Alnylam Green Shoots After Corporate Restructuring

The latest quarter must have been the best quarterly performance by Alnylam in the last 3 years. After going through a rough patch that culminated in Novartis not adopting a widely expected $100M platform license with the attendant lay-off of a third of its staff, the results and also tone of the conference call struck me as if the company had re-discovered its old enthusiasm for RNAi Therapeutics drug development and is intensely focused on creating value by providing additional clinical proof-of-concept data over the coming months.

There is reason to be cautiously optimistic about the upcoming clinical data. For one, dose escalation for the liver cancer candidate ALN-VSP02 seems to have progressed beyond the magic 1mg/kg mark and is still ongoing! First generation or not, the fact that patients have now received and tolerated this kind of dosage, and on a repeat basis, is major de-risking for all of Alnylam’s, but also Tekmira’s pipeline candidates which involve LNP delivery (almost all of them). Similarly encouraging, ALN-TTR01 dosing is also ongoing and with 3 centers in Europe recruiting now, results may not be that far off (28 patients anticipated in this phase I study).

Although the first generation LNPs appear to be well tolerated, Alnylam seems to be even more excited about a potential quantum leap in LNP delivery: LNPs containing the next-generation MC3 lipid which not only silence in the unprecedented single micro-gram per kg range for gene targets in the liver, but also appear to be very well tolerated in animals. The MC3 lipids are derived from the DLin-KC2-DMA ionizable lipids developed by Tekmira, results from which were published earlier this year in Nature Biotech.

Besides the science, financials seem to be in better-than-expected shape, and I believe is what underlies today’s jump in share price (you can assume that the stock market wouldn't pay much attention to MC3). With over $370M cash/equivalents on the balance sheet, Alnylam is poised to close the year with well over the previously guided $325M cash/equivalents. Having slashed the work force, albeit probably at considerable personal cost, thus buys the company strategically valuable breathing room. In addition, there were a number of positive one-offs this quarter, including $2M for the successful award of 8 federal grants, a Quark milestone, and increased activities related to Novartis finalizing its 31 target picks. And with Novartis' relationship with Alnylam settled now, it should become easier to talk to other companies about partnerships and further add to the strong financial position.

Alnylam and Medtronic also stand to receive very significant funding from the Huntington’s Disease Foundation (CHDI), likely totaling over $10M, some of which has already been earned (agreement is retro-active). Somewhat dampening the excitement around that program was news that ALN-HTT is now a 2012 goal for entering the clinic, while LNP-delivered ALN-TTR02 and PCSK9 (both probably MC3) are poised to be the Company’s 2011 new clinical candidates.

An interesting tidbit on PCSK9 is that, faced with numerous competition from mainly monoclonal antibody candidates against the same target, some of which have already entered the clinic, it appears to be now Alnylam’s strategy to emphasize the fact that with RNAi you down-regulate both intra- and extracellular PCSK9 levels, which therefore is closest to recapitulating human genetics which has been driving the adoption of PCSK9 as a drug target for hypercholesterolemia in the first place. A good argument indeed.

Overall, my most important take-home was that this seems to be a re-energized company, and with some of the right clinical news, there may soon be a second honeymoon between Alnylam and its shareholders (of whom I’m btw not one of…yet).

More RNAi Therapeutics Deals by Alnylam and Silence Therapeutics

Silence Therapeutics and Alnylam Pharmaceuticals hardly let a week go past without announcing partnership news leveraging their IP position in the RNAi Therapeutics arena.

When Alnylam and the medical device company Medtronic announced their initial partnership in 2005, the plan was to evaluate Medtronic’s CNS drug delivery devices for use with RNAi Therapeutics (see July 22, 2007 Blog: “Looking Ahead: Alnylam-Medtronic Alliance Stop-Go Decision Expected Soon”), and a joint decision on whether to continue pursuing such drug-device combinations would then be made in 2007.

Yesterday, the companies announced that the progress to date, particularly in their pre-clinical program for Huntington’s disease, warranted a continuation of their partnership. Simultaneously, the original terms of the agreement were amended as a 50:50 relationship in the US, while Medtronic will be solely responsible for development and commercialisation in Europe. It is not clear, however, whether Medtronic will make a $1-8M equity investment in Alnylam as under the original agreement. If not, the new deal structure might reflect the greater flexibility gained by Alnylam through their strong financial position, especially in the wake of the Roche alliance 2 weeks ago.

Such details should become available during next week’s Q2 conference call. Meanwhile, the decision to pursue this alliance further speaks to the promise of RNAi Therapeutics for the treatment of neurodegenerative diseases.

In a similar development, Silence Therapeutics announced a deepening of their existing partnership with Quark Biotech. Quark Biotech, which only very recently dropped their ambitious plans to go public, has two ongoing clinical programs with siRNAs licensed from Silence. In the new agreement, Quark obtains non-exclusive rights to develop RNAi Therapeutics for three gene targets using Silence Therapeutics’ AtuRNAi platform. Details of the deal were not available, but it does not appear to involve a significant upfront cash payment to Silence. Although the deal sizes by Silence Therapeutics pale in comparison to those of Alnylam, at least some of their partners appear to be convinced that Silence’s AtuRNAi technology is sufficiently distinct from Tuschl’s siRNAs to be worth paying money for. It could also mean, however, that some are unwilling or unable to meet the terms that Alnylam can ask for now.

Looking Ahead: Alnylam-Medtronic Alliance Stop-Go Decision Expected Soon

In early 2005, Alnylam and Medtronic announced a joint product development program to evaluate the use of Medtronic’s implantable drug delivery devices for RNAi Therapeutics applications of the central nervous system (CNS). If at the end of this development program a joint decision for the continuation of this program were made, Medtronic would take an equity position in Alnylam and additional investments following the achievement of certain milestones.

According to regulatory filings, the original decision making due date was April 2007, but was then postponed to July 2007. It is interesting to speculate that this delay may have been either caused by scientific uncertainties or is the consequence of drafting a comprehensive and therefore complicated co-operation agreement. Certainly, in development time-frames, 3 months do not seem to be sufficient to reasonably expect major new breakthroughs had there been fundamental scientific problems.

Medtronic realised early on the potential of RNAi as a new class of drugs that could be used with their drug delivery devices. Only shortly before the 2005 agreement, in August 2004, Medtronic published a patent on the treatment of neurodegenerative diseases such as Parkinson’s, Alzheimer’s, and Huntington’s, through intracranially delivered siRNAs using Medtronic’s implantable catheters (United States Patent 20040162255). Two years later, a similar patent was published for the treatment of neuropathic pain.

While pertinent in vivo data are lacking in these patents, it is clear that Alnylam already has amply tested Medtronic’s devices. Josephine Lai from the University of Arizona Health Sciences Center in Tucson, a Alnylam collaborator, for example has published strong in vivo data on intrathecally delivered siRNAs [Luo et al. Mol. Pain 1: 29 (2005)]. It is also of note that in this study, siRNAs were most efficient when formulated in the liposomal i-Fect transfection reagent from Neuromics. The same reagent was also successfully applied in rescuing mice from lethal flavivirus infection of the CNS [Kumar et al. Plos Med. 3: e96 (2006)].

One potential limitation with the local delivery of siRNAs and shRNA vectors such as AAV, however, is to achieve sufficient diffusion of the RNAi inducing agent to its target cells. That diffusion of macromolecules in the dense matrix of the CNS may also be an issue with a device from Medtronic similar to the one Alnylam is evaluating, is suggested by the failure of a phase II clinical experience of the neurotrophic factor GDNF for Parkinson’s [Salvatore et al. Exp. Neurol. 202:497 (2006)]. This particular experience, however, has to be taken with a grain of salt, as there appears to be some controversy about the interpretation of the trial results [Slevin et al. Annals Neurol. 59:989 (2006)]. A positive announcement on the Medtronic-Alnylam alliance may therefore indicate that it is possible to achieve sufficient siRNA diffusion.

Nevertheless, local delivery may not be sufficient for diseases where the whole brain has to be targeted, such as in viral infections and brain tumours. Here, systemic delivery solutions are needed. While the blood-brain barrier has historically been regarded as a major obstacle to achieving that goal, targeted approaches such as the rabies-peptide conjugation approach that I have highlighted in my June 19 Blog (“New Breakthrough in the Systemic Delivery of RNAi for the Brain”) and similar efforts make me hopeful that a range of both local and systemic delivery strategies will eventually prove successful in addressing a number of diseases of unmet medical need. These issues also highlight once more, that it will be critical to carefully tailor the delivery of an RNAi Therapeutic to its disease application.

Blog Watch: The ‘Old Vic’ blog talks about a possible takeover or significant RNAi Therapeutics alliance involving Silence Therapeutics: http://www.sharescity.com/2007/07/silence-therapeutics-takeover-rumours.html