Thursday, January 19, 2012

Alnylam Shocks with a further 33% Reduction of Its Workforce

When I saw the announcement a few minutes ago, I had to gasp for air: A little more than a year after laying off 25-30% of its workforce after Novartis failed to exercise the $100M IP option, Alnylam announced this evening that it will further reduce its workforce by another 33%. Even the PR person seemed shocked, as the same PR went out twice.

Following recent guidance that the company would only advance two clinical candidates for orphan diseases, ALN-TTR and ALN-APC, on its own dime and was planning to give everything else away in their pipeline at what could likely be at firesale prices, it already looked like something was deeply wrong. Today’s news and Alnylam’s lawsuit this week against Tekmira in an apparent desperate attempt to make anything stick against that company, only add to that suspicion. After all, Alnylam still enjoys a fairly lavish cash balance of $260M, and its share price, especially in light of the very positive clinical results recently, would put it again into a position to raise a bit of capital on the public markets.

The cost-saving measures and the new mantra of having transformed from a platform into a product-focused company is also at odds with the notion that Alnylam wants to remain at the forefront of RNAi Therapeutics innovation.

Moreover, when the Novartis lay-offs were announced, it was naturally felt that it would be a good thing to make one deep cut and be done with it instead of depressing employee moral by a series of gradual workforce reductions. I’m therefore convinced that today’s news had not been anticipated back then.

So what’s wrong?

The only reasonable explanation that I can come up with is that they are putting contingency plans into place for a potentially hefty settlement with Tekmira. A capital raise may be difficult to do if they had good reasons to expect that the Tekmira litigation could end up being costly, in which case they would probably have to disclose that in a prospectus.

I know- these are a lot of speculations, and definitely don’t buy Tekmira shares based on those. I invite you though to share your suspicions of what’s going on inside (survey on top right hand corner): a) the company has lost all belief that the science will mature in time; b) they expect the Tekmira litigation to end up being very costly and are starting to save up for it (settlement or buy-out); or c) none of the above.

My eyes are now peeled on that financial guidance in February, and I'm truly sorry for all those that now see their lives turned upside down after having pursued the dream of turning RNAi Therapeutics into a reality.


Anonymous said...

Ahhh, as a long time tkmr shareholder I am confident in the company( and science), and all I can say is "down you go, you big bad bully"

TKMR will be the giant in this field for the future. Love it.

max said...

Alnylam are simply slimming the cost base further as thye reduce in house research and development.This reflects the continuing slow progress in getting big deep pocketed partners into the space.It was more starnge they continued with the madly high burn rate they had and raising money through an issue is not as easy as you may think.The CEO is already almost out becasue of the performance of the shareprice anyway and the lack of clear advancement in the company's value.As for Tekmira I can only assume Dirk you own the shares or are paid by tekmira to be so exclusively and monootonously positive about the company and its scince.In the case of the lawsuit it is very rare that these result in big pay uts and even rarer that they lead to takeovers to stymie the lawsuit.This is more like a boys comic book outcome.Most likely it will fizzle out into a medium term small settlement one way or the other.There may be consolidation in the sector-it is a loss making area that still has no clear big monied supporters and ,as yet,no drop dead data that has made anyone join the field despite all your best attempts to bull it up.Tekmira may end up being a big player in the field,so too may Silence,the dark horse that all of you seem to ignore.Certainly in bang for the buck terms Silence provides the best upside.But then Dirk you probably dont own the shares so wont agree.I'll be amazed if all RNAi doesnt reduce workforces this year and until someone with money believes in the data.

Anonymous said...

After reading Max's post, I will heavily invest in any company that has a foolproof grammar/spell check feature for online blogging. Sorry, Max, but you really need to proof read the chit you post if you want to have any credibility.

Anonymous said...

So, how long until Alnylam's year-old strategy gets more accurately rebranded as "2x17" ??

Given the attrition rate in early clinical development, giving even a '2' is generous!

In fact, I'll probably trademark all of the other potential number combinations for a renamed strategy - then we can have another lawsuit, just for fun ;o)


Dirk Haussecker said...

Just to advise readers of this blog that the name of the poster 'Max' may be misleading.

Anonymous said...

What do you mean by that the name of "Max" is misleading? Does "Max" stand for "making a cross"? Or what does it mean for? Sorry for being silly here.

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