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.
