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Sirna Plans Layoffs, Tweaks Pipeline To Save Cash; Alnylam to Add Drug Program

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Sirna this week said it plans to lay off an undisclosed number of employees in a bid to control expenses as it refocuses its resources on three core development programs. The company made the announcement as it reported growing first-quarter operating expenses and a higher net loss.

Sirna peer Alnylam Pharmaceuticals also released its first-quarter financial results this week, posting increased revenues and declining expenses.

Alnylam also reported that it has selected and optimized a lead age-related macular degeneration drug candidate, called ALN-VEG01 and reiterated its expectation that it will have the therapy in phase I testing in the second half of this year. During a conference call this week, COO Barry Greene noted that the company plans to unveil another drug-development program this year.

Patty Allen, vice president of finance at Alnylam, added during the conference call that the company expects its cash on hand to be sufficient to fund the company's operations through 2006.

Sirna

Sirna President and CEO Howard Robin said in a statement that the company would be laying off an undisclosed number of employees in order to reduce its budgeted cash expenditure for 2005. When it released its financial results for the full-year 2004 in late February, Sirna's former CFO Martin Schmieg said during a conference call that the company was anticipating spending between $20 million and $21 million during 2005.

With the job cuts, Sirna is expecting to trim $6 million from its 2005 burn rate before severance costs.

For the first quarter, Sirna reported a rise in net loss to $8 million, or $0.19 per share, compared with $5.9 million, or $0.19 per share, in the year-ago quarter. Driving the loss increase was a 38 percent rise in total expenses, to $8.7 million from $6.3 million, stemming from greater research and development spending.

R&D costs in the quarter were $6.1 million, up from $4.5 million in the first quarter 2004, which Sirna said reflects the expense of phase I development of the age-related macular degeneration treatment Sirna-027, and $1 million in costs associated with the company's recent deal for Protiva Biotherapeutics' SNALP delivery technology (see RNAi News, 4/8/2005).

Meanwhile, Sirna's revenues in the first quarter, derived primarily from contract manufacturing deals, rose to $508,000 from $318,000 the year before.

As of March 31, Sirna had cash, cash equivalents, and securities available-for-sale totaling $24.9 million, versus $36.1 million at the end of the first quarter last year.

In his statement, Robin said that the company has refocused its pipeline on its three lead drug-development efforts: its phase I program in age-related macular degeneration, which is expected to reach phase II in mid-2006; and its preclinical programs in hepatitis C and hair removal, both of which are expected to enter the clinic by the end of next year.

The company's other programs, all preclinical, will be "advanced with a combination of internal and external support," Sirna said. These programs include asthma, Huntington's disease, oncology, and diabetes.

Sirna has already formed partnerships for its Huntington's disease program with Targeted Genetics (see RNAi News, 1/14/2005) and oncology with Eli Lilly (see RNAi News, 1/30/2004).

News of Sirna's refocusing comes on the heels of a major shake-up at the company, namely the departure of both COO Nassim Usman and Schmieg (see RNAi News, 4/8/2005) and the relocation of its headquarters to San Francisco from Boulder, Colo. (see RNAi News, 3/11/2005).

Officials from Sirna did not return requests for comment.

Alnylam

Alnylam's first-quarter net loss fell to $6.6 million, or $0.32 per share, from $15.5 million, or $9.39 per share, in the year-ago quarter when the company was still privately held and used far fewer shares to compute its loss per share.

Contributing to the lower losses was a drop in operating costs during the quarter to $8.3 million from $13.5 million as research and development spending fell to $5.4 million from $10.4 million.

According to Alnylam, the drop in R&D costs reflects a $5 million charge related to the company's March 2004 IP licensing arrangement with Isis Pharmaceuticals (see RNAi News, 3/19/2004) for which there were no comparable charges in this year's first quarter. Also helping to drive down operating costs was lower non-cash stock-based compensation in the first quarter this year.

Alnylam's revenues for the first quarter jumped to $1.6 million from $134,000 a year earlier, largely as a result of $1.2 million in cost reimbursement related to the company's June 2004 deal with Merck for the development of ocular disease therapeutics (see RNAi News, 7/2/2004).

Also contributing to the revenue growth was amortization of up-front and maintenance payments from Merck tied to both the ocular disease deal as well as the companies' September 2003 strategic alliance (see RNAi News, 9/12/2003) and $200,000 received from Japanese drug developer GeneCare for its January license to Alnylam's IP (see RNAi News, 1/7/2005).

As of March 31, Alnylam had cash, cash equivalents, and marketable securities totaling $38.3 million. This compares with $46 million the company had at the end of 2004. The company said that it expects to have more than $25 million in cash and marketable securities by the end of 2005.

Greene said during the call that Alnylam expects a third indication will be added some time this year to the company's stable of near-term drug development programs, which currently includes AMD and respiratory syncytial virus. He added that the company expects "to build multiple preclinical programs through year-end 2005."

-- DM