Alnylam Cuts 25-30% of Workforce, As Novartis Alliance Ends

9/23/10Follow @xconomy

Cambridge, MA-based Alnylam Pharmaceuticals is facing some big cuts now that one of its major partners is going its separate way.

Alnylam (NASDAQ: ALNY) said today it is planning to cut about 25 to 30 percent of its workforce. The move came after one of Alnylam’s big partners, Novartis, effectively brought a five-year alliance to an end. Alnylam didn’t say how many people are being let go, but the company had 178 employees heading into this year, meaning the cuts could affect about 44 to 54 people.

While the news is certainly bad for the people losing jobs, Alnylam pointed out that the company will still go forward. Novartis has selected all 31 RNA-based targets it was entitled to under a 2005 partnership, and the Swiss drug giant remains “fully committed” to developing them as therapeutics that could someday provide Alnylam with additional milestone payments and royalties. Alnylam still plans to end this year with $325 million of cash and investments in the bank, and the cutbacks will help it protect that financially strong position, saving $25 million in operating costs in 2011.

Alnylam’s CEO, John Maraganore, stressed that his company still has a stake in Novartis’ ongoing success in RNA interference, and that Alnylam will now have more flexibility to do other deals. “We welcome this new period in Alnylam’s development with both reduced need for allocation of service-based collaboration resources and substantially greater freedom in forging new major partnerships,” he said in a statement.

What Alnylam does matters because it is one of the pioneering companies in the field of RNA interference, in which scientists seeks to turn off specific genes related to disease that have been largely inaccessible to conventional small-molecule drugs or protein therapies. While those technologies have excited researchers in the lab, and the pioneers in the field were awarded the 2006 Nobel Prize, no RNAi drug has yet navigated the long, difficult journey to become an FDA-approved product. Alnylam has built up a leadership position in the emerging field through its intellectual property and by inking a number of alliances with major pharma companies like Roche, Takeda Pharmaceuticals, and GlaxoSmithKline.

But Novartis has provided one of the biggest votes of confidence in Alnylam. Besides contributing to the five-year partnership that yielded 31 drug targets, Novartis is the second-largest shareholder in Alnylam with a 13.3 percent ownership stake, according to the most recent proxy statement filed with the SEC. Fidelity Management & Research is the largest shareholder with a 15 percent stake.

Alnylam will webcast a conference call at 8 am Eastern tomorrow to discuss the news and its future plans.

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