Alnylam Pharmaceuticals (ALNY), is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi technology. The year 2007 was an exciting and a transformative one for the company. The multimillion dollar deal with Roche changed its financial landscape and eased concerns regarding the company's operational cash flow.
The company also successfully advanced its first candidate, ALN-RSV01, into phase II trials and combined its technical know-how and intellectual property with that of Isis Pharmaceuticals (ISIS) to launch Regulus Therapeutics. Regulus will seek to develop and commercialize micro-RNA therapeutics.
We maintain our Hold rating on Alnylam shares with a target price of $36. The company was hard at work to validate the RNAi technology. Merck's (MRK) $1.1 billion dollar acquisition of Sirna Therapeutics, a rival of Alnylam, in 2006 and the Nobel prize in physiology or medicine for 2006 being awarded jointly to Andrew Z. Fire and Craig C. Mello for their discovery of RNA interference-gene silencing by double-stranded RNA were early pointers to the value this new technology held. The acquisition of Sirna also opens up the opportunity for other RNAi companies like Alnylam to be acquired by big pharma or biotech companies.
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. Though the company's balance sheet is in good shape, valuation of the company at current levels remains a bit of a concern.
We value Alnylam using relative valuation metrics. The most comparable peers for Alnylam are Sirna Therapeutics and Isis Pharmaceutical. Market cap for Sirna was $923 million when it was bought by Merck for $1.1 billion. Market cap for Isis Pharmaceutical is $1.32 billion. As such, we come up with a $36 price target with a market cap of $1.58 billion for ALNY.
Read the full analyst report on ALNY.
Read the full analyst report on MRK.
Read the full analyst report on ISIS.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.