What’s Next For Alnylam Pharmaceuticals After A 50% Rally?


The stock price of Alnylam Pharmaceuticals (NASDAQ:ALNY), a pharmaceutical company best known for its ribonucleic acid (RNA) interference therapeutics for genetically defined diseases, has rallied around 50% over recent weeks (vs. about a 40% gain in the S&P 500) to its current level of $149 after falling to a low of $99 in late March, as a rapid increase in the number of Covid-19 cases outside China resulted in heightened fears of an imminent global economic downturn. With the current recovery, Alnylam stock is now up 15% from the $129 levels seen in mid-February, when the markets peaked. Is the recovery warranted or are investors getting ahead of themselves? We think it is warranted! Our conclusion is based on current stock-specific factors. We also compare Alnylam’s stock performance vs the S&P 500 and the 2008 Recession, parts of which are summarized below.

How Did Alnylam Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

We see Alnylam stock declined from levels of around $33 in October 2007 (the pre-crisis peak) to roughly $18 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 44% of its value from its approximate pre-crisis peak. This marked a drop slightly lower than the broader S&P, which fell by about 51%.

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Interestingly, Alnylam failed to stage any recovery post the 2008 crisis, with the stock staying at about $18 in early 2010 – roughly 46% lower than the pre-crisis peak. In comparison, the S&P fared far better with its losses from the pre-crisis peak standing at about 27%.

Given that Alnylam stock lost over 23% of its value between the market peak on February 19 this year to the low on March 23 and it has already bounced back 50% since then. This means that the stock has actually gained over 15% from the pre-crisis highs. The S&P remains about 8% below its pre-crisis peak.

Is The Recovery Warranted & Can We Expect Further Gains?

The rally across industries over recent weeks can primarily be attributed to the U.S. government’s fiscal stimulus and lower interest rates, which have made stocks attractive to investors once again. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover.

There were some specific levers for Alnylam as well – as the U.S. FDA approved its drug Givlaari, which is used for the treatment of a rare disease, acute hepatic porphyria, in 2019, and the drug garnered sales of $5 million in Q1 2020. Givlaari was also approved by the EU regulators in March 2020. The drug is priced at $39,000 per vial, translating into an average annual cost of $575,000 per patient, and its peak sales estimated to be north of $500 million. Note that Alylam’s total revenues stood at $90 million in 2017, $75 million in 2018, and $220 million in 2019.

Givlaari is the second drug based on RNA interference to secure regulatory approval. The U.S. FDA in late 2018 approved Alnylam’s Onpattro, which is used for the treatment of polyneuropathy caused by hereditary transthyretin-mediated amyloidosis (hATTR). The drug garnered sales of $166 million in 2019, explaining the surge in 2019 total revenues for the company. Onpattro sales stood at $67 million in Q1 2020, and its peak sales are estimated to be north of $1 billion.

These two drugs have changed the outlook for the company, and the company will see strong sales growth over the coming quarters. As such, the recent gains may stick for the stock. As lockdowns are lifted and investors may begin to focus on the company’s performance in 2021 and onward, potentially driving Alnylam’s stock upward in the near term.

While Alnylam looks like it can gain more, which S&P 500 component stocks have the best chance of outperforming the benchmark index? Our 5 In the S&P 500 That’ll Beat The Index: TWTR, ISRG, NFLX, NOW, V look promising.

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