Biotech Milestone preview (6): ALNY

In previewing ALNY, let me describe the way biotech companies can be categorized. First group of companies are FDA approval driven group. Many of the large biotech cap companies such as DNA, AMGN, GENZ, and CELG falls into this category. They already have gone through creative research development stage and have been using the developed technology (cutting, I might add) to address many of the human diseases. For these companies, successful development of the late stage pipeline and the large market size that these pipeline addresses are the key in getting the higher multiple that will push the share price higher.

In the second category of companies, earning outlook and the pipeline story may not be so critical. This is because these companies often possess methods to develop the drug that will revolutionize the industry. You recall in late 1990's, CRA and handful of other companies came up with technology to decode DNA structures. Although they had no products what-so-ever, the prospect of revolutionizing the drug development industry propels these stocks to the moon. Most of these companies racked up gains as large as 1000% in matter of less than a year.

Many of the current oncology drugs are based on technology to suppress the blood vessel formation that nourishes the cancer cells. DNA's blockbuster Avastin and AMGN upcoming cancer drug Vectibix works on the similar principle. These cancer drugs clearly are superior to conventional cancer drug which are only based on chemical compositions that introduces the harmful side effects. However, they are still with potent side effects and may not address all types of cancer tumors as some are still able to grow under current therapy regime.

ALNY's RNAi technology will take cancer and other drug development process to the next level and in my opinion is truly revolutionary in nature. Thus, without the firm emerging drug pipeline, I am speculating that ALNY will grab investors' attention. RNA plays a role of a messenger in duplicating DNA structure to produce protein blocks, which are fundamental units of the living cells. If cancer cell DNA is decoded and RNAi technology is used to suppress the formation of the relevant cancer cells, the malignant tumor is not going to grow. ALNY's RNAi technology thus may result in highly personalized cancer treatment in which each patient cancer cells may be biopsy and RNAi technology can be applied to the unique cancer cell structure of each patients. Thus RNAi drug targets only cancer cells, resulting in minimal side effects.

ALNY owns vast array of IP in RNAi technology. I am speculating that RNA field will garner more and more attention from biotech investors and large pharma and biotech companies will be on the hunt for this technology for M&A opportunities. This forms my basis for my speculative investment thesis with ALNY. Again, ALNY pipeline is at its infancy as most of them are in a preclinical stage. However, its technology can be applied to wide array of diseases with fewer side effects.

Description.

RNA-interference (RNAi). Phase I study with an inhaled formulation of ALN-RSV01 for the treatment of Respiratory Syncytial Virus (RSV) infections. Initiated a human experimental infection/viral challenge study in RSV with inhaled ALN-RSV01. In 2005, company signed multiple deals and IP licenses, including RNAi development alliance with Novartis, and collaborations with Medtronic and the Cystic Fibrosis Foundation.

Milestone Events.

1Q07: ALN-FLU01 IND filing
1H07: ALN-RSV01 phase I inhalation safety study results
1H07: ALN-RSV01 phase II initiation in naturally infected patients (inhalation)

My Take.

Ultimate speculation play with "hot" upside potential. Pipeline story may not be as important as the acceptance of RNAi technology in the biotech industry. Recommend putting less than 5% of your speculative money with ALNY.

The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.