An update has just come out today on Alnylam Pharmaceuticals (ALNY), in which senior bioscience analyst Grant Zeng, CFA suggests a Hold rating on the company. Here we find out why:
'Alnylam Pharmaceuticals is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi technology. The company possesses a deep, but an early-stage therapeutic pipeline. Merck's (MRK) billion-dollar acquisition of Sirna and the recent multi-million dollar Alnylam and Roche deal provide an insight into the revenue potential the RNAi technology holds. The Alnylam Biodefense Initiative, using the RNAi technology, has also been awarded over $63 million in federal contracts.
'On October 30, 2006, Merck acquired Sirna Therapeutics, Inc., a rival of Alnylam in RNAi technology. The deal was an all-cash transaction worth $1.1 billion. Further, on July 9, 2007, Roche entered into a multimillion deal with Alnylam for developing RNAi therapeutics. Roche paid an upfront payment of $331 million (consisting of cash payment and equity investment).
'However, we remind investors that both Sirna and Alnylam are early stage development companies. With just one candidate in clinical stage development, we are hesitant to project any product-related revenues for Alnylam before 2010. We value Alnylam using relative valuation metrics. We come up with a $33 price target with a market cap of $1.27 billion. The most comparable peers for Alnylam are Sirna Therapeutics and Isis Pharma (ISIS). Market cap for Sirna was $923 million when it was bought by Merck for $1.1 billion. Market cap for Isis is $1.20 billion. Merck paid a premium for Sirna, so we choose Isis as the most appropriate comparable company for Alnylam.'
Read the full analyst report on ALNY.
Read the full analyst report on MRK.
Read the full analyst report on ISIS.
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