Alnylam Pharmaceuticals ALNY reported third-quarter financial results that were consistent with our expectations, and we're maintaining our fair value estimate. The firm continues to report steady revenue from established collaborations, but advancing clinical and preclinical studies, as well as the growing research staff, added to operating expenses. Alnylam remains well prepared for many more quarters in the red as its pipeline progresses, with more than $450 million in cash at the end of the third quarter. We're slightly disappointed by the pace of new partnership deals and development of Alnylam's lead program, partnered with Cubist Pharmaceuticals CBST. Management has backed away from its previous forecast of signing two additional deals in 2009, but it's too early to speculate whether this is just a timing issue or a sign that potential partners are losing confidence in Alnylam's intellectual property estate and technological know-how. In addition, while Alnylam has chosen to pursue the adult lung transplant indication for ALN-RSV01 in a Phase IIb trial in early 2010, Cubist is not funding development of this compound, and is instead focusing on a next-generation compound, ALN-RSV02, for pediatric indications. We think this decision could be a result of Cubist's marketing strategy rather than safety or efficacy concerns, as adults and children will no doubt require very different dosages that could make price differentiation of one compound challenging.On the other hand, we're encouraged by earlier-stage developments in Alnylam's proprietary pipeline and current partnerships. We should see Phase I data for liver cancer drug candidate ALN-VSP in mid-2010, and Alnylam's next program, ALN-TTR for amyloidosis, should enter Phase I in early 2010. Alnylam and partners are also making progress with new technologies to improve the delivery of its RNA-based therapeutics; the firm's alliance with Roche RHHBY has advanced to the point where both firms are sharing their delivery technologies and looking to codevelop and commercialize any resulting drug candidate in the United States. Roche expects to push its first RNA-based drug candidate from the partnership into development in 2010, and we're eager to see more of Alnylam's partners--including Novartis NVS and Takeda--move their RNA-based pipelines to the clinic.
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