The collateral damage from Alnylam's blow-up jeopardizes the entire biotech sector.
Alnylam said Wednesday evening that it was scrapping development of revusiran, one of the two most advanced RNA interference drugs in the company's pipeline.
A phase III clinical trial of revusiran in patients suffering from a rare, fatal disease that causes heart failure was stopped early because the "benefit-risk profile for revusiran no longer supported continued dosing," the company said. Patients in the study were reporting serious nerve pain, worsening over time. When independent monitors peeked into the study results, they found 18 patients had died, more treated with revusiran than with a placebo, although how many more Alnylam won't disclose.
Alnylam shares are down 47% to $37.46 in Thursday trading from the preceding day's close. The last time Alnylam's stock price traded this low was July 2013. More than $2.4 billion in Alnylam market value has been erased.
The failure of an experimental drug is a common occurrence in biotech, but Alnylam's forced shutdown of revusiran is a bigger deal because it raises real fears that one of the industry's most highly touted drug technologies might be a total bust.
RNA interference, or RNAi, uses snippets of genetic material to turn off disease-causing genes. RNAi inventors won the Nobel Prize in 2006, spurring a round of heavy investment by pharma into the technology. But most of the big drug companies gave up a few years later, leaving the field to Alnylam and a few other small biotech companies.
Alnylam has spent more than $1.4 billion over 14 years trying to prove to doubters that RNAi could be transformed into effective and safe drugs. In 2014, a Sanofi investment and partnership gave Alnylam a confidence boost. As Alnylam's gene-silencing drugs advanced through early and mid-stage clinical trials, CEO John Maraganore became more outspoken, appearing frequently on CNBC and other business media outlets to talk about how RNAi would transform medicine and improve the lives of patients.
Investors bought into the Alnylam story. At the peak of biotech stock bubble in 2015, Alnylam's market cap exceeded $11 billion despite having no approved revenue-generating drugs.
On a conference call Wednesday night, Maraganore tried to reassure investors that Alnylam's RNAi drug platform would survive the demise of one drug.
"This is drug development," he said, "these things do happen."
Safety problems have not shown up to date in the company's other RNAi drugs, which are all delivered into patients differently from revusiran, Maraganore said. He added that he still expects to have three drugs approved and on the market by 2020.
But 2016 has been a rough year for biotech stocks, which mostly are under water and underperforming the major indices. Investors, stung by the collapse in biotech stock valuations and constant, negative headlines about drug pricing, are not in a forgiving mood.
Alnylam sees failure in just one drug, nothing more. Skittish biotech investors are just as likely to take a risk-off approach, believing that revusiran's safety problems could be a precursor to bad things happening to Alnylam's remaining drugs. That includes patisiran, the remaining Alnylam RNAi drug in a large phase III study, with results expected next year.
And if the future of RNAi is in doubt, the confidence investors have in other biotech technologies -- CRISPR, gene therapy, cancer immunotherapy -- might also suffer erosion.
Biotech stock prices have been on a significant upswing since bottoming out this summer. Sentiment had been improving. Confidence was gaining. The Alnylam blow-up is the type of bombshell event that reminds a lot of investors why they avoid biotech stocks.