What happened

Shares of Alnylam Pharmaceuticals (NASDAQ:ALNY) jumped 57.9% last year, according to data provided by S&P Global Market Intelligence. That far exceeded the 28.8% gain of the S&P 500 in 2019, though all of the pharma stock's gains came in the fourth quarter. 

It was quite the finish considering that the stock got off to a rocky start, collapsing in May after first-quarter 2019 operating results were released. At the time, Alnylam Pharmaceuticals also announced plans to increase research and development spending, which made investors nervous. Could the money-losing business justify that decision with only one drug on the market? Those concerns were short-lived, however, as the company exited the year with two approved drug products, and one or two more headed toward approval in 2020.

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Image source: Getty Images.

So what

In August 2018, the U.S. Food and Drug Administration approved Onpattro (patisiran) to treat a rare disease called transthyretin amyloidosis (hATTR). It was the first drug candidate based on RNA interference (RNAi), a gene-silencing technique that can be used to reduce the impact of disease-driving genes, to earn regulatory approval. 

While Onpattro product sales more than doubled from Q4 2018 to Q1 2019, investors balked when Alnylam Pharmaceuticals proposed increasing its R&D spend from $540 million to $570 million for the year. After all, the business reported an operating loss of $189 million in Q1.

Shares bottomed out in May and June, but began inching higher over the next five months. Then, on Nov. 20, Alnylam Pharmaceuticals announced the surprise approval of Givlaari (givosiran) as a treatment for adults with the rare disease acute hepatic porphyria (AHP). The FDA made a decision only four months after the company submitted its new drug application (NDA) for Givlaari. The process usually takes six to 10 months or longer.

Givlaari is expected to eventually capture most of the $500 million market opportunity for AHP. It's also the first RNAi drug to utilize a targeted delivery technology to earn regulatory approval, which bodes well for the company's and industry's deep pipeline of therapies utilizing that model. 

Now what

Investors have reason to be optimistic that Alnylam Pharmaceuticals will maintain its momentum in 2020. It ended the year by announcing positive results from a phase 3 clinical trial of Lumasiran as a treatment for primary hyperoxaluria type 1 (PH1). The drug candidate met its primary endpoint and all secondary endpoints, providing it with a strong case for regulatory approval. The company plans to submit applications in the United States and European Union in early 2020. 

It will take time for Alnylam Pharmaceuticals to ramp up its product sales and start to erase its operating losses, but the company appears to be on a solid trajectory that would make it a good investment for those with a long-term mindset.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.