Battleground: Alnylam Plunges After Revusiran Pulled, But Some See Opportunity
Shares of Alnylam Pharmaceuticals (ALNY) crashed Thursday after the biopharmaceutical company decided to stop development of revusiran, one of its late-stage drug prospects, in the wake of several patient deaths. Wall Street was mixed on the news, with some analysts highlighting that revusiran used older technology that required extremely high doses, and others warning of increased uncertainty surrounding the company's pipeline.
BACKGROUND: Alnylam announced Wednesday evening it is ending development of revusiran, a gene modifier that was in late-stage development to treat heart disease amyloidosis, after an emergency review of the Phase 3 "ENDEAVOUR" study revealed greater patient deaths in the revusiran study arm as compared to the placebo group. On a subsequent conference call, Alnylam executives emphasized that revusiran uses first-generation "GalNAc" drug delivery technology, which increases drug exposure by 12-30 times relative to the improved ESC-GalNAc technology that its other candidates use. The company did not offer an explanation for the deaths, but did note that the data review committee found no conclusive evidence of drug-related nerve damage. The company declined to give full details of the number of deaths in the study until further review, saying only that "the total number of deaths was 18 and there was an imbalance. It wasn't 18 [revusiran deaths] to zero [placebo deaths] -- it was an imbalance."
PIPER SAYS BUY ON WEAKNESS: Piper Jaffray analyst Edward Tenthoff does not believe the discontinuation has any read-through to the Phase 3 study of patisiran or Alnylam's seven other RNAi gene interference therapies that use ESC-GalNAc technology. Tenthoff highlights that revusiran was the company's only first-generation GalNAc drug and that none of the 18 deaths were deemed drug-related, leading him to reiterate an Overweight rating while trimming his price target to $106 from $118, adding that he would buy the stock amid today's weakness.
BARCLAYS SAYS OTHER BIOTECHS MORE ATTRACTIVE: Barclays analyst Geoff Meacham downgraded Alnylam to Equal Weight and cut his target to $50 from $85. Meacham still feels "very comfortable" with patisiran as well as the company's hemophilia program, for which he models a respective 80% and 50% success chance, but he views other comparably-sized biotech names such as Neurocrine (NBIX), Prothena (PRTA) and Incyte (INCY) as more attractive over the next year. The analyst does not have any broader concerns about the RNAi platform, and emphasizes that more than 800 patients have been safely dosed using the company's other delivery technologies.
COWEN SAYS RESUVIAN ONLY MINOR DRIVER: Cowen analyst Ritu Baral reiterated an Outperform rating on Alnylam while cutting her target to $100 from $150, saying she sees no contagion to the company's remaining drug programs. The halt doesn't signal an issue with Alnylam's broader platform, she says, adding that the previous Phase 2 revusiran trials hadn't produced much hopeful data and that the drug was only a "minor driver" in her valuation model. That said, Baral suspects that the 18 death imbalance was indeed a "profound" imbalance, though she reiterates management commentary that the elderly patient population was in an advanced state of disease and taking many concomitant medications.
JEFFERIES SAYS 'MAJOR SETBACK': Jefferies analyst Gena Wang kept her Buy rating on Alnylam and lowered her price target to $58 from $86. Though the impact of the drug halt is likely program/disease specific, it is still a "major setback" and Wang sees "high risk" for Alnylam's ALN-TTRsc02, which is also being evaluated in hereditary amyloidosis and uses the same RNA sequencing as revusiran.
LEERINK SEES INCREASED UNCERTAINTY: Leerink analyst Michael Schmidt downgraded Alnylam to Market Perform from Outperform while cutting his target to $40 from $107. While he still believes that the company's RNAi platform holds "tremendous" potential and that other programs that use next-generation technology "are at this point not affected," Schmidt says the halt nevertheless raises uncertainty around Alnylam's pipeline.
JPMORGAN SAYS ALNYLAM LOST KEY ASSET: JPMorgan analyst Anupam Rama cut Alnylam to Neutral while lowering his target to $51 from $83. Revusiran was a "key asset" for the company and a central piece of his thesis that Alnylam was being undervalued. With the company's patisiran maximally represented in his valuation model and upcoming data from the rest of its pipeline "likely being more incremental than game changing," Rama does not see meaningful near-term value creation, leading him to move to the sidelines. The analyst noted that he had forecast peak revusiran sales of nearly $2B across the U.S. and Western Europe, or roughly $18-$20 per share.
PRICE ACTION: Shares of Alnylam have crashed 47% to $37.05. The Medicines Co. (MDCO ), Alnylam's partner in a ALN-PCSsc program, is down 9.9% to $34.70 in late afternoon trading.
Disclosure: None.