “elderly patients over 65 [who have] pre-existing [chronic obstructive pulmonary disorder] or heart failure are at a higher degree of risk of RSV and its complications,” Vaishnaw added. “Clearly, there are several high unmet need populations … and in due course … we will be providing more guidance on the choice population and the type of study we’re doing” for ALN-RSV01.
 
In terms of possible partnerships for the drug, Alnylam CEO John Maraganore said during the conference call that the company is currently discussing potential alliances with a number of undisclosed companies, noting that “the level and quality of those discussions has accelerated quite a bit with the advent of the [phase II] data.”
 

“While we are pleased to have achieved a profitable quarter, we expect to continue in the near term with significant investments in our technology and our pipeline as a development-stage company.”

Maraganore indicated that Alnylam expects to ultimately partner its RSV drug “because we think that the fullest potential of that program is going to be through a partnership. There are opportunities for geographic-based partnerships for that program, and … even partnerships in the US market where Alnylam retains significant ownership and value.
 
“Programs in clinical development with positive phase II data are very highly valued assets in the marketplace and we believe there is a significant opportunity for partnerships with that program,” he added.
 
During the call, Alnylam officials also noted that Regulus Therapeutics, the company’s recent microRNA therapeutics joint venture with Isis Pharmaceuticals (see RNAi News, 9/13/2007), is ramping up its operations, but declined to discuss specific plans.
 
“Neither Alnylam nor Isis have specifically given goals for Regulus for this year,” Maraganore said. “We’ll certainly provide … goals in the near term, but right now there is no additional granularity around specific objectives for Regulus other than its clear effort to build a leading company in microRNA therapeutics.”
 
However, Regulus’ President and CEO Kleanthis Xanthopoulos suggested during the conference call that although his company is still being built, it is likely to have its operations fully underway sooner rather than later.
 
“A way to characterize Regulus … is a super-charged startup company, given the fact that we have access to and a very close working relationship with 200 scientists” at both Alnylam and Isis, he said.
 
Although the miRNA therapeutics field is still new and Regulus will be an independent company, “we actually have the toolbox already established to translate our biological knowledge into drugs of high value” as a result of the technology and expertise inherited from Alnylam and Isis, he noted.
 
During the year, Xanthopoulos added, Regulus expects to double its current workforce of 12 employees, “identify a handful of therapeutic areas that will become our core focus, and expand that with collaborations with big pharma or biotech companies. We’ll be disclosing more information as we move forward.”
 
The Financials
 
For the fourth quarter, Alnylam reported a profit of $1.7 million, or $0.04 per share, versus a year-ago loss of $8.4 million, or $0.26 per share. Driving the profit was a jump in quarterly revenues on sharply increased collaboration-related revenues.
 
Total revenues in the fourth quarter increased to $18.2 million from $7 million in the same period in 2006, of which $11.2 million came from Alnylam’s collaboration with Roche.
 
Research and development costs during the quarter jumped to $15.6 million from $12.3 million as Alnylam invested in its RSV program and a variety of other preclinical efforts including ones in liver cancer, hypercholesterolemia, and Huntington’s disease.
 
Company officials noted that Alnylam continues to expect it will file an investigational new drug application for either its liver cancer drug candidate or investigational hypercholesterolemia therapy some time this year.
 
Alnylam’s general and administrative costs for the fourth quarter edged up to $5.5 million from $4.6 million the year before, an increase the company attributed to greater business development and intellectual property activities.
 
As of Dec. 31, Alnylam had $455.6 million in cash, cash equivalents, and marketable securities.
 
For full-year 2007, Alnylam posted a jump in its net loss to $85.5 million, or $2.21 per share, from $34.6 million, or $1.09 per share, in 2006. Its revenues during the year surged to $50.9 million from $26.9 million, also as a result of increased revenues from collaborators.
 
Total expenses during 2007 were $144.1 million, compared with $66.4 million the year before.
 
Looking ahead, the company said it expects to end 2008 with more than $390 million in cash, cash equivalents, and marketable securities. Allen also noted during the conference call that Alnylam anticipates that revenues from Roche will “account for a significant portion of our revenues,” with approximately $14 million in revenues from the deal expected in each quarter of 2008 “and going forward.”

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