Alnylam Pharmaceuticals, Inc.: Waiting on APOLLO

Alnylam Pharmaceuticals (ALNY -0.11%) reported fourth-quarter earnings last week, but given the lack of an actual product for sale, the earnings call was more of a review of the biotech's pipeline than of the numbers.

Alnylam Pharmaceuticals results: The raw numbers

What happened with Alnylam Pharmaceuticals this quarter?

• While its net loss more than quadrupled, much of the increase is an accounting issue having to do with when Alnylam has to recognize payments from partners.
• Operating expenses increased 43% year over year, which is to be expected with more drugs in larger phase 3 clinical trials.
• Most importantly, the company has a lot more cash than it did a year ago thanks to a $450 million secondary offering it did last January.
• The open-label extension phase 2 study for patisiran showed continuing evidence that the drug is helping halt the progression of transthyretin (TTR)-mediated amyloidosis (ATTR amyloidosis) after 18 months of treatment.
• The APOLLO phase 3 trial testing patisiran in patients with ATTR amyloidosis is now fully enrolled.
• The open-label extension phase 2 study for revusiran showed patients with transthyretin cardiac amyloidosis had lower levels of the protein that causes the disease through six months of treatment.
• Interim results from a phase 1 study of fitusiran, which is designed to treat hemophilia and rare bleeding disorders, showed a decrease in antithrombin, an inhibitor on thrombin, the protein that helps clot blood.
• A phase 1/2 clinical trial in ALN-CC5 for the treatment of complement-mediated diseases showed that the drug appears to be knocking down the protein that facilitates complement-mediated diseases.

What management had to say
At the end of the year, Alnylam had eight programs in the clinic, with six having reached proof of concept, including two in phase 3 clinical trials. Not too shabby, but expect more programs to advance this year. "As we end 2016, we anticipate having a profile of 11 programs in the clinic, three in phase 3, and nine programs with established human proof of concept," said CEO John Maraganore.

"The recent sell-off in the sector has little to with our innovation ecosystem, and we firmly believe that biotech remains one of the most attractive sectors in the overall stock market, based on its strong potential for many years to come," Maraganore said. It's sad when a CEO has to make cheerleading comments, but it's hard to argue with him. Alnylam is down more than 30% this year and trades at less than half its highs set back in June, but the biotech has had a plethora of positive data since then.

Looking forward
Alnylam has plenty of milestones coming this year. Unfortunately, investors will have to wait until late 2017 to get results from the APOLLO study to let them know the likelihood of patisiran getting on the market. The lack of an imminent, sizable value-adding binary event has probably contributed to the decline in the stock price as investors have rotated out of the sector recently.

Investors may also be worried about Alnylam's competition with Ionis Pharmaceuticals (IONS -0.24%) for patients with ATTR amyloidosis. Ionis' drug, IONIS-TTR, is designed to treat both related diseases that Alnylam's patisiran and revusiran do. The first phase 3 trial for IONIS-TTR is scheduled to be completed in 2017.

Of course, looking at the price charts of Alnylam and Ionis Pharmaceuticals, it seems they're both trading in lock-step at the whim of investors' thoughts about the sector more than because they think one company is going to prevail in their battle for ATTR amyloidosis patients.

Data by YCharts.

Fortunately, Alnylam plans to end the year with more than $850 million in the bank, including spending approximately $100 million for a manufacturing facility, so the company can ride the lower stock price without having to raise additional capital through a secondary offering.