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Share Alike? Top Three RNAi Shops in US Treated Very Differently By Their Investors


Though the top three RNAi companies in the United States - Alnylam Pharmaceuticals, Sirna, and CytRx - have shown progress in moving their respective drugs into preclinical and clinical trials, they have experienced different reactions from their investors.

Since the beginning of the year, shares in Alnylam have soared 71 percent, Sirna's stock has increased around 8.3 percent, and CytRx's shares have fallen 30 percent [see accompanying chart]. To be sure, stock valuations represent just one metric by which a company's performance can be measured. But in an industry like RNAi-based drug discovery, which remains very young, it is an important gauge of a shop's ability to garner investor interest, develop alliances, and grow.

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To be sure, these companies generally are competing in different areas of RNAi-based drug discovery. And though there are some similarities in their portfolios, their products are at varying stages of development. But based on recent events at the companies, they face distinct challenges if they are to keep their shareholders interested - or, in the case of CytRx, to revive investor malaise.


Where shareholders of Nasdaq-listed companies are concerned, few things shake up confidence in their investments as much as warning letters from the exchange. In June, CytRx was treated with such a letter, which said the company risks being delisted from the exchange if its closing share price continues to hover below $1.

But this month, CytRx, which also said it has enough cash to last about one more year, was given a reprieve of sorts when the exchange agreed to extend until June 2, 2006, the company's deadline to regain compliance with its $1 minimum bid price requirement. CytRx previously had until Dec. 5 to bring its stock price back up to a minimum of $1 for at least 10 consecutive trading days.

Contributing to CytRx's investor woes are the company's revenues, which declined around 96 percent year over year, and net losses, which swelled 8.5 percent year over year, during the first nine months of 2005.

These points are not lost on CytRx brass. Last month, hoping to shore up support from the investor community, president and CEO Steven Kriegsman told participants at the Rodman & Renshaw Techvest 7th Annual Healthcare Conference in New York about his company's small-molecule drug programs.

Speaking to RNAi News on the sidelines of the conference, Kriegsman said that CytRx is considering handing off its RNAi-based drug programs to a spin-out company, which could immediately infuse the company with cash and set the stage for additional growth.

Although CytRx was an early mover in the RNAi-based therapeutics field, snapping up the rights to key University of Massachusetts RNAi-related intellectual property in the areas of obesity, type II diabetes, and amyotrophic lateral sclerosis in early 2003, the company's interest in the area has apparently been waning lately as it focuses more on near-term small-molecule drug opportunities - and, presumably, greater revenue.

During his presentation at the Rodman & Renshaw conference, Kriegsman listed as CytRx's core foci small molecule drugs, and its DNA vaccine for HIV - conspicuously leaving out RNAi-based drugs, although he did note that the company has "RNAi capabilities" for therapeutics.

Kriegsman noted that the company's board is primarily "focused on getting the [ALS] drug [arimoclomol] to market." When asked about CytRx's plans in the RNAi drugs area after the breakout session, Kriegsman told RNAi News that the company is considering spinning out a separate, publicly traded, pure-play RNAi drug firm.

While he didn't comment specifically on possible timing for such a move, he said the company is "working on it now."

Each of these companies is competing in different areas of RNAi-based drug discovery. Their products are at varying stages of development and target distinct disease states. And based on recent events at the companies, they also face distinct challenges if they are to keep their shareholders interested - or, in the case of CytRx, to revive investor malaise.

But in an interview with RNAi News this week, Kriegsman said the company "continues to take steps to develop" its drug programs, including research in ALS, obesity and diabetes, and cytomegalovirus. "For whatever reason, we haven't gotten maybe the stock market appreciation for our RNAi effort."

He said one reason for this could be that Alnylam and Sirna are both "heavily venture-backed" whereas CytRx is not.

Also, he said, CytRx is not a pure-play RNAi shop - the company has research programs in small molecules. We're not betting everything on RNAi," Kriegsman said. He said he is hopeful that the company's RNAi-based ALS effort, which targets the inherited form of the disease, will pay off soon because the disease has been given orphan status by the FDA.

"We could conceivably have a drug out on the market before" Alnylam and Sirna, he said. "It's like the tortoise and the hare."

Contributing to this goal was the disclosure by CytRx this week that it has expanded its alliance with the University of Massachusetts Medical School covering "more than 700" newly discovered novel drug targets that have "demonstrated the ability to regulate insulin activity in fat cells." [see full story]

Two of these targets regulate a "well-known" fat-burning metabolic pathway that "has been the focus of significant interest to several large pharmaceutical companies," Kriegsman said in a statement. "Our strategy is to secure a significant pharmaceutical or biotechnology partnership to assist with resources as we develop drugs that alter the activity of these novel targets."


Alnylam disclosed this week that it will advance its "pandemic" flu candidate with the help of US government funding [see related story]. Yet despite this news, which coincides with a lively debate in the US about the country's ability to fight a bird flu pandemic, shares in Alnylam closed down 3.57 percent, or $.50, to $13.51 in unusually heavy volume on the day of the flu announcement after surging almost 6 percent in early-morning trading.

In a three-hour R&D presentation held in New York this week, Alnylam said it expects to submit an investigational new drug application for an RNAi-based candidate for pandemic flu "as early as the end of 2006." The company said the flu drug would be designed to treat and prevent illness brought on by a wide variety of influenza viruses, including bird flu.

Other indicators of strong investor support lie in Alnylam's plan to ramp up its European phase I trial of its lead product candidate, a treatment for respiratory syncytial virus dubbed ALN-RSV01.

ALN-RSV01 is an intranasally delivered RNAi drug that targets the RSV nucleocapsid "N" gene, which is essential for viral replication. The drug became Alnylam's lead product candidate after the company dropped plans to develop an RNAi-based treatment for age-related macular degeneration in the face of an increasingly competitive AMD field (see RNAi News, 8/12/2005 and RNAi News, 9/23/2005).

Additionally, Alnylam said earlier this month that an INDA needed to begin testing ALN-RSV01 in the clinic had passed the FDA's 30-day review period, which means the company is on track to begin a US phase I trial before the end of December. If this timeline holds fast, the company will beat its previously disclosed schedule of starting clinical testing in the first half of 2006.

In both studies, ALN-RSV01 will be evaluated for safety, tolerability, and pharmacokinetics, and Alnylam said earlier this month that it expects to have preliminary data available from these trials in the first half of 2006.

This progress followed a minor gaffe the company made last month when it said it became the first RNAi shop to be added to the Nasdaq Biotechnology Index. It turned out Alnylam jumped the gun a bit. The company joined the index one week after it said it had, and therefore joined the list the same day as its close rival Sirna Therapeutics was added to the index. An Alnylam spokeswoman told RNAi News at the time that the company has corrected the NBI-listing date on a version of the press release on its corporate website, but did not plan to issue a corrected release.

But what will likely continue driving investor interest is Alnylam's alliance with Novartis Pharmaceuticals (see RNAi News, 9/9/2005). In September, Alnylam said it struck an RNAi drug-discovery and -development alliance with Novartis, a deal that will bolster Alnylam's coffers with millions in upfront fees and equity investments, and calls for Novartis to take a 19.9-percent equity stake in the RNAi-based shop.

The deal marked the latest - and the biggest - step forward in Alnylam's ongoing effort to establish collaborations that would help advance its R&D programs.

The three-year alliance will focus on a "significant number of disease targets" identified by Novartis across "multiple therapeutic areas," according to Vincent Miles, senior vice president of business development at Alnylam. Terms of the deal call for Alnylam to optimize Novartis' lead RNAi therapeutic candidates, and for Novartis to move them into the clinic and beyond, he said during a conference call this week.

As part of the deal, Novartis in October made a payment of approximately $58.5 million to Alnylam for the purchase of approximately 5.3 million shares of newly issued Alnylam common stock at a price of $11.11 per share. Novartis now holds 19.9 percent of Alnylam's outstanding common stock.


Sirna Therapeutics shareholders, meantime, will likely continue to remain confident in the company in the coming weeks as the shop moves a novel type of RNAi molecule into animal testing. Termed "multifunctional" siRNAs, the molecule is designed to knock down expression of two or more target genes with a single oligo.

According to Barry Polisky, senior vice president of research and chief scientific officer at Sirna, in vivo work is currently being conducted in mice, and manuscripts detailing both in vitro and in vivo work with the multifunctional siRNAs are being prepared for submission to peer-reviewed journals.

As reported by RNAi News last month, multifunctional siRNAs are essentially siRNAs modified in such a way that both the sense and antisense strands can be used to each silence a distinct gene (see RNAi News, 11/11/2005).

Sirna said it expects multifunctional siRNAs to help streamline manufacturing. If a company wanted to use an siRNA cocktail therapeutically to hit multiple targets at once, it "would be faced with all of the challenges of making those [oligos], purifying them, characterizing them, looking at metabolites, and so on, which is a big deal," Polisky said. In the case of multifunctionals, "we avoid those problems."

According to the company, Sirna has filed US and international patent applications on the multifunctional technology, and two of the applications, US 20050233329 and WO 0578097, have already been published.

Since this technology is "home-grown" and "not covered by any other patents out there except Sirna's," Bharat Chowrira, vice president of legal affairs and chief patent counsel at Sirna, said that he expects the company to be able to develop and commercialize the multifunctional siRNAs without any concerns about intellectual property infringement - which is no small thing in the world of RNAi where the IP landscape has proven to be highly litigious.

As for when the multifunctional siRNAs might be ready for primetime, Polisky declined to provide any specific timelines.

"We're in the process of evaluating these in our viral systems and other in vivo models that we have, so it's very early stage," he said. "But these things can move quickly because the models are all set up, the designs are straightforward, [and] synthesis is straightforward.

"We're actually in the process of comparing the efficacy of a number of these ... to monofunctional siRNAs and looking to see what the in vivo performance is," Polisky added. "I don't know that I want to say when these things will be in the clinic, but they've [been] ... moved to the front of our preclinical pipeline."

- Kirell Lakhman ([email protected])

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