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Alnylam's '06 Revenue Grows as Loss Narrows; Says Rejection of Sirna IP Affirms Advantage

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Alnylam Pharmaceuticals this week reported its fourth-quarter and full-year 2006 financial results, posting significantly higher revenues and lower losses in part due to increased milestone payments and expense reimbursements from its corporate partnerships.
 
Expenses, meanwhile, rose as Alnylam continued to advance its clinical and preclinical drug candidates, and expanded its research and development staff.
 
During a conference call to discuss the results, Alnylam officials also highlighted the company’s growing intellectual property portfolio while firing another salvo at rival Sirna Therapeutics, which was recently acquired by Merck for $1.1 billion (see RNAi News, 1/4/2007).
 
One of Sirna’s US patents — No. 7,022,828, which covers the use of nucleic acids such as siRNAs to modulate the expression of IKK-gamma genes and was issued last year — is under re-examination by the US Patent and Trademark Office.
 
When Sirna was first issued the patent, it touted it as a key indicator that the company was on track to win patents for roughly 250 RNAi target-specific applications (see RNAi News, 4/6/2006).
 
Bharat Chowrira, vice president of legal affairs and chief patent counsel at Sirna, said at the time the patent was awarded that "the claims of the patent are not limited to any specific siRNA sequence, but cover any siRNA sequence used against the gene. In addition, the claims of this patent are not limited to a specific type of chemical modification or structure, but cover any chemical modification that can be made to the siRNA.”
 
However, the USPTO late last month rejected all of the claims in the patent in light of prior art, including the Tuschl-1 and Tuschl-2 patent families, and the seminal Fire/Mello patent. Sirna has until the end of March to appeal the re-examination findings.
 
According to the USPTO, the patent re-examination is being conducted at the request of the Boston-based law firm Foley Hoag, which has provided corporate finance services to Alnylam institutional investor Polaris Venture Partners.
 
“We believe that target IP, especially target IP filed after Tuschl-2 … is not really going to yield broad claims on targets that are well-validated,” Maraganore said during the conference call. “We think this is … consistent with other patent rulings that we have been able to see in the competitive landscape where the patent office is providing issued patents on single siRNAs, not broad siRNAs toward a whole target.”
 
Alnylam and Sirna have long feuded over which firm held the field’s most important IP, and during the conference call Maraganore noted that his company continues to believe that those seeking to develop siRNA-based drugs will need a license to Alnylam’s patents — even its partner Merck.
 
The Merck collaboration “is defined by 10 targets, of which four have been selected as active programs,” Maraganore said. “These are the only targets where Merck has access to Alnylam IP, which we believe is clearly needed to develop and commercialize RNAi therapeutics.”
 
As reported by RNAi News last year, Maraganore told investors during a breakout session at the Rodman & Renshaw 8th Annual Healthcare Conference that Peter Kim, president of Merck Research Laboratories and one of the key architects of the Sirna acquisition, had previously conceded that Merck will require additional licenses to Alnylam’s IP (see RNAi News, 11/9/2006).
 
Officials from Sirna were not available to comment as of press time.
 
The Financials
 
Alnylam’s net loss for the fourth quarter dropped to $8.4 million, or $0.26 per share, from $14.5 million, or $0.56 per share, the year before. For the full year, net loss fell to $34.6 million, or $1.09 per share, from $42.9 million, or $1.96 per share, in 2005.
 

“We believe that target IP, especially target IP filed after Tuschl-2 … is not really going to yield broad claims on targets that are well-validated … [which is] consistent with other patent rulings that we have been able to see in the competitive landscape where the patent office is providing issued patents on single siRNAs, not broad siRNAs toward a whole target.”

Revenues in the quarter surged to $7 million from $1.6 million in the same period a year earlier, while full-year 2006 revenues rocketed to $26.9 million from $5.7 million in 2005.
 
Primarily driving the revenue increases were expense reimbursements, milestones, and amortization revenues related to its collaborations with Novartis. Also contributing to the increases were expense reimbursement and amortization payments from partners Biogen Idec and Merck; from a National Institutes of Health contract to develop RNAi agents against the Ebola virus; from research reagent and services licensees; and from other sources.
 
Alnylam’s fourth-quarter expenses edged up to $17 million from $16.5 million as its full-year expenses jumped to $66.4 million from $49.1 million the year before.
 
Fourth-quarter R&D spending dropped slightly to $12.3 million from $12.8 million, while total 2006 R&D costs climbed to $50 million from $35.3 million year over year.
 
The decrease in R&D expenses in the fourth quarter of 2006 was largely due to $3.7 million in payments made to third parties, primarily Isis Pharmaceuticals, in the fourth quarter of 2005, Alnylam said.
 
The higher R&D spending for the full year was in part due to the initiation of its PCSK9 hypercholesterolemia program (see RNAi News, 12/7/2006) and the addition of R&D employees.
 
At the end of 2006, Alnylam had $217.3 million in cash, cash equivalents, and marketable securities.
 
Looking ahead, the company said it expects to have more than $180 million in cash, cash equivalents, and marketable securities by the end of 2007.
 
The company also reiterated its previously stated goals of publishing or presenting “human proof-of-concept data demonstrating the effectiveness of an RNAi therapeutic in human subjects within the next 12 to 18 months.”
 
During 2007, it further intends to file investigational new drug applications for two programs, possibly its influenza and PCSK9 programs, forge at least one industry alliance, sign at least five new licensing deals for its IP, and receive at least $25 million in alliance-based funding.

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