About Alnylam Pharmaceuticals
Alnylam is your run of the mill biopharmaceutical company.
It has certain products it specializes in that separate itself from the competition, as is the case from other pharmaceutical companies, small and large.
According to TD Ameritrade’s platform, Alnylam primarily focuses on and is “developing therapeutics based on ribonucleic acid interference (RNAi),” further mentioning that its drug pipeline includes four products and therapeutics such as “ONPATTRO (patisiran), GIVLAARI (givosiran), OXLUMO (lumasiran) and Leqvio (inclisiran).”
Although we have little to no idea as to what any of those treatments actually are, the company’s website simplifies what Alnylam really does for its patients.
Simply put, its products aim to “silence the genes that cause human disease.”
In other words, it is our understanding that the company tries to mute genes and their certain negative effects in order to prevent future diseases from occurring.
It’s also worth noting that Alnylam was the first to bring RNAi medicine to the marketplace, which is no small accomplishment given the regulatory scrutiny younger biopharma companies must endure, of course, for good reason.
Now that we’ve set somewhat of a stage of what the company does, the type of business it is engaged in, not to mention its exemplary track record thus far, let’s get a bit closer to our comfort zone and analyze Alnylam’s core financial figures and metrics and try to conclude whether or not investors should consider putting some money behind this company or not.
Alnylam’s stock financials
Presently trading at a share price of approximately $241 and accompanied by a market capitalization of $29.23 billion along with no regular annual dividend being paid to its shareholders and no readily available price-to-earnings (P/E) ratio, Alnylam is your textbook younger, growth-oriented, specialized pharmaceutical company.
While an unavailable P/E ratio usually signals that a company is not profitable, we don’t think this is necessarily the case with Alnylam. Namely, we think it is far more likely that the company just doesn’t have any earnings to immediately report because any earnings it is retaining are being reinvested back into the business in order to fund its operations, pay for its innovations and with its prime first mover’s advantage, separate and distance itself from the herd as much as it possibly can.
This is also probably why the company doesn’t pay out a dividend yet.
This is all very expensive but as a potential shareholder in Alnylam, we have zero qualms with this decision as it is a very common strategy in other current growth industries (such as software and cybersecurity) and it will likely benefit shareholders in the long run for the company to be focused on innovation now and profit sharing later.
Diving deeper into the company’s financials, according to Alnylam’s balance sheet its management team oversees around $3.6 billion in total assets paired with nearly $3.1 billion in total liabilities.
While this is a slightly higher amount of total liabilities than we had initially expected, we get it.
With a mixture of negative external inflationary and other cost-related pressures as well as the fact that frequently investing and reinvesting is essential and by virtue required to stay ahead of the competition, we’ve arrived at the presumption that as long as this company continues to sharpen and eventually expand its current pipeline and obtain the necessary and required FDA stamps of approval, a higher amount of total liabilities is acceptable, of course, as long as it is being deployed and managed properly over time.
As mentioned in previous stock analysis articles, we’re also just grateful that the company’s total assets outweigh its total liabilities.
Moving onto the company’s income statement, Alnylam’s total revenue figures over the past five years have been moving in the right direction.
Specifically, the company’s total revenue in 2017 stood at $90 million and has since generally trended upward, being reported at $844 million in 2021. This is a sign that Alnylam has been consistently receiving FDA approval and is also successfully marketing and selling the products and offerings within its pipeline, as well as developing new treatments within its pipeline.
As long as this trend continues, which we think it will, given its strong pipeline and its prospects, especially if it can potentially dip its beak into COVID-19 products and other pandemic-related treatments, we’re not terribly worried about Alnylam’s ability to generate consistent-to-climbing revenue moving forward.
From the perspective of the cash flow statement, the company’s net income during the past five years has been overwhelmingly negative, which doesn’t surprise us in the slightest. As harped on before in this article, you have to pay to play in the pharmaceutical industry and part of that price is consistent reinvention and (re)investment in the company’s respective pipeline.
Over time, we hope to see Alnylam’s net income inch closer to positive but as this company is at the forefront of many new medical and RNAi discoveries and innovations and needs to invest accordingly in order to continue to separate itself from the competition, we understand the need to burn through some cash in order to sufficiently invest in its pipeline and bring about some distance between it and its up and coming competitors.
As a reference, the company’s net income over the past five years has ranged from as high as -$886 million (2019) and as low as -$491 million (2017).
Alnylam’s stock fundamentals
Right now, Alnylam’s trailing twelve month (TTM) net profit margin isn’t pretty, at least at face value, but it’s a whole lot better than that of the industry average, which is nothing to scoff at. Specifically, the company’s TTM net profit margin currently stands at -123.02% to the industry’s average of nearly -464%.
We take great comfort in this, as we take it to indicate many things, one of which includes that the company has successfully cornered a market both in RNAi and pricing against the competition as well as widening its margins relative to the competition.
In addition to its relatively strong net profit margin, Alnylam’s TTM returns on equity, assets and investment aren’t anything to write home about, however, this is to be expected when the company in question hasn’t been in operation as long as it’s larger, more established peers have, such as Pfizer, Merck and other scaled players in the industry.
We think achieving solid returns on the aforementioned metrics will take continued consistent operation and efficient use of its capital and time, but we think it will happen nevertheless.
Should you buy Alnylam Pharmaceuticals stock?
This is a relatively young company with a lot of impressive intellectual property and operations. On its own, we think Alnylam has a bright future in the biotechnology sector and pharmaceutical industry in general and that as the company continues to hum along and receive the approval it needs to keep its operations funded, there’s a good chance shareholders will be rewarded in the long run as well, and hopefully Alnylam’s customers as well.
Lastly, as mentioned before, the pharmaceutical industry is known for being profitable and relatively recession proof, especially over the last few years, which is another plus for a company like Alnylam.
We give Alnylam Pharmaceuticals a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.