Alnylam Pharmaceuticals, Inc. (ALNY) Earnings Call Transcript & Summary

All right. Good morning, everyone. This is Alan Carr. I am a biotech research analyst here at Needham. Welcome to the 19th Annual Needham Healthcare Conference. This is our first virtual health care conference. Sorry for the slight technical delay, but we're off and running now. So with me, I have Barry Greene, President of Alnylam. Good morning, Barry. How are you?

Good morning, Alan. I appreciate you and Needham having us here today.

I am Glad you could join us. So we've got a few topics that we want to run through until 9:15 this morning. Let's start off with yesterday's news. I guess if you -- you did spend a call on it yesterday. So -- but I do want to give you just a minute or so to give us an update on the Blackstone financing and then maybe we can run through some of the other topics for Alnylam.

Yes. Thanks, Alan. So as you mentioned, just yesterday, we were thrilled to announce that we've entered into a strategic financing collaboration with Blackstone. They are, as you know, a premier private equity firm. The financing provides Alnylam with up to $2 billion in cash and secures our bridge towards achieving a self-sustainable financial profile and really completely mitigates the need to access the equity markets, again, anytime in the near future. In addition to the partial monetization of the inclisiran royalties that we described in the call yesterday, the deal also includes corporate debt and R&D partnership and equity investment. And importantly, we believe this deal solidifies Alnylam's value creation potential and really validates both the company and the RNAi field. With the fuel here, the financial fuel, we strongly believe that we have what it takes to build a top tier, top really 5 biotech company become a global leader in the biopharma space. And really, one of those rare companies that has an organic pipeline with an opportunity to launch a new drug or a new drug indication every 12 to 18 months for the foreseeable future. So pretty excited to get that done.

Yes, congratulations on that. Well, let's go through our list here. So COVID-19, you touched on it briefly, but it sounds like you wanted to wait to get into details until your earnings call. But what can you say about impact of COVID-19 on Alnylam, both with respect to sales and trial -- clinical trials and operations at the company?

Yes. So let me go through what I can. And as you said, we'll provide further updates on our quarterly call. I think, as we're all aware, the COVID-19 pandemic is an evolving global crisis that really changes on a daily basis, sometimes on an hourly basis. There's a tremendous amount of uncertainty about the endurance of the pandemic and the extent of the impact on health, global health and the global economy. From the U.S., we appear to be entering a peak period of infections and deaths. However, things seem to be plateauing, and I'm really hopeful that we'll see a decrease in new cases and deaths in the coming weeks, similar to Italy and other countries where the pandemic seems to have crested. From a high level, we've been very active with ensuring continuity across our business, fortifying our operational position across various areas of the company. In fact, over a month now, we've been monitoring the pandemic on a daily basis and adjusting as needed, where we can, to ensure the continued benefit and safety of our patients in the communities we serve as well as our employees. Now from investors, our answers are based on planning assumptions that measure, such as social distancing and the onset of herd immunity, should lead to general return to kind of a new normal over time. The way we're thinking about planning our business so that we're not sort of " waiting " for this to be over is we're really planning our business in 3 distinct phases. Right now, we're in a pandemic period, which encompasses a good part of the second quarter. We believe that we'll be -- that the world -- countries will be moving to a recovery period, which encompasses third quarter and then kind of a new normal, which is the fourth quarter. And we're planning what we, across our business, are doing in each of those phases. So we're not just standing still and " waiting " for this to be over. And again, we'll give as much update as we can on our first quarter call. Now let me drill a bit further, just to give you a little bit more specificity. Let's start with supply chain, the most important thing. And the good news is we're seeing no issues. In fact, we have sufficient inventory for commercial product, both drug product and drug substance as well as raw materials for ONPATTRO and GIVLAARI. We also have sufficient supply for all of our clinical stage programs. So we don't see any exposure on the supply chain. We've got inventory built and we have a very comprehensive mitigation measures in place to reduce any exposure. So that's really in good shape. From a clinical trials perspective, that's frankly an area of potential greater impact. Our priority here is ensuring overall patient safety, while continuing to conduct our trials in a vigorous way. We do believe these trials will yield the support to developing life-saving therapies. And as you know, we haven't sort of announced stopping trials. We're continuing to move forward. These are progressive debilitating diseases, and we are offering life-saving therapies, we believe, assuming the data hold up. Now to support this focus, we're doing a lot of work to include remote administration of drug and study assessments, patient monitoring along with effective data collection in our studies is another area of attention. And including ongoing trials, like HELIOS-A and ILLUMINATE-B, where we've completely enrolled. Now for other trials, enrollment is a focus. In areas where the pandemic has crested, we're continuing to enroll patients, such as Asia. This includes global studies, like HELIOS-B, APOLLO-B. Now if there are interruptions, we think they may be in the case of enrollment delays, but we're exploring avenues to soften or mitigate any impact as we get into the recovery phase. It's also important to remember, and this is really critical, that regulators have issued guidance on the operation of clinical studies during the pandemic, and we plan on following those guidelines closely. I can't summarize all of the guidelines, but it really comes down to exquisite documentation of any deviations, and we're doing that very well. Now I'll stop with the commercial part so we can move to the other questions. But on the commercial performance, again, I'll remind you that diseases, like hereditary ATTR amyloidosis, polyneuropathy and acute hepatic porphyria are severe life-threatening conditions and that medications, like ONPATTRO and GIVLAARI, are necessary in these conditions. From an ONPATTRO perspective, there's tremendous commitment to therapy. And you may recall, our historical adherence rate has been great, over 90%. And we expect similar metrics for GIVLAARI, given its strong therapeutic value. Like others in the industry, with the exception of Asia, in our case, Japan and Taiwan, our global field team has largely shifted health care provider and payer interactions, patient interactions to virtual mediums, and we are prepared to do that and made that pivot very quickly. Our teams have been very successful, helping patients with their ONPATTRO infusions or the GIVLAARI sub-q injection. They need an appropriate sites of care, including the home setting. In fact, and this is one of the silver linings in this pandemic, home infusion has become broadly available in virtually all countries. We've commercialized ONPATTRO as payers and regulators increasingly recognize the value of in-home care, particularly during the pandemic. So we've been working to open alternative sites of care, alternative care sites for both drugs. Now moving on to porphyria patients, as you know, when a porphyria patient has an attack, they come into contact with an urgent care setting or a hospital. Of all times, this is a time now to be proactive with acute hepatic porphyria patients and, if appropriate, get them on GIVLAARI and keeping them out of the urgent care setting. So this is a time if, like all others, that we really want to keep the AHP patients away from urgent care settings. And GIVLAARI administration is the right answer at any time, but particularly in this pandemic time.

Barry, you had said in the past that many patients like going to an infusion center. You said there was a sense of community, but home infusion is available. I assume you're seeing somewhat of a transition to home care these days or you're finding some sort of other alternative arrangements to keep some social distancing. How is that playing out?

Yes. As -- Alan, as the pandemic became clear country by country, our teams working with the health care providers reached out to the patients to understand their comfort level and continue with their site of care, sometimes an academic center, sometimes it was a local infusion center or a desire to shift to a home infusion. And we are seeing, in many countries, a pretty rapid shift to home infusion. I think when we move to the recovery in new normal phase, patients may again opt to get out of their homes, where they often feel trapped and get to local infusion centers. But I've been very gratified with how rapidly we've been able to ensure continuity of care and shift patients to locations that they desire, and that's across the world.

Okay. One other aspect to COVID-19, I want to touch on is you do have a collaboration with Vir. It's -- well, the disease hasn't been around that long, so it's obviously an early stage. But you want us to -- tell us a little bit about what you're doing with Vir?

Yes. Absolutely, Alan. So before I dive in, let me remind everyone that we formed our infectious disease partnership with Vir as far back as November 2017. The original agreement focused initially on HBV infection and led to the advancement of ALN-HBV02, which Vir calls the VIR-2218. And that compound utilizes our ESC+ technology and is currently in a Phase I/II with very encouraging preliminary data, and they'll be providing data throughout the course of the year. As you mentioned, we recently expanded the partnership with Vir to include developing commercialization of RNAi therapeutics to treat coronavirus infection, including COVID-19. And while this particular novel virus hasn't been around, the coronavirus is, in general, were fairly well known. So the plan here is to advance siRNA to target the SARS-CoV and SARS-CoV-2 genomes as well as siRNAs to target the human host factors that are necessary for cell entry to the virus. So here, we're combining the advances of lung delivery. And remember, we had an RSV program of novel siRNA conjugates, which Vir has established infectious disease expertise, capabilities and models. We'll develop the drug candidates, and they'll lead the development and commercialization of selected drug candidates forward. We retain an option at clinical PoC to equally share in profits and losses associated with development and commercialization of the program or we can elect to earn development and commercialization milestones and royalties on the products. Now, obviously, given the fact that this is a global health crisis, this has become a major focus for us and one that we're very excited about moving forward.

So you've got host and viral targets in this case, but that's if I heard you right. And then any guidance on -- any updates on timing for various milestones during the development process? Or is it still pretty fluid unlike COVID-19, in general?

Yes. So since you asked about the approach, let me provide some color. We envision both a targeted prophylactic setting, perhaps for health care workers and their families. You can imagine delivering these drugs to the nasal passages and stopping viral application in the nasal passages where they start. And also an inhaled drug where if deep infection, we can stop viral replication or uptake. So on the viral targeting, as we did with RSV or HBV, we're going after highly conserved regions of the virus and cleaving at the appropriate parts to stop viral replication. We're also targeting the 2 host targets, ACE2 and TMPRSS2 . As you know, ACE2 is known to be the viral entry receptor. So by knocking that down, we potentially stop viral entry. And TMPRSS2 is known to cleave the SARS-COVID-2 spike protein to facilitate interaction. So by going after that broad approach, we're hopeful that we dramatically lessen the infectivity rate. In terms of timing, we're getting molecules to Vir as we speak. We've got over hundreds in their hands, and they're going to move as quickly as possible to get these programs in demand. The ultimate is going after all 3 of these targets simultaneously. But from a time frame, we might start with one and then the other then the other, just to get things moving and understand how these might work in people with the infection.

Okay. Well, maybe let's move back on to your -- to the rest of your pipeline then. You haven't -- with respect to ONPATTRO and GIVLAARI, there's no changes to guidance or anything like that. Maybe I assume, maybe you want to remind us of what guidance you issued back in the fourth quarter call for 2020.

Sure. So just to provide some context, ONPATTRO has been performing well. We're pleased with how commercial has continued to mature, notwithstanding the COVID-19 issue. We'll be reporting Q1 results in a few weeks. So for now, I can remind you that results of fourth quarter, we reported nearly $56 million, $55.8 million. Global ONPATTRO revenue totaled $166.4 million, included over 750 patients worldwide on commercial ONPATTRO. So we have seen on the landscape an increase in amyloidosis patient identification through our efforts and efforts of other companies. We've also seen really amazing awareness at medical congresses, like ACC and HFSA. Entire tracks are now deal -- are dealing with ATTR amyloidosis, rather than just amyloidosis, generally. So we're really seeing a good uptake there. And as you asked, the guidance that we provided at the beginning of the year was that ONPATTRO net product revenues would be $285 million to $315 million, and we've made no comments on that. And again, we'll provide any material necessary updates at the quarterly call.

And then with respect to GIVLARRY -- GIVLAARI, sorry, updates on how that program is performing commercially?

Yes. So the quarterly call will be the first really full quarter of GIVLAARI update. So for now, I can tell you what we said in the fourth quarter call, which we -- I feel we had a nice launch in November. 13 start forms received in the quarter, a couple hundred thousand dollars, really stocking product revenues. But we've made tremendous progress since as we turned into this year. I'll remind you that we had -- in the United States, we had Ironwood doing disease education, calling on gastroenterologists. And then with approval, we're able to promote GIVLAARI, and there's been -- we'll give specific updates on the call, but there's been some nice uptake there. We have new commercial geographies later this year opening, EMA approval in March. So that allows us to get into some countries in Europe quickly. And I can tell you that, throughout the crisis, our team has been working closely with the health care providers and payers to get patients the GIVLAARI they need. And as I mentioned earlier, this is a time -- particularly, this is a time where we really don't want an attack to occur that requires the patient to engage in the urgent care or hospital settings, it's dangerous. So this is a perfect opportunity to identify patients and then, frankly, keep them out of urgent care settings.

Okay. It seems like you would be able to challenge that and due to that right now, considering this environment. And how do you adapt to try and define new patients right after you've launched the drug? I mean, granted, it makes a lot of sense why since they would want to avoid the hospital or urgent care, but finding these patients under these challenging circumstances, how are you doing that?

Yes. So I'll remind you, let's go back to the ONPATTRO launch. When we launched ONPATTRO, we highlighted that patients were coming in, in 3 buckets: expanded access program, patients known to site and de novo patient finding. Now in the case of GIVLAARI, since approval in the United States came 3 months early, we really didn't have an EAP up and running. So the patients coming in are kind of patients known to site and then de novo patients. And many, many patients are aware of the approval. They're advocating for themselves. This is not a disease that requires them to go to one of the few porphyria centers for a full workup because they've already been diagnosed with the disease. So it really is a matter of not them, I'm not simplifying this in these times, but it really is a matter of their local physician, who have already diagnosed them, switching them over to GIVLAARI rather than waiting for an attack or continuing them on hemin prophylaxis. So we're seeing that happen very well. Of course, none of these things can happen fast enough. But medicine goes on. Many of the hemoncs, the benign hematologists, many of the gastroenterologists have, in fact, converted to telemedicine, where they are seeing patients continue to move diagnoses along. So we're not seeing the practice of medicine halted in these times, impaired but not halted.

Okay. Should I go on to lumasiran? You just submitted an NDA, and then there was also a cross-license deal with Dicerna the day before. You want to talk about those 2 items?

Yes. So as you know, lumasiran is our investigational RNA therapeutic for the treatment of primary hyperoxaluria 1 or PH1. We announced positive top line results from our pivotal ILLUMINATE-A Phase III study last December. And last week, we completed the rolling submission of our NDA and submission of our MAA. So really huge kudos to the team in these times for keeping and, in some cases, accelerating our time lines. Lumasiran has been granted Breakthrough Designation in the U.S. and PRIME designation in Europe as well as accelerated assessment in the EU, and we expect approval by the end of the year. We're also running ILLUMINATE-B in the pediatric PH1 setting, patients less than 6 years old. We completed enrollment earlier this year and expect top line results by the end of the year. And ILLUMINATE-C is a Phase III study in PH1 patients of all ages with more severe renal impairment. So enrollment in the study is ongoing and we expect top line results from this study in 2021. Much of our prelaunch prep is focused on patient identification and disease education. It's very important to note that the capabilities we've built to launch ONPATTRO and GIVLAARI are being fully utilized for the luma launch. This includes Alnylam assist, patient services and all the other support that we've had for our other drugs. Now you asked about the recent deal, so let me kind of pivot to that. As it pertains to PH1, this is simply a cross license of intellectual property from our respective programs in primary hyperoxaluria for both of our drugs, luma and their Nedosiran. The license clears an unambiguous path for lumasiran, and it removes any potential IP dispute affecting luma or potential delay in getting this medicine to patients as quickly as possible. We'll owe Dicerna royalties on lumasiran sales, single-digit royalties, and the lost royalties on sales of Nedosiran. Since we'll be the first to market by a good year or 2, this deal made a lot of sense for us. Dicerna will pay Alnylam low single-digit royalties on global net sales, and we'll also pay them higher single-digit royalties on global net sales, but it should not impair our commercialization in the lease. In fact, this does avoid potential litigation that may have occurred as we launched lumasiran. Now the other piece of the deal is development and commercialization agreement to advance our ALN-AAT02 program in alpha-1 trypsin liver disease. They'll assume responsibility for both ALN-AAT02 and their drug DCR-A1AT at their expense. We retain a no-cost opt in right at the end of Phase III to commercialize the program outside the United States, which is really pretty spectacular that we're now a company that's negotiating deals with ex U.S. commercial capability, a real testament to what we've been able to build and the quality of what we've got globally. If we chose not to opt in, we'll be eligible to receive milestones and royalty payments. So this partnership allows us to focus our investments in our commercial and late-stage assets as well as earlier efforts, like our CNS programs with Regeneron and programs, like ALN-AGT for hypertension. So both parts of these deals made a lot of sense to us and we're very happy with.

Do you want to comment on maybe some of the background behind the Dicerna deal or is that something that's still confidential? To what extent do you -- can you comment on that? The history behind it and that sort of thing.

Well, I mean, obviously, the Dicerna team is a team well-known to us. We had, as you remember, we had an earlier dispute, which we were able to settle out of court. And as you've seen in the landscape in general, so I'm not talking about Dicerna, specifically, you've seen when multiple companies have patents for a target or for a program, we see all this with the PCSK9 monoclonal antibodies, there's often disputes. Those disputes involve lawyers and money and courts. And rather than go through all that and be distracted while we try to launch a life-saving drug, we and they decided to get together and create a deal that, frankly, makes sense for both companies. And we're really happy with the team there and how we've kind of settled this part of the deal.

Okay. A couple of important license programs, inclisiran and fitusiran. We talked about inclisiran a little bit before because of the royalty sale or a partial royalty sale. But do you want to give us an update on where things stand with those 2? Inclisiran, obviously, under review and the other one still in Phase III. But from your perspective, the status on those 2 and expectations?

Yes. I mean we talked about the Blackstone deal at the front end of the call, Alan, you asked about that. But again, thrilled to do a deal worth $2 billion. We're -- we understand that Novartis continues to move forward. Obviously, barring any unexpected delays due to the COVID situation, we expect an approval by the end of the year. I think the PDUFA date is late December. From what we're hearing and seeing, we're excited about Novartis's innovative thinking on commercializing inclisiran. And if you step back, when you have a drug that is efficacious, very safe and infrequent, and that infrequency, efficacy, safety leads to better overall adherence. This is a kind of medicine that is an opportunity to lower catastrophic risk at a population level. And the kind of deal they did in the U.K., it really speaks to that. If we can treat high-risk patients and lower catastrophic risk, payers want to pay for a drug like this. It doesn't make sense to treat someone for $100 a year and then if they end up with a stroke or heart attack anyway because they're not as adherent or they have other genetic issues. So we're really excited about inclisiran and the promise it holds as a game changer in hypercholesterolemia management. And I believe, as you've seen, the team of Novartis shares that view. Now fitusiran, we spoke about that a bit already. I'm really excited as I think Sanofi is with fitusiran. It's really a drug that's being studied for the treatment of hemophilia A or B, with or without inhibitors. I'm sure that the team there is also thinking about other rare bleeding disorders because unlike other rare bleeding disorders, where a different factor would have to be created, any bleeding disorder where thrombin generation is required, fitusiran has an opportunity for. So it potentially can go even broader than hemophilia A or B with or without inhibitors. And given the once-monthly subcutaneous dose, that has a potential to dramatically reduce annual bleeding rate across all forms of hemophilia, it really is an attractive option for patients. The ATLAS Phase III studies are moving forward, and we expect Sanofi to report top line results at the beginning of 2021. We know that Sanofi is incredibly excited by the product's prospects, and it's clearly been a part of the company's strategy and their pivot in the hemophilia market.

Can you remind us of what's the revenue opportunity for Alnylam on this one? Obviously, it's worked out or working out well with inclisiran, just with the royalty sale, but what can you expect with -- from Sanofi around fitusiran?

Yes. So we've got escalating royalties up to 30% for fitusiran. So it presents a very significant future revenue stream in terms of royalties. It also presents something that could be monetized or partially monetized in terms of royalties. So it's another tool in our tool build as we continue to move to the self-sustainable profile.

Okay. So we have a couple of minutes left. Two things to address before we let you go. What interests you in the earlier stage pipeline? It's a question I have to get from investors about Alnylam. What's next? And then also, anything we didn't cover with respect to financials and key upcoming events from your perspective.

Yes. So we're really excited about ALN-AGT, an RNAi therapeutic targeting angiotensinogen in development for the treatment of hypertension. As you know, there's been virtually no innovation in hypertension over the last couple of decades. Hypertension is the #1 modifiable risk factor for cardiovascular disease. And even with standard of care of [ ASMR ], as many patients don't achieve blood pressure control. And we talked about it in the case of inclisiran, should the data play out, an efficacious, safe, infrequent dose, again, this is another drug that could change catastrophic risk at a population level. We're in Phase I, and we plan to report initial data on blood pressure lowering later this year. So, I guess, since we're close to time, as I mentioned, we're really excited by the financing deal with Blackstone, the balance sheet that's emerging and the profile of the company moving forward. We said this at JPMorgan kick off at the beginning of the year, but we feel stronger now, more than ever, that over the next several years, we can emerge at the top 5 biopharmaceutical company and really become a global leader with an organic pipeline of novel RNAi therapeutics.

Great. Well, thank you, Barry.

Thanks, Alan.

Thanks so much for your time. Great overview. And wish you the best and stay safe during these interesting times.

You too. I hope everyone is healthy and safe. Be well, everybody. Thanks, Alan.

Thanks, Barry.