WASHINGTON, May 10 (UPI) -- Alnylam wildly exceeded Wall Street's expectations in first-quarter earnings and analysts expect the firm's pipeline candidate RSV01 and other products from its direct RNAi clinical program will continue to drive strong performance.
"The coming quarters should be transformative for (Alnylam) as it progresses its first therapeutic program through clinical trials," Michael King, Jr., senior biotechnology analyst with Rodman and Renshaw, wrote in a research report issued late Tuesday.
King gave Alnylam an "outperform" rating and predicted RSV01, a direct RNAi candidate for the treatment of respiratory syncytial virus, would prove successful in a phase 1 trial and a study in experimentally infected volunteers that are both expected to start later this year.
"In our view, the phase 1 data presented recently demonstrated convincingly that intranasal ALN-RSV01 is safe and well tolerated in healthy adults," King stated. "Combing this with the positive animal model data that have been previously released, we are optimistic about the outcome of both upcoming studies."
The studies could begin in the second half of this year, which would enable Alnylam to launch proof-of-concept studies in naturally infected patients in the first half of 2007.
Many of Alnylam's previous ventures have been collaborations with big pharma companies, such as Merck and Novartis. But the firm said it will be the sole owner of its next clinical development program, which King viewed as a positive step.
"We are encouraged by this strategic decision and look forward to an announcement in 2H06 of a third, in all likelihood Direct RNAi (i.e., not systemic), clinical program," he stated.
Alnylam's collaborations also are viewed as a good sign. King noted that Alnylam's collaborations with Novartis were one of the predominant sources of its increased revenue.
"We consider the positive surprise on revenues from (Novartis) to be a strong endorsement of the progress being made in these important collaborations, including pandemic influenza and other unnamed programs," he stated.
Alnylam said in announcing its first quarter revenues Tuesday that it plans to engage in more collaborations going forward.
"We expect more in the future," said John Maraganore, Alnylam's president and CEO.
The firm said its previous collaborations should continue to provide it with increased revenue over the remainder of the year.
"As we projected late last year, we are now starting to see a significant step-up in revenue as a result of our value-creating partnerships with pharmaceutical companies," said Patricia Allen, Alnylam's vice president of finance. "We expect this level of funding to continue to ramp up in the coming quarters," she added.
Alnylam said its revenues in the first quarter of this year were $5.7 million, up from $1.6 million during the year-ago quarter. The expected consensus estimate was around $2.2 million.
The company said the bulk of this revenue increase -- $4.4 million -- consisted of cost reimbursement and amortization revenues from its collaboration with Novartis.
Approximately $0.8 million was attributed to its flu collaboration with Novartis and $0.3 million was related to its Merck collaborations.
Maraganore told United Press International a phase 2 study of RSV01 is slated to start in the first half of next year and the company plans to use its RNAi platform to develop therapeutics for a wide variety of other diseases.
In addition to RSV and flu, Alnylam has programs to develop RNAi-based treatments for cystic fibrosis, spinal cord injury and neuropathic pain, Maraganore said. The company also has an ongoing program with Medtronic that is in the preclinical stages to develop treatments for central nervous systems disorders, including Parkinson's disease and Huntington's disease, he added.
Maraganore said the company did not have any projections for how much revenue a successful RSV or flu treatment might generate.
Mark Monane, an analyst with Needham and Co., agreed that Alnylam's future looks bright.
"We remain impressed with the company's progress and reiterate our BUY rating," Monane wrote in a research report issued Wednesday. "We believe encouraging data to date as well as expected newsflow will continue to gather investor interest," he added.
Monane also agreed on the promise of RSV01. "We view the company's RSV program favorably, given the lack of effective therapies and the novel and promising approach enabled by the RNAi platform," he wrote.
Bank of America analyst David Witzke was similarly enthusiastic about the company, rating it a "buy" in a research report.
"We believe (Alnylam) has a strong proven management team, the foremost collection of siRNA patents for use as therapeutics, and strong validating partnerships," Witzke stated. "Because of the transformational potential of siRNA, we believe (Alnylam) should be a core small-cap biotech holding."
