Breakingviews: Alnylam loses half its market value

Published Thu, Oct 6 20164:00 PM EDTUpdated Thu, Oct 6 20164:42 PM EDT

Breakingviews

Robert Cyran

Half Alnylam Pharmaceuticals ' $6 billion market value evaporated on Thursday after patient deaths ended a drug trial. The promise of novel treatments based on RNA interference had pushed the biotech's market value as high as about $12 billion last summer. That's now down to $3 billion, suggesting investors fear trouble with one drug may prove contagious for all of them. During boom times, biotech investors focus mainly on potential. RNA interference has plenty. The technology involves selectively stopping the operation of specific genes, thereby preventing the production of unwanted proteins. In theory, once the capability — or "platform" — exists to produce such drugs, they can relatively easily be tailored for specific purposes, to treat both common illnesses and rare inherited conditions. More from Breakingviews : Activist attack gives Samsung cover to restructure With Alnylam, investors were excited not only by the concept but by the potential speed at which the company could pump out new therapies and get them through trials and into use. The firm still has five drugs in clinical trials, and more waiting in the wings. Yet RNA interference has run into difficulties with both delivery and efficacy. Problems with an earlier generation of therapies led to significant losses. For example, Merck bought a company called Sirna Therapeutics for $1.1 billion in 2006. The pharma giant sold what remained of the firm to Alnylam for $175 million eight years later. New methods of delivery and general enthusiasm for biotechs combined to pump up Alnylam's valuation last year. The hype has diminished since then. The latest plunge may reflect a realization that the technology is still not market-ready. The failed drug's possible link to nerve damage is worrying, and a higher number of deaths among patients taking the drug than for those receiving placebos is more so. The company notes that patients involved in trials for drugs of this kind are very sick, and there's no direct evidence the drug itself caused deaths. Moreover, drugs still in Alnylam's pipeline use improved delivery methods. Investors, however, have heard this before, and are increasingly skeptical. Over the last few years, "platform" drug technologies such as antisense, gene-editing and messenger-RNA interference have attracted waves of investment. Alnylam is the latest to disappoint the optimists. It won't be the last For more independent commentary and analysis from Reuters Breakingviews, visit breakingviews.com

John Maraganore, CEO of Alnylam Pharmaceutical

Source: Alnylam Pharmaceutical