The current ratio, however, declined to 5.0 in the most recent quarter compared to 5.4 in the prior quarter and is a source of concern as the company continues to spend its cash on its own shares, instead of R&D re-investments.

The launch of new products will enable the company to stay ahead of competition. Additionally, the tie-up with Blue Ridge Networks in the US will combine Aladdin eSafe and BRN's EdgeGuard to address customers' growing need to deploy scalable and unified gateway and endpoint content security solutions. Due to these factors, we are maintaining our Hold rating, although we have fixed our target price at $9.90 per share over the next six months, or between 8.4x to 8.6x our new 2008 EPS estimate of $1.16 per share.

Alnylam Continues Signing Deals

Alnylam Pharmaceuticals Inc. (ALNY) develops novel therapeutics based on RNA interference, or RNAi technology. The company has continued the deal-signing spree with a development and commercialization deal with GlaxoSmithKlinePlc. (for Regulus Therapeutics), Alnylam's joint venture with Isis Pharmaceuticals in April 2008 and another with Takeda in May 2008.

The company also announced a development and commercialization deal for ALN-RSV01 (currently in a second phase II trial) in Asia with Kyowa Hakko in June. We maintain our Hold rating on the shares of Alnylam with a price target of $34.

The RNA interference technology could represent a breakthrough in developing therapies for serious diseases. We believe that siRNA may offer some advantages over conventional therapies. Under the terms of the deal with Takeda, Alnylam will receive an upfront payment of $100 million and near-term technology transfer payments of $50 million.

The most advanced candidate for Alnylam is its proprietary candidate, ALNRSV01. The company reported positive data from the phase II experimental infection study called GEMINI (n=88) in late January. Top-line results show that ALN-RSV01 was safe and well tolerated and demonstrated statistically significant anti-viral activity.

Although RNA interference technology is potentially revolutionary, we are not sure about its success in drug development program application. Currently, there are no marketed therapeutics approved by FDA using RNAi technology. There are very limited drug candidates based on RNAi discovery which have ever been tested in animals or humans. This increases the uncertainty of any drug program developed by this technology.

On July 16, Alnylam announced that Novartis has elected to extend the company's RNAi therapeutics collaboration for an additional year, through October 2009.

AOB Enjoys Solid Growth from TCM

We maintain our Buy rating on American Oriental Bioengineering Inc.