Alnylam’s Market Cap Slashed 50 Percent

Poor clinical trial results never signal great things for a company’s stock, but rarely do they trigger a 50 percent slash in its market cap valuation. That’s what happened to Alnylam Pharmaceuticals (NASDAQ:ALNY), after the company cancelled an ongoing clinical trial for its product candidate, revusiran.
On October 5, 2016, Alnylam had a market cap of six billion dollars. Today, that number has dropped to just over three billion. Share price has seen a dramatic depreciation, plummeting over 45 percent in just a few days—in fact, Alnylam was Thursday’s largest premarket decline.
The drop stems from a single company announcement: Alnylam stopped a clinical trial for its product candidate, revusiran.The therapy was intended to treat hereditary ATTR amyloidosis with cardiomyopathy, a rare disease with few available treatment options. As such, many investors were excited about its potential to disrupt the market.
But over the course of revusiran’s clinical trials, 18 patients died and there was evidence of nerve damage in other participants.

It is difficult to say for certain whether those 18 fatalities resulted from the therapy or the condition itself. Nevertheless, the ENDEAVOUR Data Monitoring Committee (DMC) found a higher mortality rate in participants receiving revusiran versus those receiving the placebo. As a result, they recommended that all dosing be suspended, and the company has complied.
“Patient safety comes first,” said CEO John Maragnore. In a press release issued on October 5, 2016, the company assured shareholders that this move would not affect development of patisiran, another therapy currently in phase III trials, or anything else in their pipeline.
Yet the significant stock movement seems to indicate investor unease.
That may be because Alnylam develops all of its products around a technology known as RNA interference—a way to turn select genes ‘on’ or ‘off.’ In theory, this approach has the potential to rapidly cure any number of medical conditions. “It’s like a whole factory. You just put in a different code and you pump out the drugs and you cure another disease,” explained Breakingviews columnist Robert Cyran.
But the failure of revusiran seems to have generated anxiety over RNA interference itself. “The technology has had a lot of problems over the years with delivery and efficacy,” Cyran went on to note, “and it seems like this is another example of that problem.”
Indeed, Alnylam’s major losses in the last few days suggest that investors are nervous about the potential of this technology going forward. With other gene-editing tools in development, they may be looking at different options in the space.

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Securities Disclosure: I, Chelsea Pratt, hold no direct investment interest in any company mentioned in this article.