What happened

Shares of Dicerna Pharmaceuticals (NASDAQ:DRNA) fell more than 11% today for no apparent reason. However, individual investors who have been following the biopharma know that the stock has erupted higher in the second half of 2019. Shares have gained 63% in the last three months -- and that includes the tumble today.

Today's drop appears to be a simple correction. Investors with a long-term mindset should find no cause for concern, especially given multiple positive announcements in recent months with Roche, Novo Nordisk, and Alexion Pharmaceuticals. As of 2:20 p.m. EST, the pharma stock had settled to a 10% loss.

A scientist in the lab with a dejected look on his face.

Image source: Getty Images.

So what

Dicerna Pharmaceuticals is developing precision genetic medicines based on RNA interference (RNAi) technology that can silence disease-driving genes. RNAi drug candidates had a rough start in clinical trials in the last decade or so, but the recent invention of targeted delivery technologies has renewed interest and enthusiasm for the technique. The three major RNAi drug developers have platforms that take advantage of the same basic chemistry to efficiently deliver drug payloads into liver cells, where they can get to work silencing genes.

Alnylam Pharmaceuticals (NASDAQ:ALNY) wields the GalNAc-conjugation platform, which recently earned its first-ever approval for the targeted approach. Arrowhead Pharmaceuticals (NASDAQ:ARWR) has developed the TRiM platform, which has turned heads thanks in part to a promising collaboration with Johnson & Johnson in chronic hepatitis B. Not to be outdone, Dicerna Pharmaceuticals is forging ahead with its GalXC platform.

The smallest of the bunch, Dicerna Pharmaceuticals has leveraged its targeted delivery tool to advance multiple collaborations in 2019. A recently finalized partnership with Roche in chronic hepatitis B will trigger a $200 million up-front payment in early 2020. A fresh deal with Novo Nordisk aimed at a wide range of diseases will land the small-cap RNAi developer an up-front payment of $175 million and an equity investment of $75 million. Meanwhile, advancing a collaboration with Alexion Pharmaceuticals triggered a milestone payment of $20 million this week.

Now what

Dicerna Pharmaceuticals might be loaded with cash, partners, and potential, but, to be blunt, the company has proved relatively little to date. Therefore, it's not too surprising that investors thought twice about handing the company a market cap of nearly $2 billion heading into 2020. The RNAi developer may very well earn that valuation -- or one much higher than that -- but the company will need clinical results in hand to truly deserve it.