This version of our ongoing better buy series pits two drugmakers working on platforms that can produce multiple drugs using the same technology: Bellicum Pharmaceuticals (NASDAQ:BLCM) and Alnylam Pharmaceuticals (NASDAQ:ALNY). Let's take a closer look at each platform technology and see which one comes out on top.
Bellicum's CID technology uses molecular switches that are put in cells as either a "safety switch" that can kill off cells if they're attacking the patient, or an "activation switch" that Bellicum calls GoCAR-T, which can activate the cells. The biotech's lead treatment, BPX-501, is made up of T cells that can be used in transplant patients and shut off at signs of deadly graft-versus-host disease that occurs if the T cells begin to attack the transplant.
While the safety-switch technology seems to work in practice, Bellicum ran into some trouble earlier this year when the Food and Drug Administration (FDA) placed BPX-501 on clinical hold after three patients had altered brain function -- referred to as encephalopathy. Bellicum responded to the FDA with plans for additional monitoring and management of the potential encephalopathy, which the company hopes will result in the agency lifting the hold.
A European clinical trial of BPX-501 in children undergoing partial match stem cell transplantation continues with top-line results expected at the end of this year. Preliminary data from the trial looks promising, with 91.5% of the first 38 patients living one year without relapsing.
The GoCAR-T switch is being tested in chimeric antigen receptor T cell (CAR T) therapy to control the activation of the T cells, avoiding problems with either overactive T cells that can reach 50% of all T cells in some patients or cells not proliferating at all in other patients. The first product using GoCAR-T -- BPX-601 -- is in a phase 1 trial in patients with pancreatic cancer. Bellicum plans to present preliminary data from the trial at an upcoming medical meeting.
Turning off the plumbing
Most drugs work by inhibiting or activating a protein -- or are the protein themselves -- but Alnylam's RNA interference (RNAi) technology works one step upstream before the protein is made. The RNAi drugs trigger a mechanism that degrades RNA that encodes for a specific protein, resulting in substantially reduced protein levels.
Alnylam's lead drug patisiran, which treats a rare disease called hereditary ATTR amyloidosis, is already under review by the FDA and European regulators, with decisions expected in mid- and late 2018, respectively. Considering the phase 3 data looked great, it's hard to see regulators on both sides of the Atlantic giving patisiran anything but a thumbs up.
Beyond patisiran, Alnylam has a series of drugs in the pipeline using its RNAi platform, including givosiran for another rare disease called acute hepatic porphyria, fitusiran for hemophilia, and inclisiran for high cholesterol, and they're all in phase 3 development. And Alnylam recently announced plans to move another drug, lumasiran, which treats primary hyperoxaluria type 1, into phase 3 development later this year.
With more advanced drugs and a proven platform, Alnylam is clearly the safer pick. But at a market cap north of $14 billion, investors are paying for that safety. Figuring a price-to-sales ratio of 7, Alnylam's valuation already has $2 billion of sales factored in. It may be slow growth from here for Alnylam's share price until the biotech can prove a couple of its drugs are on their way to becoming blockbusters.
Bellicum, on the other hand, has a market cap of around $265 million. Success for BPX-501, or even its early stage CAR T program, would boost its valuation substantially. Just keep in mind that the company ended 2017 with only $106.5 million in the bank, so a capital raise will be required sometime this year. If Bellicum's stock price doesn't jump substantially, a secondary offering would result in a considerable dilution to current shareholders, negating much of the potential future gain in valuation.
On a risk-reward basis, Alnylam is the better choice between these two platform biotechs, but it may have trouble beating the S&P 500 over the short term, with much of its future sales already priced into the valuation.