Zacks_Analysts' Blog : Alnylam Loss Tapers, Inks GSK Deal - Analyst Blog

Alnylam Pharmaceuticals Inc.’s (ALNY) third quarter 2011 loss of 31 cents per share was narrower than the Zacks Consensus Estimate of a loss of 36 cents per share. Lower operating expenses led to the narrower loss despite lukewarm revenues in the quarter. The loss was however wider than the year-ago loss of 23 cents per share.

Revenues for the reported quarter fell 24.9% from the prior year to $20.8 million. Revenues were however slightly above the Zacks Consensus Estimate of $20 million.

Quarterly Details

Revenues in the quarter were inclusive of $14 million from the company’s alliance with Roche (RHHBY), $5.5 million from Alnylam‘s partnership with Takeda Pharmaceuticals, in addition to $1.3 million of expense reimbursement, amortization revenues and license fees from Cubist Pharmaceuticals (CBST), Novartis (NVS), Biogen Idec (BIIB) and other sources.

Research and development (R&D) costs declined approximately 11.6% to $24.3 million. The lower R&D was primarily due to reduced spending on pre-clinical costs concerning the ALN-PCS programs.

General and administrative (G&A) expenses in the reported quarter were almost consistent at $9.0 million.

2011 Guidance

Alnylam expects to exit 2011 with a cash balance of more than $250 million. R&D and SG&A expenses are expected to be consistent for the rest of the year.

Pipeline Update

Alnylam’s core product strategy, introduced in January 2011, is Alnylam 5x15, which aims at developing RNA interference technology (RNAi) therapeutic products for the treatment of genetically defined diseases addressing major unmet medical needs. Under this strategy, the company aims to have five RNAi therapeutic programs into advanced clinical development by 2015. These include ALN-PCS (for hypercholesterolemia), ALN-TTR01 (for transthyretin (TTR) mediated amyloidosis or ATTR) and ALN-HPN (for refractory anemia). In September 2011, Alnylam selected the fourth RNAi therapeutic, ALN-APC, for the treatment of hemophilia, which is in pre-clinical development. ALN-APC is expected to move into clinical development in 2013.

Data from a currently ongoing early stage trial of ALN-TTR01 is expected to be presented in November 2011 at a scientific conference in Japan. Data from an early stage study of ALN-PCS, which began in September 2011, is expected to be presented by the end of 2011.

Collaboration with GlaxoSmithKline

Alnylam announced that it has collaborated with GlaxoSmithKline (GSK) in vaccine development and production, including influenza, utilizing its new VaxiRNA technology. The VaxiRNA technology applies RNAi technology for enhanced production of vaccines. Glaxo will provide the costs of research. In addition, Alnylam will also be entitled to potential milestone and commercial payments (based on unit sales of vaccine product). We are encouraged by the company’s alliance with yet another pharma giant.

Our Recommendation

We currently have an Outperform recommendation on Alnylam. The stock carries a Zacks #2 Rank (“Buy”) in the short term. We like the company’s “5X15” initiative which aims at developing products for treating genetically defined diseases with unmet medical needs using the potentially revolutionary RNAi technology.  We like the pipeline progress at Alnylam and believe that 2012 will be an important year for the company due to significant clinical catalysts.  Moreover, the company has collaborations with some big pharmaceutical players to further develop and utilize its core technology. These partnerships further validate the potential and viability of the RNAi approach.