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With More Than $1B in the Bank, Alnylam Expects to Surpass Pipeline Guidance

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Following the consummation of a lucrative research and development alliance with Genzyme and with its acquisition of former rival Sirna Therapeutics pending, Alnylam Pharmaceuticals is now projecting that it will have six to seven drug candidates in the clinic by next year, topping its previous guidance.

Meanwhile, the company is now sitting on more than $1 billion in cash, which Alnylam executives said last week would enable the firm to execute its strategy while still ending 2014 with more than $825 million in its coffers.

In early 2011, Alnylam unveiled what it dubbed its 5x15 plan, under which it promised to have five drugs for genetically defined diseases in human trials before the end of 2015. The strategy marked the beginning of the company's shift in focus away from large-scale indications and onto smaller, niche indications with high unmet medical need.

Since then, Alnylam has steadily advanced the 5x15 program, leading with patisiran, a systemically delivered treatment for TTR-mediated amyloidosis (ATTR) that entered a phase III study in late 2013. In that placebo-controlled trial, the drug is being administered once every three weeks in patients with a manifestation of ATTR known as familial amyloidotic polyneuropathy.

Importantly, Alnylam is also testing in phase II a subcutaneous version of patisiran called ALN-TTRsc, which eschews the lipid nanoparticle delivery technology the firm had heretofore used with all of its clinical candidates in lieu of a proprietary delivery conjugate approach called GalNAc.

Following a contentious legal battle with the developer of the lipid nanoparticles, Tekmira Pharmaceuticals, Alnylam has made GalNAc conjugates the foundation for the lion's share of its 5x15 pipeline programs.

About a month ago, Alnylam announced that it had struck a deal with Genzyme under which the biotech giant picked up the rights to Alnylam's genetic medicines programs outside of North America and Western Europe in exchange for a $700 million equity investment. The arrangement also includes co-development/promotion aspects for patisiran and potentially other Alnylam drugs.

Speaking during a conference call held last week to discuss Alnylam's fourth quarter 2013 financial results, CEO John Maraganore said that the Genzyme deal not only expands his company's "development and commercial opportunities" for its existing candidates, but "solidifies" the firm's balance sheet, "enabling increased investment in an expanded number of RNAi therapeutic programs."

As such, "we now expect to significantly exceed our original goals," ending 2015 with "six to seven programs in clinical development, including at least two programs in phase III and five to six programs having achieved human proof-of-concept results," he added.

Included in this list is patisiran and ALN-TTRsc, as well a ALN-AT3, which recently entered phase I testing for the treatment of hemophilia and other bleeding disorders. Alnylam also anticipates filing an investigational new drug application for its complement-mediated disease treatment ALN-CC5, its hepatic porphyria therapy ALN-AS1, and a subcutaneous version of its hypercholesterolemia drug ALN-PCS in late 2014 or early 2015. Earlier-stage candidates include ALN-AAT for alpha-1-antitrypsin deficiency associated liver disease; ALN-TMP for beta-thalassemia and iron-overload disorders; ALN-ANG for hyperlipidemia; and about 12 other programs that have yet to be disclosed, Maraganore noted.

Contributing to the accelerated R&D, he said, is the ongoing refinement of the GalNAc technology, which is helping to "establish the beginnings of a modular and reproducible platform for genetic medicines." And once Alnylam completes its buyout of Sirna, this process is expected to ramp up further.

Previously Alnylam's chief competitor, Sirna, was acquired by Merck in 2007 for $1.1 billion — still the high water mark for deals in the RNAi space. Despite pushing ahead with RNAi both as a target validation technology and a therapeutic modality, in 2013 Merck announced that it was downsizing and reducing its focus on platform technologies including RNAi.

Then, in January, Alnylam announced that it was acquiring Merck's RNAi assets, including its Sirna subsidiary, for $175 million in stock and cash.

During last week's call, Maraganore highlighted the importance of acquiring Merck's RNAi IP, which "continues to help Alnylam build and expand" its pipeline. But more important to the transaction, he noted, is the conjugate delivery technology that is being picked up from Merck.

"When added to the Alnylam GalNAc conjugate platform, [the technology] really goes a long, long way to continue to optimize that platform for the future and for Alnylam’s efforts," he said.

Alnylam has not provided a specific timeline on when it anticipates closing the Merck deal, but during the conference call Alnylam's Chief Business Officer Laurence Reid noted that both companies have made the appropriate filings to the US Federal Trade Commission to complete the deal and that no issues are expected to arise.

Q4

For the three-month period ended Dec. 31, 2013, Alnylam posted a net loss of $32.4 million, or $0.51 a share, versus a year-ago loss of $62.2 million, or $1.20 a share. The decrease in loss primarily reflects a one-time charge of $65 million related to Alnylam's legal settlement with Tekmira in 2012.

Revenues in the quarter edged up to $10.8 million from $8.5 million, and included $5.5 million in revenues related to Alnylam's partnership with Takeda Pharmaceuticals and $1.4 million from its alliance with Monsanto.

Its R&D spending in the fourth quarter jumped to $32.1 million from $21.7 million in the same period a year earlier, in part due to the costs associated with phase III testing of patisiran. Although it didn't provide specifics, Alnylam said that its R&D costs are expected to rise significantly over 2014 as additional candidates move into the clinic.

General and administrative expenses slipped in the fourth quarter to $8.3 million from $10.2 million, partly reflecting a decrease in legal expenses as Alnylam's litigation with Tekmira ended.

At the end of 2013, Alnylam had cash, cash equivalents, and marketable securities totaling $350.5 million, but that was prior to the $700 million investment from Genzyme.

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