14 years after floating on Nasdaq, and with a strategic rebranding as well as $2.4bn of accumulated losses under its belt, Alnylam on Friday achieved its proudest milestone yet: its first ever US approval. Patisiran is now the world’s first RNAi drug.
So far so bullish. But history suggests that the group’s honeymoon might be painfully short: drugs launched by biotech companies without help from a senior licensing partner have a nasty habit of coming woefully short of sellside expectations (see tables below). And the situation is particularly acute considering that Alnylam carries a market cap of nearly $10bn.
After all, not even the sellside thinks such a valuation is realistic; taking into consideration consensus forecasts EvaluatePharma calculates $7.2bn as the NPV for all of Alnylam’s R&D assets. This kind of disconnect could play into the hands of anyone who has identified shorting solo biotech drug launches as an investment strategy.
History is on the side of such short speculators. For instance, those betting on the successful solo launches of Rubraca by Clovis, Nerlynx by Puma or Zejula by Tesaro would now be nursing losses of 15%, 54% and 83% respectively if they had purchased these stocks on the products’ approval dates.
|Selected US solo launches over the past 5 years|
|Product||Company||Launch||Share price since peak||Share price since approval|
|Nerlynx||Puma Biotechnology||Jul 2017||-83%||-54%|
|Tymlos||Radius Health||May 2017||-72%||-37%|
|Rubraca||Clovis Oncology||Dec 2016||-70%||-15%|
|Exondys 51||Sarepta Therapeutics||Sep 2016||-2%||568%|
Often, when it comes to launching a new drug, only big biopharma can be trusted to do the job properly – notwithstanding the effort Alnylam has undoubtedly made to get a commercial infrastructure in place for patisiran, which it will now sell as Onpattro for adult hereditary transthyretin-mediated amyloidosis.
As if to underline the point Goldman Sachs downgraded Alnylam after Onpattro’s approval, citing the lack of cardiovascular data on the label, and ensuring that the company started its first day as a commercial entity down 8%.
Of course, not all therapy areas are the same. Clovis, Puma and Tesaro’s oncology drugs, for instance, naturally require a more intensive sales effort than a rare disease product like Onpattro.
And bulls will no doubt point to Sarepta – the clear outlier in this analysis – and Alexion, which after the solo launch of Soliris became the most successful rare disease company to date. But Soliris has itself come under pressure for its high price – something Alnylam appears keen to tackle before it becomes a problem.
In conjunction with Onpattro’s approval the company revealed that it has been working with insurers and patient groups on a value-based pricing strategy. This kind of scheme is now pretty much par for the course for makers of complex drugs that treat rare conditions and are, relatively, very expensive to produce, like Glaxo’s Strimvelis, Novartis’s Kymriah and Spark’s Luxturna.
Several of the stock price collapses in the above analysis relate to companies coming off peaks reached during the 2015 biotech boom.
But many are also the result of sellside-fuelled investor expectations of lucrative licensing deals or even takeovers, before the grim reality of the expense and difficulty of a solo launch sets in. This is undoubtedly the case for Clovis, Tesaro and Puma.
Spare a thought then for investors in companies like GW Pharma, Bellicum and Alder as they approach solo launches of drugs that, in many investors’ eyes, mark key share price inflection points.
True, the presence of a big biopharma partner does not always guarantee market success – just look at the disaster that is Afrezza, the inhaled insulin that Mannkind briefly managed to license to Sanofi. But more often than not lack of marketing muscle spells doom for a new drug launch. Or perhaps it is just that unpartnered products are unpartnered for a reason.
|Selected upcoming solo launches|
|Project||Copany||Share price since peak||Product NPV ($m)|
|Viaskin Peanut||DBV Technologies||-62%||2,564|