RNA Interference Technology's "Home Run" Potential

Excerpt from our One-Page WSJ Summary:

Nobel Discovery Already Sparked Hunt for Drugs

Summary: This year’s Nobel Prize for medicine was awarded to Andrew Fire and Craig Mello for research they did back in 1988. Their research, known as RNA Interference ('RNAi'), focused on natural methods used by cells to destroy harmful genes (for example genes carried by an invading virus). RNAi is now seen as an approach to create new pharmaceuticals that will directly target genes of specific diseases. This technology is attracting the interest and capital of both private industry and the federal government. Investors have funded Biotech companies pursuing RNAi technology to the tune of $500 million, and the major pharmaceutical companies have pledged an additional $2 billion if the drugs live up to their potential. The government has gotten into the act, awarding a $23 million contract to Alnylam Pharmaceuticals (ALNY). The contract calls for Alnylam to develop pharmaceuticals which could be used to defend against a bio-terrorist attack. Alnylam also received $700 million from Novartis (NVS) to develop drugs using Alnylam’s RNAi technology. The big winners here could be the Carnegie Institution (Dr. Fire’s former employer) and the University of Massachusetts, which share patent rights on RNAi. They have already collected $5 million in royalties, and experts believe that the potential income stream is huge, given the technology’s commercial potential.
Related links: Full WSJ article • Drug Companies Threatened By Proposed Patent Legislation • Rob Black's Healthcare Stock Report • Biotech IPO: Highlights from Rosetta Genomics' F1 Filing • BusinessWeek: Biogen and Alnylam to collaborate • Wikipedia: RNA Interference
Potentially impacted stocks and ETFs: Merck (MRK), GlaxoSmithKline (GSK), Alnylam (ALNY), Sirna Therapeutics (RNAI), Novartis (NVS). ETFs: Pharmaceutical HOLDRs (PPH), Pharmaceutical HOLDRs (PJP), Health Care Select Sect SPDR (XLV)

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