Alnylam Pharmaceuticals CEO John Maraganore had a snappy greeting ready for our first conversation of 2010.
“Happy RNA Decade,” Maraganore said.
For the sake of his Cambridge, MA-based company (NASDAQ: ALNY), Maraganore is wagering that this will be the decade in which scientific seeds of RNA-based therapies start to fulfill their potential. The decade-long vision is that RNA interference, microRNA therapies, RNA activation, and other treatments like them will emerge as new classes of therapy that can hit specific molecular targets, and regulate disease processes that targeted antibody drugs or conventional small-molecule chemicals can’t. And, oh yes, Alnylam is seeking to be one of the trailblazers of RNA, if not the dominant player.
While Maraganore was clearly in the mood to think big, and long-term, about RNA-based technology when we talked, he knows that the biotech investment world that gathers today at the JP Morgan Healthcare Conference in San Francisco is more interested in what Alnylam is going to do this quarter, and this year, rather than the rest of the decade. So we talked about both the short term and long term.
To keep things in perspective, it’s been a little more than a decade since the discovery of RNA interference, which can turn off specific genes. That discovery has given birth to new ideas on how to turn on desirable genes (RNA activation), ways to turn off whole biological networks (microRNA), and ways to regulate long-non coding RNA. While those technologies have excited researchers in the lab and produced reams of scientific papers, no RNAi drug has yet navigated the long, difficult journey to become an FDA-approved product.
But this will be the decade that sort of progress materializes, Maraganore predicts.
“This feels a lot to me like the ’90s,” Maraganore says. “Most people would agree looking back that the ’90s were the antibody decade. I would say this is going to be the RNA decade.”
It’s a bold statement, given that history says new pharmaceutical technologies tend to boom, then bust, before they finally reach their potential and boom again. The technique to engineer specific antibodies was first discovered in 1975, but it took 20 years for the first approved product to arrive. It was longer than that before antibodies blossomed into an estimated $30 billion worldwide market. Maraganore clarified that RNAi will demonstrate its effectiveness over the coming decade, but he wouldn’t go so far as to say the markets will also materialize in such a big way over the next 10 years.
Of course, 10 years is a long time, and there are a lot of milestones along the way that investors want to see. Last year at this time, Alnylam predicted it would deliver two more major partnerships during 2009, which didn’t happen. The company certainly made progress, by starting a clinical trial of its first RNAi treatment that can circulate throughout the bloodstream, forming a plan to move ahead into later-stage testing of its lead drug for respiratory syncytial virus in adults and children, and preparing to bring its third product into clinical trials for a rare genetic disorder that offers potential for a Genzyme-like domination of a pioneering treatment in a niche market.
But investors showed signs of impatience. Alnylam stock fell almost 29 percent in 2009.
So what are the incremental markers of success Alnylam has staked out for 2010? What steps does Alnylam hope will keep investors excited about the journey of developing RNA-based therapies? Here’s a rundown of some highlights.
—Before the end of March, Alnylam is planning to move its lead drug candidate, ALNRSV01, into a Phase IIb trial in adult patients who are infected with respiratory syncytial virus (RSV). Alnylam’s partner, Lexington, MA-based Cubist Pharmaceuticals will take the lead in advancing a next-generation form of this drug that the two companies consider a better candidate for children with RSV.
—Alnylam expects to have the first results from an early-stage clinical trial of ALN-VSP for treating liver cancer. This is the first-of-its-kind drug Alnylam has developed with help from Vancouver, BC-based Tekmira Pharmaceuticals that delivers the RNAi drug in lipid nanoparticles so that it can travel throughout the bloodstream.
—The next product candidate, for which Alnylam envisions building a Genzyme-like niche franchise around someday, will enter clinical trials before the end of June. This is ALN-TTR, a drug for TTR amyloidosis. I profiled this drug and the strategy last month.
—Fourth on the list is ALN-PCS, which is another RNAi treatment that can be delivered throughout the bloodstream to shut down the PCSK9 gene, which is involved in metabolizing so-called “bad” LDL cholesterol. The company’s drug candidate has been shown to reduce LDL cholesterol by more than 50 percent in primate studies. That candidate is being primed to enter its first clinical trial before the end of 2011, Maraganore says.
—Alnylam expects to do “a couple” new partnerships this year, although it’s not promising specific number to investors like it did in 2009, Maraganore says. While Wall Street likes to count on a specific number of deals in a given time frame, that also can take away a bit of leverage when a prospective partner can sense that the other side is under pressure to take whatever’s on the table by a certain deadline. Alnylam doesn’t want to give away any of that leverage this year by promising a fixed number of deals, Maraganore says.
Even though Alnylam didn’t deliver any major new partnerships in 2009 as it forecasted, the Big Pharma companies still have a strong appetite for Alnylam’s RNA interference technology, Maraganore says. “It’s [pharma interest] never been stronger,” Maraganore says. “We are having conversations at the CEO level all the time. They are increasingly convinced that RNAi is a disruptive technology, and that Alnylam is a leading, if not the leading, company.”
—Like last year, Alnylam has set a goal of getting at least 15 scientific papers published in top quality, peer-reviewed journals. That’s important for the company to keep its research sharp, even though it may not be enough to move the needle anymore among shareholders. “Investors want to see proof of concept in the field,” Maraganore says. “The goalposts are moving, and that’s OK. First it was animal data. Now they want to see human data. Then it will be about the marketed products and how they do. The goalposts are always moving, and we’re ready for it.”
—The intellectual property battles certainly aren’t over either. Alnylam expects to receive at least 30 new patents this year to strengthen the position it wants to hold, as a gatekeeper that RNAi drug developers need to pay in order to get in the game or stay in it.
—Last but not least, this will all take a lot of cash. Alnylam forecast a year ago that it would ring in 2010 with about $435 million of cash and investments in the bank, and now it says it ended 2009 just about right on target, with a little more than $430 million. It expects to tap a big chunk of that stockpile, and finish this year with at least $325 million, Maraganore says. But that number is clearly a conservative estimate, because Alnylam isn’t counting on a $100 million fee that Novartis may elect to pay to get a non-exclusive license to continue developing the Alnylam RNAi technology on its own, Maraganore says. The $325 million cash guidance figure also doesn’t assume that Alnylam will secure any major partnerships, he says.
Before we hung up, I asked Maraganore about his predictions on what will happen in the external world, beyond his control, that will have a big effect on Alnylam’s year. He conceded that he was worried a year ago when industry estimates said one-fourth to one-third of all biotech companies were operating on less than a year’s worth of cash. Most of the companies in that precarious position found some way to survive, either by cutting costs, or by producing enough clinical trial results that they could raise more money. “In general, the industry has been resilient, and made it through a tough period,” Maraganore says.
That led him to his one big prediction for the year. If Congress passes the health care reform bill and it wins President Obama’s signature, then big institutional investors will breathe a sigh of relief that health reform won’t harm biotech, Maraganore says. Essentially, the pricing power of biotech and pharma companies who develop innovative medicines will remain intact, and investors will see the benefits for drugmakers, who will essentially be able to sell their high-priced products to an even larger base of customers with insurance coverage.
“If you cure cancer, or at least make a big difference in people’s lives, you can still create a lot of value,” Maraganore says.
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