Is Alnylam Pharmaceuticals a Good Stock?

Biotech is a volatile sector and it’s not just topsy turvy stocks that pose risks. According to data compiled by BioPharma Dive, the biotech sector laid off at least 10,000 jobs last year.

In spite of the turbulent nature of the pharmaceutical business, a host of giant firms from Pfizer to Moderna have thrived.

Will Alnylam Pharmaceuticals (NASDAQ:ALNY) be one of them?

Is Alnylam Pharmaceuticals Growing?

Alnylam uses RNAi technology to devise its novel therapeutics. As of the end of last year, four of its therapies were commercially available, namely, ONPATTRO, AMVUTTRA, GIVLAARI, and OXLUMO.

A substantial part of the company’s revenue over the past few years has come from collaborations with other large biotechs or pharmaceuticals, and these strategic collaborations are expected to keep driving funding for the foreseeable future.

Alnylam’s revenue performance is crucial now so it’s comforting for shareholders to see that the top line growth has actually accelerated over the past year.

Between 2021 and 2022, total revenue grew by 23% to reach $1.04 billion. Between 2022 and 2023, this growth stood at 76% to reach $1.83 billion.

This was caused by a 305% increase in net revenues from the company’s collaborations, while net product revenues increased by 39%. At the same time, net product revenues made up about 68% of top line sales.

Up until 2022, ONPATTRO was the company’s most-sold drug, driving $557.61 million in revenue. This drug is used for treating polyneuropathy of hATTR amyloidosis in adults.

However, its flag-bearing position was taken over by AMVUTTRA last year, posting a $557.84 million revenue. This drug, which is also used to treat polyneuropathy, was initially commercialized in 2022 and, since then, annual sales have gone up by 495% year-over-year.

Alnylam has more or less abandoned the expansion of ONPATTRO in the U.S. after the FDA declined to approve the therapy for the rare heart disease transthyretin amyloidosis cardiomyopathy (ATTR-CM), overruling the decision of an advisory committee.

While this is a setback for the company, AMVUTTRA, on the other hand, has shown prospects as a popular treatment option for ATTR-CM.

By contrast, AMVUTTRA is unlikely to challenge Pfizer Inc. (NYSE:PFE) at the moment in the treatment space for ATTR-CM, even if an anticipated HELIOS-B study were to come back positive.

Pfizer’s Tafamidis will most likely remain the go-to therapy for ATTR-CM, but AMVUTTRA might be an add-on therapy option.

How Is Alnylam’s Profitability?

Alnylam’s top line is where investors’ focus has been to adjudicate its financial health because the company is not profitable at the moment.

In fact, since its inception in 2002, it has accumulated significant losses. As of December 31, 2023, this figure stands at $7.01 billion.

However, in 2023, the company’s loss from operations fell by 64% from the prior year to stand at $282.18 million, while net loss declined by 61% to $440.24 million.

In Q1 2024, which ended March 31, Alnylam’s net loss clocked in at $65.94 million, a solid improvement compared to the Q1 2023 net loss of $174.10 million.

On a non-GAAP basis, net loss per common share came in at $0.16, compared to $1.06 in the prior year’s period.

Alnylam expects to report ongoing annual operating losses for the next several years, which in turn will strain the balance sheet until it can be self-sufficient. Management’s aim is to achieve financial self-sustainability by the end of 2025.

Is Alnylam Pharmaceuticals a Good Stock?

According to 26 analysts, Alnylam Pharmaceuticals is a very good stock to own now because it has substantial upside of 47.2% to fair value of $220.38 per share.

With that said, the recent sentiment has dimmed somewhat with 6 analysts revising their earnings lower for the upcoming period.

It’s worth noting also that, as far as pharma stocks go, Alnylam isn’t actually particularly volatile. A big drawback, however, is its persistent lack of profitability. 

On the plus side, as of the end of the first quarter, Alnylam has a lot of R&D pipeline highlights, such as the HELIOS-B Phase 3 study of vutrisiran for treating ATTR amyloidosis with cardiomyopathy, three Phase 2 studies for zilebesiran, and the ongoing Phase 1 study of mivelsiran.

The share price has taken a beating over the past year, down by just over 19%, which compares poorly to the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).

Despite the underwhelming performance, the valuation seems stretched on a price-to-sales basis, trading now at 10.23x forward sales. As far as a discounted cash flow goes, it suggests the company is trading at fair value now so the enthusiasm analysts are projecting stems largely from future pipeline products rather than current financials. 

As always in the pharma arena, that’s a gambit but one that can pay off handsomely when it works out.

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