For all of the hype surrounding gene therapy and gene editing, the precision genetic medicine approach that turned in the best 2019 may have been RNA interference (RNAi). The gene-silencing technique earned its first regulatory approval for a novel targeted delivery method. That may not sound like much to get excited about, but it promises to open up numerous high-value opportunities for RNAi drug developers.
The approval, coupled with promising early-stage clinical results and massive partnership deals, explains why…
Arrowhead Pharmaceuticals (NASDAQ:ARWR) and Dicerna Pharmaceuticals (NASDAQ:DRNA) erupted higher in 2019. The RNAi drug developers saw their market valuations increase by 450% and 106%, respectively, last year.
While both companies have promise, pharma stocks are likely to fall in early 2020. What does that mean for investors with a long-term mindset?
A year to remember, but investors can’t forget about valuations
Shares of Arrowhead Pharmaceuticals had a pretty good first nine months of 2019, but the most impressive gains came in the fourth quarter. The RNAi stock gained heading into the American Association for the Study of Liver Diseases (AASLD) Annual Meeting in November. Investors were eagerly awaiting the results of two drug combinations being developed to treat chronic hepatitis B (CHB) by Johnson & Johnson (NYSE:JNJ) subsidiary Janssen.
The results lived up to the hype. The most impressive data came from a triple combination of an RNAi drug from Arrowhead Pharmaceuticals (now called JNJ-3989), an antiviral drug from Johnson & Johnson (JNJ-6379), and a nucleos(t)ide analog (NA). After 16 weeks of treatment, all 12 individuals in the study achieved at least a 90% reduction in two biomarkers of hepatitis B virus activity.
Investors gobbled up shares of Arrowhead Pharmaceuticals because the triple combination appears to be the industry’s best hope for developing the first functional cure for CHB (although it can’t be called a functional cure just yet).
Additionally, the RNAi drug candidate in the triple combination is based on a targeted delivery platform called TRiM. The approach is simple: The gene-silencing payload is attached to a special sugar that’s absorbed by the liver. Since many RNAi drug candidates need to interact with DNA in liver cells, and the sugars are easily metabolized by the liver (improving safety over prior-generation lipid nanoparticle delivery vehicles), it’s a perfect pairing.
It helps that just a few weeks after AASLD, Givlaari from Alnylam Pharmaceuticals (NASDAQ:ALNY) became the first RNAi drug candidate based on a conjugated-sugar delivery method to earn regulatory approval. It also helps that Dicerna Pharmaceuticals landed two massive partnerships in the fourth quarter of 2019 — both based on its own conjugated-sugar delivery platform. Following those deals, there’s now considerable overlap between the pipelines of Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals, which are both all-in on targeted delivery…
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