Agenus (NASDAQ:AGEN) and Alnylam Pharmaceuticals (NASDAQ:ALNY) are both clinical-stage biotechs developing drugs that hold the potential to make a big difference for patients. Shares of both companies have dropped dramatically since October. Which biotech stock is now the better pick for investors? Here's how Agenus and Alnylam compare.
The case for Agenus
For any clinical-stage biotech, the most important thing investors have to evaluate the stock is the potential for the company's pipeline. Agenus has plenty going for it on that front. Perhaps the most compelling evidence of the biotech's pipeline strength is the interest attracted from important players in the industry.
GlaxoSmithKline (NYSE:GSK) licensed Agenus' QS-21 Stimulon adjuvant for use in two of its vaccines in late-stage development. The biggest opportunity could be with the Shingrix shingles vaccine. Glaxo submitted for U.S. regulatory approval of Shingrix in October. If approved, the vaccine could reach annual sales topping $1 billion within the next five years.
Agenus has already received a nice chunk of money from GlaxoSmithKline. In September 2015, Glaxo paid the biotech $78.2 million as a kind of advance on future royalties from its two vaccines that use QS-21 Stimulon.
A few weeks ago, Agenus announced a collaboration with the National Cancer Institute (NCI) on a mid-stage clinical study. This study will combine Agenus' individualized autologous vaccine candidate Prophage with Merck's Keytruda in treating newly diagnosed glioblastoma. Merck is also partnering with Agenus on an undisclosed pre-clinical candidate.
Incyte is another larger company interested in Agenus' pipeline. The two companies are working together to study an anti-OX40 agonist antibody. A phase 1/2 clinical trial evaluating the pipeline candidate in treating advanced or metastatic solid tumors is in progress. Incyte and Agenus are also collaborating on development of an anti-GITR antibody candidate in an early-stage study.
Agenus also has another candidate in its pipeline -- CTLA-4 agonist AGEN1884. In addition, the biotech is exploring development of several pre-clinical checkpoint antibodies.
The case for Alnylam
Just a few months ago, the investing thesis for Alnylam would have focused primarily on experimental hereditary ATTR amyloidosis with cardiomyopathy (hATTR-CM) drug revusiran. However, that changed in October, when the biotech announced that it was discontinuing development of revusiran due to safety concerns.
Why should investors consider Alnylam after this setback? The main reason is that the company's pipeline includes three other late-stage candidates using its RNA interference (RNAi) approach.
Patisiran targets treatment of hereditary ATTR (hATTR) amyloidosis, a rare genetic disorder which affects around 50,000 people worldwide. Alnylam reported positive phase 2 results that showed evidence for the experimental drug in potentially halting or improving neuropathy progression in patients. Top-line results from a phase 3 study of patisiran are expected in mid-2017. French drugmaker Sanofi (NYSE:SNY) licensed rights to the drug outside of North America and western Europe.
Alnylam begins late-stage studies of fitusiran in treating hemophilia A and B early this year. Early-stage results were promising, with the experimental RNAi therapeutic helping to improve bleed management for hemophilia patients. Sanofi exercised its option to co-develop fitusiran in November.
The final late-stage candidate for Alnylam is inclisiran. Data from a phase 2 study of the experimental high-cholesterol drug is expected early this year. Alnylam plans to begin late-stage studies in the first half of 2017.
Another RNAi candidate, givosiran, targets treatment of an ultra-rare disease called acute hepatic porphyrias. Alnylam plans to report more data from an early-stage clinical study of givosiran in mid-2017. The company expects to initiate a late-stage study of the experimental drug by the end of the year.
Alnylam's pipeline also includes four other early-stage candidates. The company has global marketing rights for two of them, with the other two subject to partner option rights.
Had Alnylam not experienced the big setback with revusiran, the decision between these two biotech stocks would be pretty easy. Agenus' pipeline doesn't have as many late-stage candidates as Alnylam's does, which would give Alnylam a significant advantage. However, investors are understandably jittery about what will happen with Alnylam's other RNAi therapeutics.
The main knock against buying Agenus right now is that the company only has enough cash to get through the first half of this year. Expect another stock offering soon, which means the value of existing shares will be diluted.
Alnylam, on the other hand, reported over $1 billion in cash, cash equivalents, and fixed income marketable securities at the end of the third quarter. The biotech shouldn't have to raise additional cash anytime soon.
I like the long-term prospects for Agenus. The biotech could be an attractive acquisition target for a larger player at some point. For now, though, with its deep pipeline and solid cash position, Alnylam appears to be the better pick for investors.