Alnylam Pharmaceuticals Slid 12.6% Today After Earnings

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What happened

Leading RNA interference (RNAi) company Alnylam Pharmaceuticals (NASDAQ: ALNY) slid nearly 13% today after announcing third-quarter 2016 earnings when the market closed yesterday.

So what

This was the first major update provided since the company announced it would discontinue development of revusiran, the former leading drug candidate, and investors didn't enjoy having those wounds reopened. Nor did they appear particularly excited about the pipeline update provided by Alynylam Pharmaceuticals in a post-revusiran world.

As a clinical-stage biopharma, the company doesn't have much to report in terms of revenue or profits, which aren't major drivers of the stock. Therefore, it's understandable that the pipeline will continue to be the driving force -- up or down -- for shareholders.

Revusiran was discontinued in early October after an "imbalance" of deaths in the group of patients taking the investigational drug compared to those taking placebo. The news shook the industry and became another high-profile failure for the gene-therapy method known as RNAi, which has largely failed to deliver on its promise after the doctors who discovered it won the Nobel Prize in Physiology or Medicine in 2006. Most other giant pharmaceutical companies wrote off large investments in the technology in the last decade, leaving Alnylam Pharmaceuticals and Ionis Pharmaceuticals as the leading developers.

By abandoning the former lead drug candidate, the company has pushed back the timeline for commercializing its first product. However, investors may take some solace knowing that there are noteworthy differences between revusiran and the remainder of the drug candidates in the company's pipeline.

Specifically, all remaining RNAi drugs are delivered differently and in substantially lower doses than revusiran. That could make all the difference in safety profiles -- a theory that seems to be proven correct with data from early- and mid-stage trials so far. Investors will need to wait for later-stage trials to wrap up before getting too excited, however.

Now what

Alnylam Pharmaceuticals is now one of the only biopharma stocks sticking with RNAi drug development, which could mean one of two things. It will either own a substantial share of the markets that future approved products provide, or if the technology never delivers on its promise, it could be left with nothing to show for its massive investments. Investors are still optimistic that the company will reward them for their patience -- as evidenced by a respectable market cap of $2.6 billion -- but the clock is ticking a little louder now.

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Maxx Chatsko has no position in any stocks mentioned. Follow him on Twitterto keep up with developments in engineered biology and materials science.

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