The Ripple Effect of Alnylam's Blow-up Yesterday

The Ripple Effect of Alnylam's Blow-up Yesterday October 7, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Cambridge, Massachusetts – When Alnylam Pharmaceuticals dropped the bomb yesterday that it was killing its lead program, the ripples affected a lot of others as well.

Alnylam announced it was discontinuing development of revusiran for hereditary ATTR amyloidosis with cardiomyopathy (hATTR-CM). After receiving reports during the Phase II OLE study that several patients were developing or having worsening peripheral neuropathy, Alnylam requested a Data Monitoring Committee (DMC) evaluate its ENDEAVOUR Phase III trial. Although the committee didn’t find conclusive evidence of neuropathy related to the drug, due to the benefit-risk profile, it recommended they suspended dosing. Alnylam then reviewed unblended data from the ENDEAVOUR trial and noted the increased death rate.

In a conference call, company executives indicated there were a total of 18 deaths. They did not specific how many of those patients were on the drug. Hereditary ATTR amyloidosis is a rare disease that is often fatal, and the company has not found any evidence that the drug caused the deaths.

But the news caused the company’s to tank, dropping from $76.67 per share to a current trading value of $35.06. Essentially overnight, the company’s market value went from about $6 billion to almost half that.

Don Seiffert, writing for The Boston Business Journal, writes, “Revusiran was expected to be worth more than $1 billion annually a few years after its expected launch in 2019, so the decision to halt it altogether is shocking. While the company’s other lead drug, called patisiran, remains on track—and the company contends it still plans to have three drugs on the market by 2020—the news is spurring serious doubts about the company’s technology. That technology, based on so-called RNA-interference, forms the basis of nine other drugs now in clinical trials.”

Obviously, investors are affected. The company’s top 10 shareholders included at least three big financial firms and a drug company with a major presence in the Boston area. The biggest single shareholder, with 14.9 percent of company stock, is Fidelity Investments. Their 12.8 million shares lost $420 million in value.

The second largest shareholder is Boston-based Wellington Management. Wellington holds 14 percent of Alnylam shares, or 12 million, which lost $390 million. And State Street, the tenth largest investor, had 2.2 million shares. That accounts for about $74 million lost in value.

Sanofi , the French-based company, is Massachusetts’ biggest biotech employer. It owned 10.3 million shares of Alnylam, which lost $347 million.

Alnylam has 485 staffers, with 465 of them in Massachusetts. The company has not indicated if it plans to downsize. Seiffert wrote, “But since the company is almost entirely supported by investment, it’s logical to assume that a major downturn in stock price, even if it doesn’t lead to layoffs, may have a negative effect on its growth plans.”

And although Seiffert doesn’t mention it, other analysts have—Alnylam’s RNAi technology was leading the field. Adam Feuerstein, writing for TheStreet said, “The failure of an experimental drug is a common occurrence in biotech, but Alnylam’s forced shutdown of revusiran is a bigger deal because it raises real fears that one of the industry’s most highly touted drug technologies might be a total bust.”

The scientists who invented RNAi, Andrew Fire and Craig Mello, won the Nobel Prize in 2006, and a lot of companies started work in the field, but many of the bigger companies abandoned it, leaving Alnylam and mostly smaller biotech companies.

Alnylam’s chief executive officer, John Maraganore, tried to reassure investors at its conference call yesterday, saying, “This is drug development. These things do happen.”

But it does worry investors that RNAi might not be ready for prime time, and that may or may not cast doubt—because investors are ever-sensitive to whichever way the wind blows—on other new technologies, such as CRISPR, gene therapy, and immune-oncology.

Feuerstein says, “Biotech stocks have been a significant upswing since bottoming out this summer. Sentiment had been improving. Confidence was gaining. The Alnylam blow-up is the type of bombshell event that reminds a lot of investors why they avoid biotech stocks.”

Which does sort of seem like an awful lot of weight for a single biotech company to bear.

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