This Company Is in a Perfect Position to Take-off

usman is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

In 2013, a number of new drugs got approvals from the FDA. This provided a boost to the biotech industry as a whole. Now, this speculative growth market is so sensitive that even positive results from clinical trials can take a company's stock to the moon. This is what happened with Alnylam Pharmaceuticals (NASDAQ: ALNY) last week.

What a week

Last week, when Alnylam released its early-stage clinical data of ALN-TTRsc, a developmental therapy to cure a rare genetic disorder, the company’s stock shot up almost 32%. This increase in stock price was induced by the remarkable signs of improvement seen in the therapy’s clinical data. This particular program is developing an internally administered RNAi therapeutic for TTR mediated amyloidosis.

Wondering what RNAi and amyloidosis are?

RNA is a cutting-edge technology for preventing specific genes in the human body from producing harmful proteins. Amyloidosis is a condition in which soluble proteins become insoluble and are deposited in extra-cellular spaces of different tissues, disrupting the normal function of the organs. Transthyretin(TTR) is a harmful protein which causes amyloidosis. Hence, a simple explanation to this study being conducted by Alnylam is that it is developing a therapy to deactivate the genes which produce harmful amounts of TTR protein, so that amyloidosis can be cured.

Positive Phase I trials

Like I mentioned, last week, the company released its Phase I study results of the program in which the ALN-TTRsc compound reduced the levels of TTR by 80% in the healthy volunteers. The company also announced that its experimental batch of the drug was well received by the clinical subjects. This proved to be a critical point for investors who were cautious about the drug's safety in the past.

After this data came out, Alnylam’s stock jumped from $37 to $51, eventually coming down to $44.95 in recent days. This huge change, just after Phase I clinical trials, leads me to think that the stock still has room for growth. This is because as the ALN-TTRsc Phase I trial made the stock jump so high, imagine how high it would go once the drug gets its FDA approval. Moreover, future growth of the company can also be determined by its pipeline.

Pipeline products

Currently, the company has one Phase II and two Phase I drugs. The rest of its projects are either in discovery or developmental phases. The company also has two partner programs. One of them is a collaboration with Kyowa Hakko Kirin for the development and commercialization of RNAi products for the treatment of RSV in Asia. The other one is ALN-VSP, which is in collaboration with Ascletis, a privately held company, for the treatment of liver cancer.

Other gainers last week

Many other companies also experienced gains last week. One of them was Alexion Pharmaceuticals (NASDAQ: ALXN), which went up more than 18% last week. This orphan drug maker is enjoying revenue from its first and only FDA-approved drug, Solaris. Other than that, the company’s pipeline is filled with other drugs in clinical trials or discovery phases, which are giving positive results. According to rumors, after analyzing the current performance and the future growth potential of Alexion, pharmaceutical giant Roche, is taking interest in buying out the company.

More good news came from the much smaller Inovio Pharmaceuticals (NYSEMKT: INO), which has rallied 115% in the last month. On July 8, Inovio reported that its H7N9 DNA vaccine component protected 100% of the vaccinated animals in clinical trials. Then, after just two days, Inovio reported that its next-generation Pennvax-B HIV vaccine combined with Cellectra improved the effectiveness in a Phase I study. Though the positive results of Inovio are encouraging, you should still be a bit cautious before investing in Inovio as it has a history of generating nothing more than losses for 30 years.

Final assessment

More and more investors are pouring money into this highly risky industry. So, to minimize risk, I would advise them to go for Alnylam as it has more growth to offer even after its recent surge.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

usman iftikhar has no position in any stocks mentioned. The Motley Fool recommends Alnylam Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus