Mergers for Alnylam Create Risk

Alnylam Pharmaceuticals (ALNY - Analyst Report) is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi technology. After signing a multi-million dollar deal with Roche in 2007, the company has continued the deal-signing spree with a development and commercialization deal with GlaxoSmithKline (GSK - Analyst Report) (for Regulus Therapeutics, Alnylam's joint venture with Isis Pharmaceuticals) in April 2008 and another with Takeda in May 2008.

Both deals offer revenue potentials in excess of $500 million. ALN-RSV01 advanced into a second phase II trial following positive results from the first phase II trial in February 2008. We maintain our Hold rating on Alnylam shares with a price target of $32.

Although RNA interference technology is potentially revolutionary, we are not sure about its success in drug development program application. Currently, there are no marketed therapeutics approved by FDA using RNAi technology. There are very limited drug candidates based on RNAi discovery which have ever been tested in animals or humans. This increases the uncertainty of any drug program developed by this technology.

Varun Parwal contributed to this report.

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