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Alnylam's Q2 Revenues Soar as Losses Decline; Firm Gives Update on Pipeline, microRNA Work

Alnylam Pharmaceuticals this week said that second-quarter net losses declined roughly 11 percent as a nearly 500-percent surge in revenues more than offset increased research and development costs.
During a conference call to discuss the results, Alnylam’s management provided updates on the company’s pipeline and activities in the microRNA field, highlighting the recent licensing of a microRNA-related patent application from Rockefeller University and Alnylam’s relationship with antisense firm Isis Pharmaceuticals.
Alnylam’s net loss in the quarter slipped to $9.9 million, or $0.31 per share, from $11.1 million, or $0.54 per share, in the second quarter of 2005.
Contributing to the decline in losses was an increase in second-quarter revenues, which swelled to $6 million from $1.1 million in the year-ago quarter. Revenues in the quarter reflect $5.6 million in cost reimbursement and amortization revenues from partner Novartis — $4.4 million of which was related to Alnylam’s main collaboration with the drugs giant (see RNAi News, 9/9/2005) and the remaining $1.2 million coming from the companies’ pandemic flu alliance (see RNAi News, 2/23/2006).
Alnylam recorded an additional $400,000 in revenues from partner Merck (see RNAi News, 7/6/2006) and various government agencies including the US Department of Defense's Defense Advanced Research Projects Agency (see RNAi News, 12/16/2005), Alnylam’s Vice President of Finance Patty Allen noted during the conference call.
Research and development spending during the second quarter rose to $12.7 million from $9.2 million in the same period a year earlier, largely as a result of clinical trial and manufacturing-related expenses supporting Alnylam’s phase I respiratory syncytial virus program. Also contributing to the higher expenses was an increase in R&D employees over the past year, the company said.
General and administrative expenses, meanwhile, edged up to $4.4 million in the quarter from $3.1 million the year before, mostly because of higher non-cash, stock-based compensation expenses and higher legal and professional services fees tied to increased business activities.
As of June 30, Alnylam had cash, cash equivalents, and marketable securities totaling $123.3 million, versus $80 million at the end of 2005, in part due to the $62.2 million Alnylam netted through its public stock offering in January.
Looking ahead, Alnylam said it expects to have $115 million worth of cash, cash equivalents, and marketable securities at the end of 2006. Allen said during the call that the company also anticipates exceeding its goal of generating $15 million in alliance-based funding during the year, but would not provide details on how much over that number it expects to reach.
Alnylam President and CEO John Maraganore added during the call that the company is on track to sign two more out-licensing deals for its IP in the research field before year end, bringing the total number of licensees for the year to five.
Already this year, Dharmacon (see RNAi News, 1/5/2006), Integrated DNA Technologies (see RNAi News, 3/2/2006), and Bioneer (see RNAi News, 5/25/2006) have licensed Alnylam’s IP for use in the RNAi research market. Allen noted during the conference call that currently Alnylam believes it has “over 50 percent of the reagent market signed up under our IP.”
She added that royalties Alnylam receives from licenses to reagent companies are in the “low single-digit” range, and while income from these deals is expected to increase over time, they will continue to “be a small part of the [company’s] overall revenue stream.”
The Pipeline and the Patents
During the conference call, COO Barry Greene said that Alnylam remains on track to complete phase I testing of its RSV drug candidate, ALN-RSV01, this year and begin phase II testing in the second half of 2007.

Alnylam believes it has “over 50 percent of the reagent market signed up under [its] IP.”

Alnylam has already completed two phase I trials examining an intranasal formulation of ALN-RSV01 and is preparing to initiate two more phase I studies — one examining an inhalable formulation of the drug and one evaluating the intranasal version in experimentally infected patients — before the end of the year. These two trials, Maraganore noted, “should prepare us to enter phase II studies in naturally infected patients in the first half of next year.”

Maraganore said that the biggest hurdle the company faces in launching the experimental infection study is securing a GMP supply of the RSV virus. However, “production is underway, and we are still expecting to start that study by year end,” he said. “We’ve been a little bit cautious about some of the timing there because there is some critical step there that needs to get done, but we’re in the midst of doing that step.”
Initiation of the phase II study, he added, “is linked to the completion of our phase I inhalational study because [it] will use an inhalational formulation.”
As for Alnylam’s pandemic influenza program, Maraganore said that the company has selected a drug candidate, named ALN-FLU01, which “is comprised of two siRNAs targeting two different genes within the influenza viral genome. When combined, these siRNAs are designed to achieve the broadest spectrum of antiviral activity while diminishing the likelihood of viral resistance,” he said during the conference call.
“With our partner Novartis, we look forward to continued progress with this program, and our goal is to advance this effort toward an IND as early as the end of this year,” he said.
Maraganore also said that Alnylam last week submitted a response to a request for proposals from the US Department of Health and Human Services seeking funding to support development of its RNAi-based flu drug. “We understand that notification to companies receiving … grants will occur as early as the fall this year,” Maraganore said.
Greene added during the call that Alnylam also continues to expect to unveil its third formal drug-development program sometime this year. While details about this new program were not disclosed, Alnylam has not ruled out the possibility that it will involve a systemically delivered RNAi drug.

“In many ways, much of our strategy on [the miRNA] field has been developed with Isis. And that has been a very prudent strategy because the approaches and the intellectual property from Isis [are] extremely relevant as it relates to approaches for targeting microRNAs.”

On the IP front, Alnylam announced in conjunction with the release of its second-quarter financials that it has licensed from Rockefeller University the Tuschl IV patent application, which the company said covers RNAi therapeutics against disease-associated miRNAs.
“This licensing agreement [with Rockefeller] extends our consolidation of intellectual property on microRNAs that includes the Tuschl III patent application from the Max-Planck Institute, the Sarnow patent applications from Stanford [University], the antagomir patent application from the Rockefeller University … and also certain intellectual property … that is part of our March 2004 agreement with Isis Pharmaceuticals,” Maraganore said during the call.
He added that “much of our IP strategy on microRNAs has been part of our … collaboration with Isis (see RNAi News, 3/19/2004). So in many ways, we’ve been [co-licensees] with Isis on many of these patents.”
Maraganore noted that both Alnylam and Isis have co-exclusive licenses to the Tuschl III patent application, as well as the Sarnow patent application (see RNAi News, 9/16/2005).
“In many ways, much of our strategy in this field has been developed with Isis,” he added. “And that has been a very prudent strategy because the approaches and the intellectual property from Isis [are] extremely relevant as it relates to approaches for targeting microRNAs.”

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