On Tuesday, Wolfe Research adjusted its stance on shares of Alnylam Pharmaceuticals (NASDAQ:ALNY), downgrading the company's stock from Peer Perform to Underperform. The research firm's reassessment hinges on a detailed analysis of Alnylam's product Amvuttra and its projected earnings, alongside comparisons with competing products and companies within the industry.
The firm projects that Amvuttra could become a $4.4 billion product by 2030, which still falls $900 million short of the broader market's expectations. They anticipate that Amvuttra will reach a peak of $6.2 billion, an increase from the previous $5 billion estimate.
This forecast is deemed reasonable when compared to the expected $6.8 billion peak of Vyndaqel, a competing product that offers similar efficacy but at a more accessible price point for both payers and most patients.
In addition, Wolfe Research has estimated peak revenues for other Alnylam products: $667 million for Givlaari, $407 million for Oxlumo, and $1.7 billion for zilebesiran in the U.S. market. They also forecast peak royalty revenues of approximately $200 million for Leqvio and $100 million for fitusiran.
Wolfe Research's discounted cash flow (DCF) analysis extends to 2040, by which time it is expected that Amvuttra will be on the decline, impacted by market dynamics and competition from next-generation treatments.
The firm suggests a conservative approach to valuation, recommending 'zeroing out' R&D from 2028, assuming failure of all other pipeline products, and applying a 50% reduction in terminal growth. This leads to a price target (PT) of $205 for Alnylam's stock, with a potential $217 fair value if Amvuttra's decline does not commence after 2037.
The analysis also compares Alnylam's platform value to that of Ionis Pharmaceuticals (NASDAQ:IONS) and argues that while Alnylam's valuation is higher, it may not necessarily warrant such a premium. The report cites Alnylam's price-to-sales ratio for the fiscal year three (FY3) at 9.9 times, which is higher than both its profitable mid-to-large cap peers and ARGX, which is not restricted by the Inflation Reduction Act (IRA) in terms of indication expansions.
The report concludes by noting Alnylam's stock liquidity is approaching that of Biogen (NASDAQ:BIIB) and that its technical position looks stable, with $265 support expected to hold. However, Wolfe Research expresses uncertainty about whether Alnylam merits a high valuation given the slower path to expanding EBIT margins and suggests that generalist ownership of the company's stock may have reached its peak.
In other recent news, Alnylam Pharmaceuticals has reported substantial developments. The company's third-quarter financials showcased a significant 34% year-over-year increase in global net product revenue, totaling $420 million. This growth was primarily driven by the TTR franchise, including treatments such as ONPATTRO and AMVUTTRA, which generated $309 million.
H.C. Wainwright maintained a Buy rating on Alnylam, citing the company's financial performance and the potential of its ATTR-CM treatment, AMVUTTRA, which is anticipated for a U.S. launch in 2025. The firm's analysis suggests this treatment could generate over $5 billion in annual revenue.
Moreover, Alnylam is making strides in its pipeline, notably in treatments for Alzheimer's and Huntington's diseases. The company aims to double its clinical development pipeline by the end of 2025. Despite a decrease in collaboration revenues to $57 million, Alnylam saw an increase in royalty revenues to $23 million and improved its gross margin on product sales to 80%.
In a shift of resources, Alnylam has ceased the ALN-KHK program for type 2 diabetes. However, the company remains open to business development opportunities to further enhance its platform. These are among the recent developments at Alnylam Pharmaceuticals.
InvestingPro Insights
To complement Wolfe Research's analysis, recent data from InvestingPro offers additional context on Alnylam Pharmaceuticals' financial position. Despite the downgrade, Alnylam's market capitalization stands at a robust $36.09 billion, reflecting significant investor confidence. The company's revenue growth of 21.54% over the last twelve months as of Q3 2024 aligns with Wolfe Research's projections of strong product performance.
InvestingPro Tips highlight that Alnylam has seen a large price uptick over the last six months, with a 85.96% price total return. This surge may support Wolfe Research's observation about the stock's technical stability. However, the tip indicating that analysts do not anticipate profitability this year corroborates Wolfe's conservative approach to valuation.
It's worth noting that InvestingPro offers 7 additional tips for Alnylam, providing a more comprehensive analysis for investors seeking deeper insights into the company's prospects.
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