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Is Alynlam the next breakthrough name in biotechnology? Investors say ‘yes’

July 12, 2013 10:47 am by | 0 Comments

Investment in Healthcare

(Reuters) - A radical new treatment for genetic disorders has catapulted Alnylam Pharmaceuticals Inc into the crosshairs of investors seeking the next breakthrough name in biotechnology.

The challenge for the Cambridge, Massachusetts-based company now is to prove that its 'gene silencing' technology can make the leap from the laboratory to the doctor's office and eclipse an alternative therapy already in use.

Investors, for now, are betting that it will. A steady drip of positive trial data has helped to triple Alnylam's market value to more than $2.7 billion in the space of 12 months. Eight of the nine analysts covering the stock rate it "buy" or above.

For some, gene silencing could be a revolutionary treatment. It works by 'switching off' the genes that cause disease, while its potency derives from an ability to reproduce itself - meaning a small dose can eliminate multiple targets.

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"People know this mechanism works in a laboratory, but in humans there is the challenge of delivering it to the appropriate cell," said Marko Kozul, analyst at Leerink Swann, an investment bank that specializes in healthcare.

"The question isn't one of mechanism. It's one of delivery."

Alnylam is testing its technology in conditions as varied as liver cancer, respiratory tract infections, hemophilia and high cholesterol.

Its most advanced drug candidate, however, is a treatment for amyloidosis, a rare condition caused by mutations in the gene that produces the protein transthyterin (TTR). The mutation leads to an abnormal build-up of proteins in various organs.

On Thursday, Alnylam's stock rose 16 percent after the company said an early-stage trial of the therapy - known as ALN-TTR - suppressed production of the protein. The drug was administered subcutaneously, under the skin, ensuring its slow release.

Chief Executive John Maraganore told Reuters in an interview that Alnylam was in talks with the U.S. Food and Drug Administration (FDA) and wants to establish late-stage trial goals which, if negotiated, would offer a more streamlined path to approval.

"There is recognition by the authorities of the significant unmet need in this disease," said Maraganore, who invented and led development of anti-clotting medicine Angiomax in a previous job at Biogen Idec Inc.

PLAYING CATCH-UP

Alnylam is not alone in fighting genetic disease. In terms of getting a drug to market, the company is playing catch-up.

Often compared with Alnylam because of its focus on gene-based drug technologies, Isis Pharmaceuticals Inc had its drug, Kynamro, approved by the FDA in January. Its stock price has more than doubled in the last year.

Kynamro is a treatment for a rare genetic disorder causing dangerously high levels of 'bad' LDL (low-density lipoprotein) cholesterol. Isis is also developing a different drug to treat amyloidosis with its partner, GlaxoSmithKline Plc.

Isis uses a different technology to tackle genetic illness. Known as antisense, it helps a drug bind to a specific gene in order to interrupt the production of disease-causing proteins.

Alnylam's RNA interference, or RNAi - the scientific term for gene silencing - works by turning off so-called messenger RNAs, or mRNAs, which signal the production of similar proteins.

"One molecule of RNA can lead to silencing or destruction of many RNA targets," said Daniel Anderson, a scientist based at the Harvard-MIT Division of Health Sciences and Technology, who holds a research grant from Alnylam.

"It recycles, basically, and keeps going. Perhaps there is some debate in the field, but there is an argument to be made that RNAi-based drugs do have the potential for increased potency and longevity."

They might be safer, too. Edward Tenthoff, analyst at investment bank Piper Jaffray, said that RNAi-based drugs can be administered in comparatively small doses.

To date, the problem has been in the delivery. Alnylam's gene silencing therapies, when tested intravenously, have been degraded by enzymes in the blood before they could act.

Analysts say that, if this hurdle can be overcome, the treatment could be more effective than antisense. The latest data on subcutaneous delivery removed some of the uncertainty.

Alnylam said on Thursday that the subcutaneous GalNAc-siRNA conjugate delivery platform would now be the primary approach for development of its RNAi pipeline.

It is partnering with companies such as Arrowhead Research Corp and Tekmira Pharmaceuticals Corp to explore delivery techniques.

Tenthoff estimated that the subcutaneous version of the drug could bring in as much as $4.1 billion in 2020. He estimated it would reach market in 2018.

'EXCITING' PIPELINE

Alnylam has $450 million in cash, cash equivalents and marketable securities - but no plans for deals.

"Boy! We have not seen anything in the outside world that even comes close to being as exciting as investing in our pipeline," Maraganore said. "We are going to stay pretty focused on organic growth."

A year ago, the company's stock was worth $13.12. Even before Thursday's spike, shares were trading at three times that level.

Maraganore, 50, said he hopes Alnylam can follow the same upward trajectory as market darlings Alexion Pharmaceuticals Inc and Regeneron Pharmaceuticals Inc.

"Those are two companies that have built enormous value by virtue of commercializing breakthrough medicines with significant retention of product rights and using partnerships," he said.

Regeneron, for example, has risen from relative obscurity to a $23 billion company on the strength of its eye drug, Eylea.

If it can silence genes enough to treat just a few diseases, Alnylam holds similar prospects, said Kozul at Leerink Swann.

"Alnylam could become a multi-billion-dollar market-cap company even if it only targets liver-mediated disease."

(Editing by Robin Paxton)

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