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ALNY trades for about 150X projected 2016 revs per share; ISIS trades for about 20X projected 2016 revs per share.Isis (NASDAQ:ISIS) and Alnylam (NASDAQ:ALNY) These are two similar companies in that they are platform "antisense" companies, though that term is not quite as accurate as it used to be. These companies develop injectable products that modulate protein synthesis by interacting with RNA. Since I have twice reviewed ISIS recently, only to watch the shares collapse over a few months' period from $70 to below $42 during the recent panic, the reason to mention them both together is to point out how different two similar companies appear to be in the eyes of the Street. This is a core part of my investment thesis in biotech - i.e., that it really and truly is a stockpicker's sector. But in these momo times, strange things have happened with relative valuations. After all, ALNY and ISIS both have pipelines. ALNY has, after adjusting for net cash, about a $2.5 B greater market cap. ISIS has much greater revenues, though, as estimated $280 million this year versus $46 million for ALNY. ISIS has a much broader pipeline than ALNY, ranging from late-stage products to preclinical drugs. ALNY's only late-stage drug is for the same related diseases that comprise just one of ISIS's efforts; each is in partnership with a Big Pharma company for their drugs. On purely financial terms, ALNY sells for about 30X its projected 2016 net loss per share. ISIS is "cheaper," selling for about 50X its projected 2016 net less per share. ALNY trades for about 150X projected 2016 revenues per share; ISIS trades for about 20X projected 2016 revenues per share. ISIS has two other advantages over ALNY. One is a marketed, FDA- and EU-approved drug, Kynamro, for a very rare type of high cholesterol. Even though it is not producing revenues for ISIS, having a product successfully navigate the regulatory pathway is a positive. Another advantage is a more diverse set of next-generation technologies. After completion of this article, ALNY had a material announcement in conjunction with The Medicines Company (NASDAQ:MDCO). The details are found on the ALNY website. The joint press release discusses successful Phase 1 results for an ALNY product that is designed to compete with the PCSK9 inhibitors Praluent from REGN and Sanofi (NYSE:SNY) and Repatha from AMGN. The ALNY 10-K reveals that it is in line for milestones plus low double-digit royalties on sales. MDCO is going to begin Phase 2 this year and plans to initiate Phase 3 studies in 2017. If that's the case and the drug is successful, perhaps a 2020 product introduction will occur. SA article: The PCSK9 field may get crowded next decade (ISIS is interested in it, as well). I will have more to say about this in a separate article. In any case, as readers know, I like the antisense field. ALNY deserves credit for a promising pipeline. ISIS continues to have a larger pipeline with greater diversity and with more diverse technologies. Again, the reason to compare the stocks is not to criticize ALNY, it was to show the valuation disparity. Notwithstanding the nice headline on the PSCK9 drug, all we have is a Phase 1 project and a weak company taking this drug forward, with smallish royalties ALNY's only major payoff down the road. I still find ISIS the better business enterprise at a lower valuation. Intercept (NASDAQ:ICPT) |
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Msg # | Subject | Author | Recs | Date Posted |
52706 | Re: ALNY trades for about 150X projected 2016 revs per share; ISIS trades for about 20X projected 2016 revs per share. | aaljack | 1 | 9/1/2015 12:31:36 PM |