Morningstar | Alnylam's Onpattro Slow to Launch; Lowering FVE to $108 but Shares Still Undervalued. See Updated Analyst Note from 07 Nov 2018
Alnylam's Onpattro (patisiran) for polyneuropathy in hATTR amyloidosis received FDA approval in August and contributed to Alnylam's top line for the first time after its U.S. launch on Aug. 13. The company reported $0.46 million in Onpattro sales, which was slightly below our expectations. We slightly lowered our near-term expectations and adjusted costs throughout our explicit forecast period, which resulted in a fair value decrease to $108 from $117, but we are maintaining our long-term outlook on the potential of the rare-disease drug. We still believe Onpattro can take significant patient share when put up against competing therapies from Ionis/Akcea and Pfizer. The company also announced that they've already received at least 125 new patient start forms in the United States. While we don't expect all of these patients to contribute revenue by year-end, this figure gives us confidence in our 2019 estimate of over 500 patients on Onpattro, especially given the global rollout that's underway. This quarter's launch of Onpattro does not alter our no-moat rating for Alnylam, and we continue to believe that the commercial success of RNAi therapies is uncertain in the long run.The firm indicated that cost of goods sold for Onpattro would be higher than we had previously expected, in the mid- to high-teens as a percentage of product sales. This adjustment also contributed to the decrease in our fair value estimate. This quarter's cost of goods sold was slightly higher than anticipated due to fixed costs, and the firm's stock-based compensation ticked up with rewards following Onpattro's approval. We expect these costs to normalize in the fourth quarter. We estimate that the company will continue operating at a net loss through 2020 while it transitions to become a commercial biotech, driven by sales from Onpattro and potential sales from givosiran (for hepatic porphyrias), fitusiran (hemophilia), and inclisiran (hypercholesterolemia).
Alnylam Pharmaceuticals is a commercial-stage biopharmaceutical company developing therapeutics based on RNA interference (RNAi). RNAi is a biological pathway within cells for sequence-specific silencing and regulation of gene expression. The company has two RNAi-based medicines, ONPATTRO? (patisiran) and GIVLAARI? (givosiran). ONPATTRO is approved by the United States Food and Drug Administration (FDA) for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults and has also been approved in the European Union, Japan, Canada and Switzerland. GIVLAARI is approved by FDA for the treatment of adults with acute hepatic porphyria.
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