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We have downgraded our rating on Alnylam Pharmaceuticals, Inc (ALNY - Analyst Report) from Outperform to Neutral with a target price of $11.00 per share.

Alnylam Pharmaceuticals Inc. is a biopharmaceutical company developing novel therapeutics based on a biological breakthrough technology known as RNA (Ribo Nucleic Acid) interference (RNAi). Alnylam is currently utilizing this know-how to build a pipeline of drug candidates for the treatment of a wide array of diseases.

Alnylam’s core product strategy, Alnylam 5x15, is aimed at developing RNAi therapeutic products for the treatment of genetically defined diseases addressing major unmet medical needs. Alnylam expects to have five such RNAi therapeutic programs in advanced clinical development by the end of 2015. These include ALN-PCS (for hypercholesterolemia), second generation ALN-TTR (transthyretin (TTR) mediated amyloidosis or ATTR), ALN-HPN (refractory anemia), ALN-APC (hemophilia) and ALN-TMP (hemoglobinopathies like beta-thalassemia and sickle cell anemia).

Furthermore, the company is developing ALN-RSV01 for the treatment of respiratory syncytial virus, or RSV, infection; ALN-VSP for the treatment of liver cancers; and ALN-HTT for the treatment of Huntington's disease, or HD, through existing or future partnerships.

The year 2012 is important for the company with many a program expected to report data. Preliminary data was presented in early January 2012 from the phase I study of ALN-PCS for the treatment of severe hypercholesterolemia. The data showed that ALN-PCS led to robust and statistically significant silencing of the protein target PCSK9 and over 50% reduction in levels of LDL (bad) cholesterol. Additional data from the study is expected in the first half of 2012. For ALN-HPN, an investigational new drug (IND) application is expected to be filed in 2012. Data from a mid-stage study of ALN-RSV01 in RSV-infected lung transplantations is expected in mid 2012. Alnylam expects to file an IND application for ALN-HTT in the second half of 2012.

We like the “5X15” initiative and are pleased with the progress of the company’s pipeline. However, we prefer to wait and see how the year shapes up for Alnylam and whether the data presentations increase visibility on approvability of the pipeline candidates. On a cautious note, we have downgraded our rating on the stock from Outperform to Neutral.

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