Alnylam Pharmaceuticals (ALNY -1.87%) and Vir Biotechnology (VIR 0.88%) show no signs of slowing despite the current economic climate. These well-capitalized biotechs have ambitious plans to develop an array of innovative medicines. The companies recently banded together to spearhead a unique approach to attack the novel coronavirus. Let's hope they succeed for society's sake and for the investors willing to risk their hard-earned money to back these COVID-19 fighting biotechs.
With both of these biotechs at the forefront of the most important health issue of our time, which stock is a better buy? Let's find out.
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Differing R&D strategies
Alnylam's efforts to develop RNA interference (RNAi) based therapeutics date back to 2002. RNAi seeks to silence genes by interfering with RNA, the blueprint the cells need to make specific proteins, involved with a particular disease. It has been a long, arduous path to translate this powerful technology into a therapy. Give credit to Alnylam for sticking with it. Sixteen years after its founding, Alnylam finally secured its first RNAi drug approval in August 2018 from the Food and Drug Administration (FDA). In November 2019, Alnylam scored its second FDA drug approval.
Vir, founded in April 2016, has sprinted toward its goals over recent years. Rather than focusing on a singular technology like Alnylam, Vir's mission squarely focuses on eradicating infectious diseases. The pipeline consists of an RNAi program against hepatitis B virus (HBV), therapeutic antibodies targeting COVID-19, influenza A, and HBV, and cell-based vaccines against HIV and tuberculosis.
Unlike Alnylam, which has successfully developed drugs and seen them through to approval, Vir's most advanced candidate, the RNAi for HBV, is only in phase 2 testing. Vir's influenza A antibody has commenced phase 1 safety and dosing studies.
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A flurry of activity
Since the beginning of March, Alnylam gained approval in Europe for Givlaari for the treatment of the genetic liver disease called acute hepatic porphyria (AHP) and completed a submission to the FDA and European health regulators for the marketing approval of lumasiran as a treatment for primary hyperoxaluria type 1, an ultra-rare disease causing kidney damage due to the formation of calcium deposits in the kidneys and urinary tract.
The company expanded its partnership with Vir to pursue novel RNAi treatments against SARS-CoV-2, the virus that causes COVID-19. It entered into a distribution agreement in Turkey for its drug Onpattro. Finally, it forged a pact with Dicerna Pharmaceuticals (DRNA) to develop treatments for alpha-1 liver disease. Once bitter enemies that fought over intellectual property until a 2018 settlement, the two RNAi specialists have teamed up to collaborate and cross-license patents to help advance new therapies.
Not to be outdone, Vir's frenetic pace of activity aims to rapidly develop therapies for COVID-19. GlaxoSmithKline (GSK -0.12%) stepped up to the plate to help Vir expedite the development of its therapeutic antibodies for the SARS-CoV-2 virus. Along with its R&D capabilities, Glaxo is buying $250 million worth of Vir's stock. On March 3, Vir and Alnylam announced an expansion of the existing HBV partnership to develop RNAi therapies for COVID-19. A month later, on April 2, the two companies expanded the COVID-19 RNAi collaboration to pursue even more possible targets to neutralize the novel coronavirus. Vir also entered into an agreement with privately held Generation Bio to research a potential non-viral gene therapy approach to generate Vir's antibodies in COVID-19 patients.
Importantly, Vir teed up both Chinese pharma WuXi Biologics and Biogen to get manufacturing scaled to meet the potential demand should one of Vir's antibodies prove to be successful in treating COVID-19 patients. On March 25, Xencor granted Vir a non-exclusive license to use its Xtend technology to improve the half-life of COVID-19 antibodies. Vir uses this technology for its HBV and influenza A antibody programs as well.
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What does it all mean?
Vir appears to be in an "all hands on deck" mode to fight COVID-19. While I applaud Vir's throwing tremendous resources at the problem, it could be for naught if the treatments fail to work or are not as good as competing therapies. Alnylam looks to be the more stable, older sibling of the two. With two approved drugs and revenues coming in from around the globe, Alnylam will survive the current economic chill as it has done in the past. This makes Alnylam the conservative option here for biotech investors.
For me, the investment comes to upside potential, and Vir takes the cake. It's generally easier for a smaller company like Vir to triple from its current $3.5 billion valuation to $10.5 billion than it is for a larger outfit like Alnylam to increase from $12 billion in valuation to $36 billion. Yes, Vir is riskier. But if Vir succeeds in developing a COVID-19 therapy, then the stock should skyrocket. I'm willing to take that bet and cheer it on.
