Alnylam Announces 33% Staff Cut, Will Focus Internally On Two Lead RNAi Programs

The RNA interference pioneer will focus on two candidates, ALN-TTR02 for transthyretin-mediated amyloidosis and ALN-APC for hemophilia, while seeking partners for its other “5x15” programs.

Alnylam Pharmaceuticals Inc. announced its second staff reduction in less than 18 months on Jan. 19, but it is a different set of circumstances that is driving the RNA interference pioneer’s restructuring plans this time around.

While the 30% cut in headcount enacted in September 2010 was related to the termination of RNAi collaborations with Roche and Novartis AG, this latest downsizing reflects the biotech’s transition from a discovery company to one advancing clinical development programs.

In a Jan. 20 note on the announcement, JMP Securities LLC analyst Charles Duncan projected that the cuts would reduce Alnylam’s headcount from the current 171 employees to about 120. In a release and an e-mail exchange, Alnylam did not specify what divisions or specialties would be the focus of cuts.

In an interview, Duncan noted that the personnel being let go at the Cambridge, Mass., biotech won’t be notified of their status until Jan. 23, but he speculated that much of the cutting would be focused in the areas of discovery and preclinical research.

“[This] does represent a point of progress rather than a desperation move intended solely to extend the life of the balance sheet, which is what often happens with biotech,” Duncan said. “They are moving much more into clinical development from no small amount of discovery and preclinical development that has occurred.”

Alnylam is able to move forward with its lead programs, he added, because it largely has solved its primary challenge – delivery of RNAi therapeutics to specific cells and tissues. In most cases, the company will deliver its drugs via lipid nanoparticle technology, although it also is working on a subcutaneous injection formulation of lead candidate ALN-TTR02, intended to treat the orphan condition transthyretin-mediated amyloidosis.

“[The focus is] much more clinical versus discovery and development. From an outsider’s view, maybe that’s not such a profound shift for a biotech company because that’s what they do,” said Duncan. “But for this company, it represents a more profound shift because the technology platform that they’ve been working with has for many years been very promising but [also] very challenging in terms of optimizing it … They aren’t giving up on that platform at all. What this represents is them feeling that they’ve achieved critical mass in terms of characterizing what is going to be required to develop a robust technology platform for the delivery of their RNAi therapeutics.”

Near-Term Focus On “Highest Value Opportunities”

In an e-mail, Alnylam CEO John Maraganore said the restructuring is intended to focus “our near-term efforts and resources on what we believe to be our highest value opportunities.” In addition to ‘TTR02, this focus will include ALN-PCS, intended to provide a therapy for hemophilia.

Maraganore added that the staff cuts do not represent any continuing fallout from the end of Alnylam’s partnerships with Roche and Merck in the fall of 2010 (Also see "Alnylam CEO John Maraganore - An Interview With "The Pink Sheet" DAILY (Part 1 of 2)" - Pink Sheet, 7 Mar, 2011.). A year ago, Maraganore unveiled a plan (called “5x15”) to narrow the firm’s focus to five more advanced RNAi programs, with a goal of advancing each of those programs into clinical development by 2015 (Also see "Alnylam Shifts To Product-Focused Strategy As RNAi Platform Takes A Hit" - Pink Sheet, 17 Jan, 2011.).

The revised strategy includes a plan to seek partners to take the other three “5x15” programs forward – ALN-PCS for the treatment of severe hypercholesterolemia, ALN-HPN for the treatment of anemia and ALN-TMP for the treatment of hemoglobinopathies. The last of those, previously undisclosed, was just unveiled by Alnylam earlier this month and will target the Tmprss6 gene, implicated in diseases such as sickle-cell anemia and beta-thalassemia.

Maraganore said Alnylam will seek partners for both clinical and preclinical programs – the ‘PCS program has reached clinical development but currently is on hold, while the other two are in preclinical stage.

“We continue to maintain a very active business development strategy and seek to partner our programs with companies that are like-minded with regard to the path and potential for the development of RNAi therapeutics,” he said. “We continue to have multiple discussions with potential biotech and pharmaceutical companies, and we feel there remains significant interest across the industry for new partnerships on RNAi therapeutics.”

Duncan said he is unsure that partnering any of the “5x15” programs is wise in the short term. “Because I think these are relatively capital-efficient programs, they need to continue to focus internally,” he explained. “If they show good clinical data and potential value to patients and reimbursement authorities, these will be highly sought-after programs in terms of partners that are interested in orphan diseases but … they have too little data to be able to convince anyone that these are good programs.”

If Alnylam is patient, it will be able to partner the “5x15” programs for multiples of what it costs the biotech to advance them through clinical development, Duncan predicted.

Both Duncan and Leerink Swann & Co. analyst Joshua Schimmer said they were not surprised by Alnylam’s restructuring announcement. Maraganore’s address at the JP Morgan Healthcare Conference in San Francisco on Jan. 11 might have foreshadowed the company’s strategy.

“Alnylam is going to focus this year and for the next period on two specific programs, specifically our TTR amyloidosis program and our hemophilia program where we believe these represent the greatest opportunities for us to accelerate clinical development and advance these programs to patients,” the CEO said during the conference.

Advantageous Dosing Expected With RNAi Therapeutics

He noted that Alnylam recently has produced data not only providing proof-of-concept of RNA interference knocking down targeted genes but also of potency and specificity that may produce desirable dosing regimens for RNAi therapeutics. Data showed a single dose of drug yielded a potent and rapid knockdown of the target in highly specific fashion, Maraganore said, usually within four to five days. Then, after several weeks, the target gene levels would return to normal.

“So, we have a durable yet reversible biological effect,” he asserted. “We think that these data suggest that RNAi therapeutics will be administered at least once monthly to patients and possibly once every two months as a dose regimen, providing therapeutic impact to patients with six to 12 doses per year given annually in the setting of a chronic disease.”

For ‘TTR02, Alnylam expects to launch a Phase I study focused on safety and tolerability, but also exploring knockdown, ie, reduced production of transthyretin in the liver. Data are expected during the third quarter of 2012. The company also will launch a Phase II multi-ascending dose study during the second half of this year, with a goal of bringing ‘TTR02 into pivotal studies in 2013.

Alnylam will file an IND for its subcutaneous formulation of ‘TTR02 during the second half of 2012, with data expected during the first half of 2103, Maraganore added.

For the ALN-APC hemophilia program, the firm plans to file an IND during first-half 2013 and to produce data during the second half of that year.