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Alnylam to slash workforce

Alnylam Pharmaceuticals has announced plans to cut its workforce now that its collaboration with Novartis has reached its final planned year

The RNA interference (RNAi) therapeutics company Alnylam Pharmaceuticals has announced plans to cut its workforce by 25 per cent to 30 per cent now that its collaboration with Novartis has reached its fifth and final planned year.

Speaking during a conference call with investors, Alnylam CEO John Maraganore cast the end of the partnership in a positive light, saying that it would enable the company to begin to transition away from a service-based research model and focus more on its own pipeline, which includes drugs in early clinical trials for liver cancer and TTR amyloidosis. Maraganore also said that the end of the five-year deal would give Alnylam more freedom to form new partnerships with other companies.

The layoffs are expected to generate savings of about $25m in 2011 cash operating expenses, according to Alnylam. The company will take one-time charges totalling $3m related to the reductions.

Alnylam also said that Novartis has formally selected its final list of 31 drug targets from the collaboration, which the pharma giant has exclusive rights to use to discover, develop, and commercialise drugs in return for milestone payments tied to development and sales goals, as well as royalties.

"They have been very clear to us that they intend to diligently advance their RNAi efforts on these targets using Alnylam IP and technology," said Maraganore. "That's very good news for us, since we are eligible to receive $75m in milestones per successfully developed product, for greater than $2bn in potential aggregate future payments in addition to royalties on product sales."

Novartis has decided not to exercise an option for an adoption licence for non-exclusive access to Alnylam fundamental and chemistry intellectual property, which would have generated a $100m payment. "Their decision is based on their recognition that they will be very, very busy working on 31 targets in the many years to come," Maraganore said during the conference call. "Obviously, if they want more or different disease targets in the future, they will need to come back to Alnylam."

Even without the extra funds, Alnylam said it is reaffirming its financial guidance of ending 2010 with more than $325m in cash.

The partnership between the two companies was originally structured as a three-year deal that gave Novartis the right to extend the agreement for a fourth and fifth year, which the firm chose to do. In addition to the Novartis partnership, Alnylam has signed deals with companies including Medtronic, Biogen Idec and Roche.

27th September 2010

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