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Business

Biotech Cuts: Alnylam Sheds Employees As Its Pact With Novartis Ends

by Lisa M. Jarvis
October 4, 2010 | APPEARED IN VOLUME 88, ISSUE 40

Alnylam is laying off 25–30% of its staff as its long-standing collaboration with Novartis around RNA-interference-based therapeutics comes to a close. Novartis turned down an option to pay $100 million for continuing access to intellectual property from the Cambridge, Mass.-based biotech firm.

Established in 2005, the broad, service-oriented pact between Novartis and Alnylam provided critical validation of the smaller firm’s gene-silencing technology. It also brought important financial resources. Over the lifetime of the relationship, Alnylam received $125 million in funding that paid for 25 full-time employees, CEO John Maraganore says. According to its financial reports, Alnylam had 182 employees overall at its Cambridge site as of June 30.

Upon completing its alliance with Alnylam, Novartis exercised its right to take on 31 drug targets for which it can develop RNAi therapeutics with Alnylam technology. Alnylam could still get up to $75 million in milestone payments for any drug Novartis develops against these targets.

Most analysts hadn’t included the optional $100 million payment in their revenue forecasts for Alnylam, but they are still concerned about the message Novartis’ decision sends to Alnylam investors. “While we had not anticipated this milestone, not receiving it is a blow to both the company’s balance sheet and track record,” Andrew R. Vaino, a stock analyst with Roth Capital Partners, wrote in a research note.

Novartis’ choice reaffirms the “widely held view that big pharma is no longer willing to pay the big up-fronts that Alnylam had been able to secure in the past,” notes Rodman & Renshaw analyst Simos Simeonidis.

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