Alnylam’s John Maraganore Anticipates More RNAi Deals and Startups in “Unparalleled” Environment for Biotech

Massachusetts became even more firmly established as the preeminent center of commercial RNAi activity last year when two more such companies were founded here—Worcester-based RXi (a spinout of CytRx) and Boston-based startup Dicerna. The study of RNAi—a natural mechanism for blocking, or silencing, genes—is a relatively young field in scientific terms. But the process is so simple and powerful that its discovery led quickly to a spate of commercial activity. Investors hope that RNAi will offer a quick route to new types of RNA-based treatments. RNAi has also become a leading research tool for drug discovery.

To get a bird’s eye view of what might be ahead in this dynamic field, I recently spoke to John Maraganore, CEO of Cambridge, MA-based-Alnylam (NASDAQ: ALNY), arguably the dominant commercial force in RNAi at this time. Maraganore was formerly an executive at two other major local companies—Millennium Pharmaceuticals and Biogen Idec.

“It’s been an amazing year for RNAi,” Maraganore says. “There are six RNAi therapeutics already in clinical trials, and given how young the field is, that is remarkable.” What’s most encouraging is that those candidate drugs are spread out over several companies, and one of these products (from Philadelphia-based Opko) is already in Phase 3 human trials.

And Maraganore thinks there will be more companies forming around both RNAi and the related emerging field of microRNA, which exploits other types of RNA molecules that the body uses for gene silencing.

“Venture investment has increased, and we’ll see more startups in both RNAi and microRNA,” Maraganore says. That prediction is a bit ironic, since he also says Alnylam “tries to enter [a field] with a lot of intellectual property built up, which has made it difficult for competitive efforts.” Some experts, such as Dicerna co-founder John Rossi, charge that Alnylam’s fortress of patents stymies commercial growth of the field.

But even Alnylam didn’t start out with all the patents it needed. It made key in-licensing deals with California-based Isis Pharmaceuticals, a pioneer in antisense—another RNA-based method of gene silencing that’s been around for much longer than RNAi. Recently Isis and Alnylam took their relationship further, teaming up to launch the first microRNA firm—Carlsbad, CA’s Regulus Therapeutics.

“We were the first movers in RNAi and now microRNA,” Maraganore says. But Alnylam isn’t keeping the lid on these fields, according to him, because the company has such an aggressive licensing program. Alnylam has granted about 25 licenses to its technology so far, and “I would not be surprised if over the next five years we saw a doubling or tripling of our licenses,” he says. (Of course, licensees don’t necessarily get their first picks of target applications of RNAi through such arrangements. They get what Alnylam and its partners are willing to part with.)

Maraganore also predicts that companies creating real breakthrough medicines, as RNAi therapeutic firms aim to do, will find “unparalleled” opportunity in 2008 to partner with, and sell those drugs to, big pharmaceutical companies. Until recently, pharmas were largely focused on growing their profits by using business tactics, such as direct-to-consumer advertising and by trying to block generic copies of their drugs, Maraganore says. Now, he says, they are realizing that “the only way to succeed in the future is to have access to innovative medicines.”

With its lead drug, a potential treatment for respiratory syncytial virus, headed into Phase 2 human trials, Alnylam faces a critical year itself. From the looks of it, the company at least has plenty of cash to contend with the year’s likely challenges. In an announcement today, Alnylam said it ended 2007 with more than $450 million on hand (exceeding the expected $435 million) and expects to end this year with some $390 million. The company also indicated it intends to form at least two more major alliances this year. “We’ve had a significant number of new alliances in 2007; I expect 2008 to be equally strong,” Maraganore says.

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