Though we've lowered our fair-value estimate of the drugmaker after it announced that it has stopped development of a key drug, we still believe in the potential of Alnylam’s remaining pipeline.
We are lowering our fair value estimate for Alnylam Pharmaceuticals
significantly, to $50 per share from $90, after the unexpected discontinuation of phase 3 revusiran development. Revusiran is an RNAi drug for the treatment of familial amyloid cardiomyopathy, a hereditary disease where abnormal protein deposits gather in the heart and lead to heart failure. Before the announcement, revusiran was a key revenue driver in our Alnylam model. A higher incidence of patient deaths in the treatment arm of the revusiran study prompted the discontinuation, but is not expected to have bearing on the company’s other phase 3 trial, patisiran in familial amyloidotic polyneuropathy, which we anticipate will read out in 2017. Given the concentrated revenue drivers in early-stage biotech companies, we believe Alnylam still warrants a high uncertainty rating.
Kelsey Tsai is an equity analyst for Morningstar.
We still forecast break-even operating income in 2021 on the back of the successful launch of patisiran in 2018 (80% probability), although top-line revenue is expected to grow much more slowly given the loss of future revusiran contributions in our model. With Alnylam’s current rate of cash burn, we anticipate the company may need to raise additional capital before patisiran reaches the market. We still believe in the potential of Alnylam’s remaining pipeline, which includes fitusiran in hemophilia, ALN-CC5 in complement-mediated disorders, ALN-PCSsc for high cholesterol, and ALN-AS1 for hepatic porphyrias.
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