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Hawk’s Nest

Options Market Predicts Alnylam Drug Success and Scores 100X Profit

by | Aug 7, 2022

Alnylam (ALNY) shares surged 60% last week after positive drug data, a catalyst we saw positioning for as far back as April and the August bull covered risk reversal spreads tuned a $0.20 credit into more than $20, a 100X return.

On 4/26 we wrote:

Alnylam (ALNY) smaller but interesting spreads this afternoon are selling the August $130 puts and buying the $180/$240 call spread for a net $0.15 to $0.20 credit, 1000X ahead of key data. ALNY has seen bull flow recently including buyers in the May $170 and $180 calls as well as the August $180 calls for $850K on 4/18 and the August $175 calls for $2.5M in late January. The January 2023 $190 short puts remain in open interest 1000X from 9/24 for well over $3.5M. ALNY has held up well recently with shares consolidating in a range under $170 and upside to $200+ as it clears a multi-month downtrend. The $19.7B company trades 23.3X sales and 8X cash with short interest of 4.35%. ALNY has two notable catalysts upcoming. First, they will have a delayed PDUFA on 7/14 for vutrisiran for the treatment of ATTR amyloidos as the company submits additional information to the FDA on a secondary packaging and labeling facility. The second driver is the upcoming APOLLO trial for the treatment of wild-type ATTR amyloidosis patients with cardiomyopathy. Wild type ATTR is a slowly progressive disease and can often start with carpal tunnel syndrome. Patisiran has shown strong results in other forms of ATTR but the Apollo-B trial would be a big expansion and further validation of their platform. Analysts have an average target for shares of $220 with a Street High $400. MSCO downgrading shares to Equal Weight on 4/25, stepping aside ahead of the APOLLO readout. The firm thinks baseline heart failure severity and trial conduct quality are important variables, though a lack of information on these two factors make it difficult to make a strong call on the outcome. They see upside to $220 and downside to $100. HCW a buyer into weakness on 4/4 with a $400 PT and positive on the PDUFA in July as the delay should not materially impact the view that vutrisiran has potential to generate peak annual revenues of $5B-plus across several indications. Hedge fund ownership fell 2.85%. Avoro Capital adding to their stake while Farallon Capital also buying more stock.”