After 16 years of development and $2.5 billion in investments, Alnylam Pharmaceuticals Inc. (ALNY, Financial) brought the world’s first RNAi treatment, known as Onpattro, to market.
Despite this accomplishment, the company did not see a significant jump in its stock following the Food and Drug Administration's approval. In fact, Alnylam is down approximately 6% over the last three months.
Despite the cold market reaction, it is clear Alnylam is promising long term for several reasons. First, RNAi therapies in general show tremendous promise in treating diseases. Second, Alnylam is in the process of developing a promising pipeline of drugs to treat significant unmet needs. Lastly, the company has demonstrated the ability to enter into strong collaborations and close acquisitions when needed. Its goal is also clear; to have three marketed products by 2020.
“We believe today draws us ever-closer to achieving our Alnylam 2020 goals of becoming a fully integrated, multi-product biopharmaceutical company with a sustainable pipeline," CEO John Maraganore said.
It is important to explain why RNAi therapies are promising to treat disease as well as why this latest approval is such a significant breakthrough within the life science sector. RNAi stands for RiboNucleic Acid interference. Essentially, when an RNAi therapy such as Onpattro is introduced into a patient, RNA molecules are able to bind and inhibit gene expression by neutralizing very specific messenger RNA molecules. In other words, you are able to effectively suppress and silence gene expression in a highly specific manner.
Onpattro is the first FDA-approved treatment for a condition known as polyneuropathy, which is caused by hereditary transthyretin-mediated amyloidosis (hATTR), a rapidly progressive, genetically inherited, rare and life-threatening disease. Approximately 50,000 people are affected worldwide and 3,000 within the U.S. Symptoms vary greatly and include seizures, progressive dementia, kidney failure, glaucoma, heart failure as well as numbness and weakness in the arms, hands and feet.
While the number of affected individuals able to seek treatment is limited, Alnylam is able to ask $450,000 per patient ($345,000 after rebates) per year for treatment and is also able to stand by their drug with a money-back guarantee for payors. Alnylam has also selected U.S. Bioservices, a specialty pharmacy, to dispense Onpattro and provide access to treatment, which takes place once every three weeks either at infusion clinics or in a patient’s home.
In addition to Onpattro, Alnylam has three other promising drug candidates in phase III development. Fitusiran (along with partner Sanofi (SNY, Financial)) is being pursued for the treatment of hemophilia and other rare bleeding disorders; Inclisiran (along with partner The Medicine Co. (MDCO, Financial)) for the treatment of hypercholesterolemia and Givosiran for the treatment of acute hepatic porphyrias.
In addition to developing this pipeline, Alnylam has also demonstrated the ability to develop and maintain strong collaborations, partnerships and complete acquisitions despite being a biotech startup without a marketed drug. In January 2014, Sanofi bought a 12% stake in Alnylam for $700 million at a 27% premium. This alliance remains and a restructuring of the agreement occurred in January 2018, which grants Alnylam global rights for Onpattro and another early stage program known as ALN-TTRsc02 with Sanofi receiving royalties from net sales (up to 25%). Sanofi will receive global rights for Fitusiran and will take on full responsibility for its development commercialization, including costs. Lastly, Sanofi will also retain the right to opt into other rare genetic disease programs for development and commercialization in territories outside the U.S., Canada and Western Europe with a right to a global license.
In January 2014, Alnylam acquired Sirna Therapeutics, a wholly-owned subsidiary of Merck (MRK), for $175 million in exchange for “pre-clinical therapeutic candidates, chemistry, siRNA-conjugate and other delivery technologies.” Combined with an ever-increasing investment into research and development, it is clear that Alnylam is planning for long-term success.
Despite these sucesses, there remains a tough road ahead for Alnylam as competition is expected to be stiff from both a technology standpoint as well as a therapy standpoint. For example, Ionis Pharmaceuticals (IONS, Financial) and Sarepta Therapeutics (SRPT, Financial) are very active in RNAi drug development. Also, while any effective hemophilia treatment is expected to perform well in the market, Alnylam won’t be the only player. Bayer (BAYRY, Financial), Spark (ONCE, Financial), Sanofi and Shire (recently acquired by Takeda (TKPHF)) are also developing or preparing for hemophilia and bleeding disorder product launches. Alnylam’s Inclisiran to treat hypercholesterolemia will also meet competition from Amgen’s (AMGN, Financial) Repatha and Regeneron’s (REGN, Financial) Praluent.
While Alnylam was first to market with Onpattro to treat hATTR, it will also face competition in the short term, the most pressing of which comes from Ionis’ Inotersen, which has recently gained approval in Europe for stage 1 and stage 2 polyneuropathy in adult patients with hATTR. Approval in the U.S. is expected in early October. How Onpattro will compete head to head to Inotersen over time remains to be seen. Also, more distant competition is also likely to come from Eidos (EIDX, Financial). The company is developing a therapy known as AG10, which has a different mechanism of action compared to Onpattro and can be taken orally. Phase II clinical trials began in May.
In summary, Alnylam’s technology and perseverance in an increasingly competitive landscape is incredible. While it is not likely Alnylam will yield strong returns in the short term, its long-term strategy and success seems very likely. If Onpattro is able to compete with Inotersen clinically, on price and access, I do believe it will become a long-term profitable drug that Alnylam will be able to rely on as a source of funding to continue to invest in research and development. The future for Alnylam does look bright.
Disclosure: I do not have positions in the stocks mentioned.
