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Alnylam CEO: More Cash in Hand Is to Fuel Expansion From Within

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a growth strategy for the company that we think is sustainable for the long term. We’ve conquered the liver as a place where we can efficiently get [RNAi drugs], so the question logically comes up: What else can you do with the liver? [A lot], it turns out, because not only are there rare disease opportunities based on liver genes, but there are opportunities in diabetes, NASH, dyslipidemia, hypertension, and hepatitis.

We’re [also] beginning to see a profile of our drugs in humans that is a bit of a surprise. It turns out that the drug given subcutaneously in some cases can have effects that last for a month, but in some cases can have effects that last for two or three months at a time. And when you start thinking about a subcutaneous injection that you take four times a year, for dealing with diabetes, hypertension, hypertriglyceridemia, or whatever, that’s a pretty dramatically different profile than giving a subcutaneous injection once a week, or giving an IV infusion. Or it might even be more competitive than taking a pill every day.

X: This wasn’t necessarily all new, though—you did have a deal in place with the Medicines Co.

JM: But that’s just that one asset. If we knew all this stuff [about the longer subcutaneous effect] before that deal, we would’ve kept it as part of this broader area [in cardiometabolic diseases]. But we didn’t know that.

X: These other areas, like cardiovascular disease, would be pricier to develop drugs in, and they require big sales forces. Presumably you’d have to find partners for each of these drugs, right?

JM: Or have one partner [for cardiovascular diseases] like we have with Genzyme [for rare diseases]. And then do the same thing with hepatic infectious diseases, instead of doing each one one-off, or whatever. It’s so much easier to have a smaller number of good partners as opposed to a large number of good partners. Of course, the downside is if you marry up with a bad partner, you have to live with the bad partner. Also, the economics of a single relationship are likely to be more attractive than the economics of doing multiple fragments of that area. So if we could reproduce the size and the scale of a Genzyme-type deal for geographic rights around our cardiometabolic pipeline, where we keep a good chunk of the U.S. and Europe, we’d be pretty open to that.

X: So the next time Alnylam does a deal, it’ll be a Genzyme redux, not a licensing deal.

JM: It should absolutely be that way, unless it’s really unusually fantastic otherwise. We never say never, but it would have to be unusually fantastic in some other manner to do it differently.

X: What about acquisitions? Alnylam ended the year with $880 million in cash. What are you doing with it?

JM: Listen, we’re not looking to buy anything because everything we have inside is what we want to invest in. But to execute on this [plan], that’s going to take a lot of money. A big chunk is going to come from our Genzyme relationship, and to some extent, if we wanted to just do genetic medicine all the way to the endgame, we could just do that. We could probably build a really great company that way, and we wouldn’t have to go to the capital markets at all. If we want to do something broader, we can do that. We can go to the capital markets, there’s just many ways of doing it, but the $880 million is going to be needed to become profitable, and to execute on this plan.

X: Moderna is another local biotech with a huge war chest. They’re building a company differently than you did. What do you think of their approach versus yours?

JM: I think they’ve done a great job with that, I really do, and I think their strategy is really smart. We didn’t go down that path exactly, we were very committed to getting to the clinic. And we felt as we were building our company that it was going to be very important to learn from human studies what we should do and shouldn’t do. So if you look at our platform investment over time as a proportion of our total R&D spend, at the beginning it was 80 percent. Over the years it’s come down, and now it’s about 15 percent. And it’s not that we don’t think that’s valuable, it’s just that we’re now executing on products.

Moderna’s still at a stage, I believe—I don’t know all the details—where they have to make a big investment in their platform. At some point they’re going to have to do something about products—and we had to deal with that challenge as well—and they’re going to have to see how those dollars migrate between the platform investments and the products. If the platform is just there for the platform, it’s not going to be valued for very long.

X: What about the pros and cons of hiving off venture units?

JM: When I first joined Millennium [Pharmaceuticals, some 16 years ago], Mark Levin, Steve Holtzman, and Nicholas Galakatos had developed a business model that was like Thermo Electron [which later became Thermo Fisher]: Thermo Electron had all these different subsidiaries, and each had different values. The basic thinking about how you would value the whole is, you add up the value of each one, and it adds up to the value of the whole. So the basic concept was spin things out, build up independent value that was going to be better as separate entities then as combined, and then lo and behold you have this greatly valued company. That was the thinking. And I’ll never forget, I mean, I was running [Millennium’s] Biotherapeutics group, and it just got in the way of actually doing the right things. So Millennium bought it back. And I was glad they bought it back, because we were one company again—it was a distraction and it never got valued in the end.

X: Is messenger RNA potentially disruptive to Alnylam?

JM: Not from our viewpoint. Could they treat hemophilia with mRNA? They could, but it’s the same thing with gene therapy, it can too. We’re zen with where the state is with gene therapy versus our program, and the pros and cons of our approach versus that approach. I don’t get too worried about emerging technologies: same thing with [the gene editing technology] CRISPR/Cas9. I honestly don’t get worried about technologies like that, which are exciting, but relatively early—you can’t even understand how to think about competition until you see what they can do.

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