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Alnylam CEO: More Cash in Hand Is to Fuel Expansion From Within

Xconomy Boston — 

Biotechs keep cashing in. The latest is Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY), which is entering the most critical juncture in its 13-year history as it tries to enter the rarified realm of biotechs with their own products on the market. The RNA interference firm said Monday it would tap the public markets for a $450 million financing round of its own, even saying it could use the money for “potential acquisitions.”

But when Xconomy spoke with Alnylam CEO John Maraganore (pictured above) at the J.P. Morgan Healthcare Conference in San Francisco last week, where optimism about the capital markets abounded, he was adamant that Alnylam would tread a different path of expansion.

“We’re not looking to buy anything, because everything we have inside is what we want to invest in,” Maraganore said. He added that the company’s cash “is going to be needed to become profitable and to execute on this plan.”

We spoke before the new $450 million fundraising plans were announced, but Alnylam was already sitting on $880 million in cash as of the end of 2014. The five-year plan, as he outlined it, is to make Alnylam a commercial enterprise, selling its own drugs—with three on the market by 2020.

The plan also includes nearly tripling in size. Alnylam currently has about 250 workers; Maraganore expects that number to approach 700 in 2017. The company is building up a European operation, adding development roles, and down the road, will start hiring a sales force too.

The pledge to look inward for resources, not outward for acquisitions, is all the more notable because Alnylam, which has stuck to rare diseases with few, if any approved treatments, wants to expand into disease areas in which many biopharmas consider too expensive to work.

Alnylam and others in the field have made progress overcoming the big obstacle in RNAi—how to safely and effectively deliver these large molecules into the body, where they’re supposed to silence certain genes before those genes make specific proteins that trigger a disease. But Alnylam still has plenty to prove in clinical trials. Its first RNAi drug, patisiran, won’t produce final Phase 3 data for another few years in the rare disease transthyretin-mediated amyloidosis. A version injected subcutaneously (rather than intravenously, like patisiran) called revusiran is in mid-stage studies. Several other pipeline candidates are either in Phase 1 or preclinical testing.

When we spoke at J.P. Morgan, Maraganore mentioned potential programs in diabetes, nonalcoholic steatohepatitis (NASH), hypertension, and hepatitis—risky, costly, competitive, and lucrative markets. He’s now dividing the company into three areas: rare diseases, cardiometabolic disorders, and infectious diseases. This isn’t because he’s looking to break up Alnylam, he says, but because of recent revelations about its capabilities. For example, in some cases, the company’s subcutaneous RNAi drugs are lasting several weeks or months—which, he argues, could beat a once-a-day pill for high cholesterol, for instance, solely based on convenience.

There’s another factor at play: dealmaking. All Alnylam’s current and future rare disease drug candidates are partnered with Sanofi’s Genzyme unit, thanks to the $700 million deal the two companies signed last year. In essence, it’s a similar deal to the one Sanofi inked with Regeneron Pharmaceuticals (NASDAQ: REGN) many years ago; large company takes big stake in smaller company, and they work together to develop a variety of drugs and share the costs and profits.

Just one of Alnylam’s drugs in cardiometabolic and infectious disease, however, is partnered—and that deal, with the Medicines Co. (NASDAQ: MDCO) for a single RNAi drug for high cholesterol, appears to be an anomaly. Maraganore says if Alnylam does end up partnering, it would only be through deals that resemble the broad Genzyme partnership, not the one-off Medicines Co. deal from a few years ago. Those Genzyme-like transactions are the deals it has in mind for its cardiometabolic and infectious disease portfolios.

“We’re not going to do onesie-twosie type deals, it just doesn’t move the needle for us,” Maraganore says. “We never say never, but it would have to be unusually fantastic in some other manner to do it differently.”

There are many ways to build a company with a platform technology based on high-risk, high-reward science. Take Moderna Therapeutics, for instance. It’s hiving off groups of its messenger RNA therapeutics and housing them into subsidiaries; the company itself is the product engine, while the so-called “venture” units, which it wholly owns, are the vessels for development and ultimately commercialization.

This spreads out risk and the big bills for clinical trials those ventures will rack up. The more than $800 million Moderna has raised also relieves the pressure to go public soon—at least that’s what its executives have told Xconomy. And CEO Stephane Bancel has been adamant that Moderna would bide its time and get to clinical trials when its technology is ready, rather than rush; the company has said recently it expects its first trials to start in the next 12 to 24 months.

Alnylam went a different route. It IPO’d two years after forming. It tried a spinout once, joining with Isis Pharmaceutcials (NASDAQ: ISIS) to create Regulus Therapeutics (NASDAQ: RGLS) in 2007. But it only owns 12 percent of that company today, and Maraganore says he doesn’t envision doing those types of deals anymore.

“It takes a lot of time to do it, and frankly it takes a lot of senior management time,” he says. “And then on top of it, we don’t get rewarded for it by shareholders.”

By contrast, Alnylam was rewarded for last year’s Genzyme deal: shares soared more than 20 percent after it was announced, and they now trade near $100 apiece. Perhaps it’s no surprise Maraganore is eyeing other deals like it.

Here are some other edited excerpts from my conversation with Maraganore about the strategic levers he’s trying to pull (or avoid), and the specter of Moderna, as Alnylam tries to get its first drug to the finish line.

Xconomy: You’ve said before that Alnylam was focused on rare diseases. Now it’s forming divisions for cardiometabolic diseases and infectious diseases—why?

John Maraganore: We want to have … Next Page »

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