Alnylam, the most promising company in the field, dragged the entire Biotech sector down after the late-stage clinical trial of its gene-silencing drug resulted in 18 patient deaths.
Yesterday's news gave investors another reason to avoid Biotech stocks. The sector, apart from bringing a lot of new successful names to the market, is also one of the riskiest ones. Alnylam (NASDAQ: ALNY) and its "breakthrough" drug Revusiran is yet another Biotech's disappointing story similar to that of last month's Mast Therapeutics. Alnylam Pharmaceuticals is the most promising company working in the field of RNA interference drugs based on the Nobel prize-winning mechanism of gene silencing. The company has been working on the phase II clinical trials of Revusiran, a drug developed to aid the patients with a rare hereditary genetic disease that causes heart failure.
Yesterday evening, the company announced that its long-awaited trial results of Revusiran will not arrive as the testings were discontinued due to the high number of patient deaths during the trial. According to the company, "benefit-risk profile for Revusiran no longer supported continued dosing." After months of clinical testings, independent observers reported that as many as 18 patients had died. Interestingly, more people died in the group that was treated with Revusiran rather than in the placebo group, yet Alnylam declined to comment on the exact number of deaths in the treatment group. That is why, the study was pushed to halt prematurely.
“Patient safety comes first. We have stopped all dosing and are actively monitoring patients across revusiran studies to ensure their safety,” said Alnylam CEO John Maraganore in the company statement.
The immediate result of the announcement was a devastating 48% drop in Alnylam stock price to the level of $37s. Today, the stock plummeted even further and is currently trading at $34.42. In a matter of a few hours, Alnylam lost almost $2.5 billion of its market cap.
These are, indeed, shocking news for Alnylam's investors, many of which got involved with the company last year when Alnylam created a hype around its "revolutionary" new drug Revusiran. According to The Street, as soon as Revusiran passed its early stage clinical trial and demonstrated some promising results, Maraganore started promoting his company in the media claiming that Alnylam's RNA interference drugs would revolutionize the sector and considerably improve patients' wellbeing. During the last year, the company grew its market cap to $11 billion, even though there were no clinically confirmed results of any of Alnylam's drugs.
After the yesterday's announcement, Alnylam's investors have all the reasons to be furious. However, say the experts, Alnylam's drug failure goes much further than simply affecting the company's business and disappointing its investors but is capable of dragging down the entire Biotech sector. And it has already started doing so. By the end of the day yesterday, the iShares Nasdaq Biotechnology ETF (NASDAQ: iShares Nasdaq Biotechnology Index Fund [IBB]) was down 2.5% on elevated volume.
Alnylam's CEO rushed to say that what happened to Revusiran was very common in the industry, so it unlikely to affect its entire business. However, for the Biotech sector, it might mean that more and more investors would decide not to invest in the Biotech companies because of their instability. This year has been particularly hard for the industry, with many of the stocks going under the water including such big names as Mylan (NASDAQ: Mylan [MYL]), whose EpiPen price manipulations scandal made the world's headlines.
In Alnylam's case, there is no guarantee that the failure of Revusiran will not affect other drugs in the company's line as well as its upcoming launches. Yet, the analysts say that investors are getting increasingly more cautious about the risks of the Biotech industry and Alnylam's drug failure can be the last drop for some investors.