Alnylam Pharmaceuticals Inc. is hot but that s old news, and a cooling trend might be ahead, at least for a while.

The RNAi leader s stock has appreciated a 119 percent over the past year, thanks to upbeat news flow and a steadily deeper understanding by investors of the platform s value. Among this summer s items were the added federal funding in August by way of a $38.6 million grant from the U.S. Defense Threat Reduction Agency (DTRA) for the development of a drug to treat viral hemorrhagic fevers. Under the 33-month contract, the U.S. Army Medical Research Institute of Infectious Diseases will test candidates developed by in vitro and in vivo testing, and the deal fully supports all research activities through Phase I trials.

Alnylam already had signed agreements with the government to target viral organisms that include hemorrhagic fever bugs. Last September, the National Institutes of Health awarded the firm a four-year, $23 million grant to support research on the Ebola virus. Less than a month later Congress passed the Defense Appropriations Act of 2007, which included another $1.1 million for Alnylam s RNAi biodefense projects. In all, Alnylam has nailed down more than $63 million in federal contracts, and preclinical data from the Ebola program are due in the next few months.

In July, Alnylam and partner Medtronic Inc. said positive preclinical data with a drug-device combo spurred them forward with a Huntington s disease treatment that consists of an RNAi therapeutic delivered by way of an implantable infusion pump. An siRNA targeting the huntingtin gene inhibited the related protein levels as well as disease progression in a mouse. Medtronic pumps pain medication directly into the spine, but no details were disclosed about where the Huntington s pump would go.

Most RNAi therapies in the works, though, involve directly delivery, to avoid degradation of the drug. Opko Health Inc. has the Phase III siRNA drug bevasiranib and Allergan Inc. s siRNA drug AGN211745 (previously known as Sirna-027) has reached Phase II. Both involve eye injections for wet, age-related macular degeneration.

Opko, formed in the three-way merger of Acuity Pharmaceuticals Inc., Froptix Corp. and eXegenics Inc., will give pre-treatment of three injections of Lucentis (ranibizumab, Genentech Inc.), after which they will be randomized to treatment with Lucentis every four weeks, bevasiranib every eight weeks or bevasiranib every 12 weeks.

Enrollment in the two-year, 330-patient trial, known as COBALT (Combining Bevasiranib And Lucentis Therapy), is expected to take about 12 months. The study will continue for two years, with data on the primary endpoint non-inferiority in visual acuity compared to Lucentis due around mid-2009.

Will RNAi work in Huntington s? The jury s out, though Alnylam rival Sirna Therapeutics Inc. had an early stage research program in Huntington s before Merck & Co. Inc. bought the company for $1.1 billion in late 2006, and CytRx Corp. s subsidiary RXi Pharmaceuticals Corp. has a program in another neurodegenerative disease, amyotrophic lateral sclerosis. RXi targets the mutant SOD1 gene in familial AML, and injects the compound into the spinal cord.

Also in July, Alnylam signed a non-exclusive licensing deal that could mean as much as $1 billion from Roche Holding AG, with $331 million up front that includes an equity investment of $42.5 million, for less than 5 percent of Alnylam s outstanding shares.

Isis Pharmaceuticals Inc., from which Alnylam licensed the intellectual property for RNAi work in 2004, also gains from the deal.

Alnylam s own lead product, ALN-RSV01, is delivered to the lungs to treat respiratory syncytial virus. In June the firm started an experimental infection study with intranasal ALN-RSV-01 involving 90 volunteers who will be given the drug before and after inoculation with RSV. Results are expected by the end of the year. Phase I data with an inhaled version are expected then as well, and results of Phase II trials with the inhaled form in naturally infected patients are due in the first half of 2008.

Partner Biogen Idec Inc. is helping Merck with an RNAi drug for progressive multifocal leukoencephalopathy, caused by the JC virus (and linked in rare cases to the use of Biogen Idec s multiple sclerosis drug Tysabri). Alnylam is working with Novartis AG on ALN-FLU01, an RNAi drug against influenza though the firms are not moving into the clinic this year.

Steven Quay, president and CEO of another preclinical RNAi flu player, Nastech Pharmaceutical Co. Inc., said during a conference call with investors last month that work by Alnylam and Novartis was stalled, due to a lack of efficacy, though an analyst pointed out that the tighter federal granting for avian flu also had an effect.

It s unclear to me why that [program] would require government funding to continue, Quay replied. In any case, Nastech is going ahead with a flu program gained through the buyout of intellectual property from Galenea Corp., though Quay declined to provide time lines. Nastech has formed a subsidiary called MDRNA, and is exploring independent financing options, but Quay couldn t say more about that, either.

Also making RNAi news in recent months is Tacere Therapeutics Inc., gearing up for trials late next year with lead product TT-033, a combination of three short-hairpin RNAs (shRNAs) delivered within an adeno-associated virus protein coat to three separate regions of the hepatitis C virus.

Tacere s research in shRNA, also known as expressed RNA, distinguishes the company from those pursuing delivered RNA, which involves a small-molecule type of approach to deliver short-interfering RNA (siRNA).

Alnylam remains the stand-alone RNAi powerhouse, though Needham & Co. downgraded the stock from buy to hold in August, noting that the best efforts of the quality management team, the solid technology platform, and the recent events have already been priced into [shares], and thus proof of concept data and further collaborations are needed to bring the stock to the next valuation level.

With the faltering of the Alnylam/Novartis flu bid, though, Quay called Nastech s work a singularly important public health effort in an area that continues to draw interest from biotech and pharma firms. n