(ALNY) Alnylam Pharmaceuticals Analyst Maintains Neutral on Shares

We have maintained a Neutral rating on Alnylam Pharmaceuticals Inc. (ALNY) with a target price of $9.50 per share.

Alnylam Pharmaceuticals Inc. is a biopharmaceutical company developing novel therapeutics based on a biological breakthrough known as RNA (Ribo Nucleic Acid) interference (RNAi). Alnylam is currently utilizing this technology to build a pipeline of drug candidates for the treatment of a wide array of diseases.

Alnylam Pharmaceuticals Inc.’s first quarter loss of 38 cents per share was wider than the Zacks Consensus Estimate of 32 cents per share and also the year-ago loss of 29 cents. Lower revenues and higher research and development expenses led to the greater loss. Revenues for the reported quarter fell 15% from the prior year to $20.9 million but were in line with the Zacks Consensus Estimate of $21 million.

We like the company’s newly launched “5X15” initiative and are pleased with the progress of the company’s pipeline. Alnylam’s core product strategy, Alnylam 5×15, is aimed at developing RNAi therapeutic products for the treatment of genetically defined diseases addressing major unmet medical needs. Under this strategy, the company aims to move five RNAi therapeutic programs into clinical development by 2015. These include among others ALN-PCS (for hypercholesterolemia), second generation ALN-TTR (a hepatitis C compound), and ALN-HPN (refractory anemia).

Furthermore, the company is developing ALN-RSV01 for the treatment of respiratory syncytial virus, or RSV, infection; ALN-VSP for the treatment of liver cancers; and ALN-HTT for the treatment of Huntington’s disease, or HD, through existing or future partnerships.

We believe 2011 will be an important year for the company as it expects to report data from several of the above pipeline programs. Data from an early stage trial of ALN-TTR01 (a systemically delivered RNAi therapeutic that employs a first-generation LNP formulation) to treat transthyretin (TTR) mediated amyloidosis is expected to be presented in the third quarter of 2011. An Investigational New Drug (IND) for ALN-PCS is expected to be filed in the second quarter of 2011 with data presentation by the end of 2011. Data from a phase IIb study of ALN-RSV01 in RSV-infected lung transplantations is expected in 2012.

Alnylam also generates revenues from research collaborations, grants, and licensing of the RNAi technology outside its core focus area. Alnylam has partnerships with several large pharmaceutical companies, such as Biogen Idec (BIIB), Medtronic (MDT), Takeda, Kyowa Hakko Kirin, Cubist Pharmaceuticals (CBST) and Isis Pharmaceuticals (ISIS), to help fund preclinical and clinical work. The partnerships with major players further validate the potential and viability of the RNAi approach. Alnylam has a 45% stake in Regulus, which is engaged in research in microRNA and has entered into major partnerships with GlaxoSmithKline (GSK) and Sanofi Aventis (SNY).

We are also comfortable with the company’s current cash position, which allays concerns regarding its cash-burn rate.

In September 2010, Alnylam’s long time collaborator, Novartis (NVS), opted to end a five-year alliance with Alnylam. The end of the Novartis collaboration in turn reduced the company’s need for service-based activities. As a result Alnylam announced a corporate restructuring with an approximate 25% reduction in the overall workforce. Further, in November 2010, Roche (RHHBY) also ended research efforts in RNAi, including activities in Madison, Wisconsin and at the Kulmbach, Germany facility it acquired from Alnylam. Until September 2010, a substantial portion of Alnylam’s total net revenues comprised collaboration revenues from its strategic alliances with Roche, Takeda and Novartis. Though without any immediate effect, we believe the end of the Roche and Novartis deal robs Alnylam of two very big co-development partners and potential future milestones and royalties.

We prefer to remain on the sidelines and await further visibility on the clinical progress of the pipeline as well as the company’s ability to enter into new large partnerships to make up for the loss of Novartis and Roche deals.

ALNYLAM PHARMA (ALNY): Free Stock Analysis Report

BIOGEN IDEC INC (BIIB): Free Stock Analysis Report

CUBIST PHARM (CBST): Free Stock Analysis Report

GLAXOSMITHKLINE (GSK): Free Stock Analysis Report

ISIS PHARMACEUT (ISIS): Free Stock Analysis Report

MEDTRONIC (MDT): Free Stock Analysis Report

NOVARTIS AG-ADR (NVS): Free Stock Analysis Report

SANOFI-AVENTIS (SNY): Free Stock Analysis Report

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