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Shares of Alnylam Pharmaceuticals (ALNY +0.44%) have dropped 24% so far this year (through June 30). The biotech company is still a darling of Wall Street analysts, with 14 of 29 analysts following it listing the stock as a buy and seven listing it as a strong buy as I write this. The average price target is $436, about 45% above the June 30 closing price.Since 2018, the company has brought to market six RNA interference (RNAi) therapeutics, genetic medicines that use RNA interference to inhibit specific disease-associated genes. Here's why things are looking good for the stock, and one note of caution.
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Alnylam is showing explosive revenue growth In the first quarter, product revenue surged 121% year over year to $1.04 billion, fueled primarily by Alnylam's transthyretin amyloidosis (ATTR) franchise, which grew 153% to $910 million. The driver for that growth was Amvuttra, an injectable therapy used to treat polyneuropathy (damage of multiple nerves throughout the body) in adults with hereditary transthyretin-mediated amyloidosis (hATTR).
Alnylam reported a huge jump in profitability, with earnings per share (EPS) of $1.51, compared to a loss per share of $0.14 in the same period a year ago.
The company's full-year 2026 guidance calls for combined net product revenue of between $4.9 billion and $5.3 billion, up 71% year over year at the midpoint. Alnylam is rapidly transitioning from a high-burn clinical biotech into a highly profitable, self-sustaining commercial powerhouse.
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Its products are expanding into new indications While Alnylam has done well in treating rare orphan diseases, its pipeline is on the cusp of penetrating mainstream, high-volume therapeutic markets. New data reinforces Amvuttra's profile as a robust, first-line treatment for cardiomyopathy, setting up a massive commercial launch. Cardiomyopathy affects 0.2% of the U.S. population, and in 40% of cases, leads to heart failure.
Partnering with Roche Holding (RHHBY 2.01%), Alnylam has also developed zilebesiran to treat hypertension, which impacts nearly half of the adults in the U.S.
Zilebesiran and nucresiran are in phase 3 trials -- the first to treat hypertension and the second to treat ATTR. Zilebesiran is unique in that it treats a common condition but in a different manner, as an RNAi therapeutic targeting liver-expressed angiotensinogen and requiring dosing only a few times a year. Nucresiran is in phase 3 trials both to treat hATTR with polyneuropathy, and to treat ATTR-CM.
Another therapy, cemdisiran, is licensed to Regeneron Pharmaceuticals. Among its phase 3 trials are one to treat the autoimmune disorder myasthenia gravis and another to treat the rare blood disease paroxysmal nocturnal hemoglobinuria.
Unlike traditional small molecules or biologics that face immediate patent cliffs, Alnylam's RNAi delivery platforms form a deep technological moat. And its RNAi approach allows it to quickly replicate success from one liver-targeted disease to another with highly predictable clinical translation.
It is aggressively maintaining this edge by deploying artificial intelligence (AI), notably via a strategic AI collaboration with private biotech company Inceptive Nucleics, to accelerate the discovery of next-generation RNAi structures.
A note of caution Even with its tumble this year, the stock is trading at 75 times trailing earnings. That's high for a biotech, particularly one that isn't consistently profitable. Much of the share price is already factoring in the continued commercial uptake of Amvuttra. However, aggressive pricing pressure from competitors such as Pfizer or BridgeBio Pharma could trigger a sharp drop in the price.
The experts are right In the long run, this is a solid stock, even though it trades at a relatively high valuation. The company is already profitable, is growing revenue and earnings, and has a few new therapies on the cusp of commercialization. It has a unique delivery system that will help it retain patent protection. And it is branching out beyond rare diseases into areas such as heart disease and high blood pressure, which have larger patient populations.
Going on company guidance, its forward price-to-earnings (P/E) ratio is just below 30, meaning the stock isn't that expensive given its potential.