How good is any given stock? It depends on your perspective.

Clinical-stage biotechs Ziopharm Oncology (TCRT -1.40%) and Alnylam Pharmaceuticals (ALNY 0.48%), for example, have both suffered in 2016. Ziopharm's shares are down almost 20% year to date, while Alnylam's stock has fallen over 30%. However, Wall Street thinks pretty highly of both biotechs' futures. Analysts' consensus one-year price target for Alnylam reflects a premium of more than 50% over the stock's current price. The average one-year price target for Ziopharm is more than double its current share price.  

Which of these two biotech stocks is the better buy for investors right now? The answer hinges on how they stack up in terms of pipelines, partnerships, and financials. 


Ziopharm's most advanced pipeline candidate is the gene therapy combination of Ad-RTS-hIL-12 and veledimex. The biotech is currently enrolling patients in two studies of the combo. A phase 1b/2 study focuses on treatment of patients with locally advanced or metastatic breast cancer, while the other phase 1 study targets treatment of patients with recurrent or progressive glioblastoma multiforme (GBM), an aggressive type of brain cancer.

There has been good news and bad news for the phase 1 study this year. In June, Ziopharm presented data from the study at the American Society of Clinical Oncology annual meeting. Initial survival results were encouraging. While four of the 11 patients in the phase 1 study experienced severe adverse events, all were quickly reversed with discontinuation of veledimex.

By July, though, three of the patients in the study had died. Ziopharm stated that the deaths were unrelated to the gene therapy combo. However, anytime more than a quarter of patients in a clinical study die, it raises concerns.

Ziopharm also has another phase 1 candidate, a chimeric antigen receptor T-cell (CAR-T) that targets B-cell malignancies. Data from two investigator-initiated clinical trials were published in August that showed promising early results in patients with acute lymphoblastic leukemia and non-Hodgkin's lymphoma.

What about Alnylam's pipeline? The biotech lays claims to two phase 3 candidates, patisiran and revusiran, both of which target treatment of a rare genetic disease called hereditary ATTR amyloidosis. Alnylam's fitusiran is in a phase 1 clinical study focusing on treatment of hemophilia and rare bleeding disorders. The company also has two other early-stage drugs: ALN-CC5, which targets several immune diseases, and ALN-SS1, which targets a rare genetic disorder called porphyria.

Investors are understandably mostly interested in patisiran and revusiran right now. Phase 2 results for both drugs were encouraging. Phase 3 data for patisiran is expected to be announced in mid-2017, while phase 3 results for revusiran should be released in early 2018.  


Sometimes trying to determine how strong a clinical-stage biotech's pipeline is can be like reading tea leaves. One sign that things might be on the right track is when a smaller biotech attracts interest from a larger partner. That's exactly what both Ziopharm and Alnylam have been able to do.

Ziopharm and Intrexon (PGEN -4.22%) have a mutually beneficial relationship. Ziopharm's pipeline candidates use several of Intrexon's technologies. After the collaboration agreement between the two companies was amended in June, Ziopharm will receive 80% of any profits from products jointly developed. Under the original agreement, the two companies split profits equally. Intrexon also received $120 million in preferred Ziopharm stock as part of the amendment.

Through the years, Alnylam has partnered with multiple larger companies. One key relationship is with Sanofi's (SNY 0.52%) Genzyme division. The two companies formed an alliance back in 2012 to develop and market ATTR therapies. This partnership was extended in 2014. Alnylam retained commercialization rights for its pipeline products in North America and Europe, while Sanofi Genzyme has marketing rights in the rest of the world.  


Since neither Ziopharm nor Alnylam has any products on the market yet, revenue is minimal, and losses are high. The most important financial metric for the companies at this stage is how much cash they have to fund operations.

Ziopharm reported $109 million in cash and cash equivalents at the end of the second quarter. The biotech thinks that amount will carry it through the fourth quarter of 2017. Ziopharm even took the somewhat unusual step of issuing a press release in July stating that it had "no plans to access the capital markets in a securities offering." Taking the company at its word, that means no further dilution of shares is likely in the immediate future.

Cash is even less of a problem for Alnylam. The company reported cash, cash equivalents and marketable securities, and restricted investments of $1.28 billion as of June 30. At current cash burn rates, that should be sufficient to sustain Alnylam for up to three years.

Better buy

Which of these two biotechs is the better buy? I think Alnylam is the clear winner.

Alnylam outperforms Ziopharm in each of the three key areas. Its pipeline is more advanced and has more depth than does Ziopharm's. Its partnership with Sanofi Genzyme appears to be more beneficial than Ziopharm's relationship with Intrexon. And Alnylam has a much better cash position. 

Each stock comes with its fair share of risk. However, I think Alnylam gives the better risk-reward proposition for investors.