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

Good morning, everyone. Thanks for joining us at the Bank of America Health Care Conference. I'm Tazeen Ahmad, one of the senior biotech analysts here at the firm. It is my pleasure this morning to introduce our next presenting company, Alnylam. Speaking for Alnylam this morning is Chief Executive Officer, John Maraganore. John, good morning.

Good morning, Tazeen. And good morning, everybody, on the call.

So we're going to be spending the next 30 minutes talking about all the exciting things happening at Alnylam. But maybe as a starter for anyone on the phone who may not be as familiar with your company, can you just give us a quick overview of the platform of Alnylam, some of your recent accomplishments? And we can go into some details of upcoming catalysts, if that works, John.

Yes. Absolutely. Well, I mean just a quick elevator speech. Alnylam is the leading RNAi therapeutics company who have pioneered the advancement of RNAi therapeutics as a whole new class of medicine. We are a -- today, we are a global, multiproduct, commercial company with 2 products on the market, 2 products in registration, 2 additional products that are in late Phase III that we expect will be on the market in the next 12 to 24 months. So we will soon be a 6-product company, programs and ongoing clinical development and then an organic product here with all of you today.

So maybe as like the first question to just get it out of the way. How are you thinking about the current COVID environment? You've obviously been talking on your earnings call about your thoughts about clinical trials and time lines. But what broad changes have you made for the company so far? And what do you think might be some things that become permanent even as we try to, over time, return to some level of normalcy?

Well, we talked at our last -- in our quarterly call a couple of weeks ago about our overall planning framework for the pandemic and we believe that we are currently in and during Q2 we will largely be in the so-called pandemic phase. And in Q3, we expect to be in a recovery phase. And then Q4, we expect to approach the new normal phase. And we're doing a lot as a company to navigate through this time. We've been remarkably productive even in a work -- largely work-from-home mode, although we still have 300 employees roughly that are in our labs and in our manufacturing facilities that are safely continuing their efforts to bring medicines to patients. But the rest of the employee workforce, including our field teams, are in a work-from-home mode. Many of our interactions with HCPs as part of our commercial efforts are virtual at this point in time. There are some exceptions, like Japan, where some physical interactions do occur still with HCPs. But the rest of the world right now is -- for the most part, is in a virtual mode. That's just now beginning to open up. We're seeing some opening up of that in the U.S. in some states, and we're seeing some opening up of that in countries in Europe like Germany. And so that's going to be evolving toward the recovery phase in some parts of the world sooner than Q3 itself, which we think is obviously good. There'll be careful approaches that are taken, including mask-wearing and monitoring. We're looking actively at testing and how we can bring testing forward as a company, including for our field teams that are out there. So we're doing a lot to make sure that we can be as effective as possible during this period of time, but so far, so good. Keep in mind our medicines, our life-saving medicines and we're treating diseases that are life-threatening diseases. And so we are in a mode and physicians and patients are in a mode where we have an important reason to make sure that their access to our medicines is preserved even during this difficult period. There's impact on clinical trial enrollment that we're navigating through, Tazeen, which we're doing as well as possible, but we're obviously going to have some delays on clinical trials during the pandemic phase. We think that will recover during the recovery phase. And then on the supply chain side, we're actually in a very good position. There's no real impact. So as a business, we're navigating through it. It's not what we'd like to have, but we are navigating through it. There will certainly be some things that stay on the other side of the pandemic. I think there are some benefits of the virtual aspects of our field efforts with HCPs. And I think there are elements of that, that will be preserved even as the pandemic clears over time. And we're also learning, as people, how to do better remotely in terms of being effective in the workplace and/or at work -- not in the workplace but at work. And that's -- there are elements of that, that will likely be preserved for a good chunk of our workforce even on the other side of the pandemic.

Okay. You recently announced a deal with Blackstone, John, and I'm wondering if you could just recap that. Obviously, the purpose of that can be interpreted to mean that you won't have to tap the equity markets. Do you have more freedom potentially to invest in your pipeline? But a question we get is how confident are you that this particular transaction will fully bridge your path to profitability?

Yes. Well, just as a reminder for everybody, about a month ago now, we announced a strategic financing collaboration with Blackstone, which I think people know is one of the leading private equity firms in the world. And the total financing is $2 billion. It's one of the largest -- actually the largest ever financing for a company that's pre-profitable. And so it is a very large transaction and included $1 billion for a 50% monetization of our inclisiran royalties, which, obviously, is a very attractive part of the deal. And then it included $750 million in debt, $150 million of structured financing for 2 of our products in the clinic, and then there was a small -- $100 million equity investment made by Blackstone as part of their confidence in Alnylam's future. We're very confident that this financing, together with our current balance sheet of roughly $1.4 billion, enables the company to get the profitability without ever needing to go to the equity markets. And obviously, this includes a stable cushion of over $1 billion of cash in our balance sheet during that period of time. So when you think about our revenue growth from ONPATTRO and GIVLAARI, you think about 2 more products that we're bringing to market later this year with lumasiran and inclisiran and you think about the 2 additional products that should come to market in late '21 and into '22 from fitusiran for hemophilia and vutrisiran, we're going to have 6 sources of product revenues over the next -- within the next 18 to 24 months as a company, adding to the 2 that we currently have. And on top of that revenue growth as a business, we're also moderating our spend on expenses so that we can add to that operating, self-sustainable profile that we're aiming to achieve. So we're very confident about how Blackstone bridges that gap to self-sustainability, which is why we're so excited about the deal that we did.

Okay. And I just wanted to clarify. You did touch upon it just now. But by doing this deal, that doesn't change the plans that you had stated last year about being aware of expenses and making an effort to moderate them while still moving your R&D pipeline forward.

Yes. Absolutely. This -- having more money doesn't mean we have more spend. And in fact, we've actually -- at our Q1 call, we actually guided that we will reduce our 2020 spend, and that is consistent with just the fact that we reduced our guidance for ONPATTRO by 5%. We felt it was appropriate that we also reduce our operating spend, and our operating guidance was reduced. So you have a very disciplined organization here that is thinking about long-term value creation for shareholders and achieving a sustainable profile with growth on revenues and moderated growth in expenses consistent with what's needed but not above and beyond that.

Okay. Great. So let's move on to some of the other news at hand. Can you tell us about the status of your partnership for the COVID development program with Vir? There's been a lot of companies in recent weeks which, for obvious reasons, for undermet need, are jumping in to try to see if they can help fight the pandemic. I think investors are trying to figure out what the differences are among all of the different proposed programs that are out there. And to the extent, John, that you have some clarity about data and preclinical validation even, can you talk about what makes this program with Vir that you signed on to differentiate it? And can you tell us what the potential time lines for catalysts could be?

Yes. Well, we're very excited about ALN-COV or VIR-2703, which is the development candidate that we selected, and we announced that, I think, last week as well. It is an incredibly potent molecule. It is a direct antiviral. It targets the viral genome directly. It is cross-reactive with 99.9% of over 4,000 SARS-CoV-2 genomes that have been sequenced. It even is cross-reactive with the original 2003 SARS coronavirus. So it is an incredibly potent molecule targeting a highly conserved sequence of the virus, the potency IC50 toward SARS-CoV-2 infection assays in VERO cells of less than 100 picomolar, so a very potent molecule. And we see an over 3 log reduction of viral particles in cell-based assays. So that -- those data, combined with the work that we've done which have yet to be published but will be published soon, showing robust knockdown of target genes in the lung with our chemically conjugated sRNA molecules, gives us a lot of encouragement that this approach can be a very potent part of the industry effort to fight COVID-19. And our goal is to have this in clinical studies by the end of the year, and we're just now meeting with regulators and talking to them about our plans and our path forward. But we believe that obviously, this can be part of how the industry responds to the virus with a highly differentiated, very, very potent -- I don't think there's a more potent molecule out there actually than this one, and of course, science-based approach. This is not a retread of a different molecule. This is a direct-acting antiviral. So we hope this can be part of the effort to fight COVID-19. We're working as fast as we can, Tazeen. And we think that obviously, having another approach to complement the small molecules, like remdesivir, and to complement the antibodies like Regeneron and Vir's efforts, this is going to be important to have other strategies that might be effective toward this virus.

Okay. This might be jumping ahead a bit, but assuming that you do have positive data, have you thought about what kind of challenges there may be with manufacturing and getting enough supply?

Yes. I mean, look, that's going to be the challenge for the whole industry on every aspect of therapies that are developed here. But we do have an ability and have scaled up manufacturing of small interfering RNAs. We've done that with our existing marketed products. We're doing that and Novartis is doing that now, but we've been assisting them over time with inclisiran, which is going to be addressing millions of people around the world. And as a therapy, we don't need to go to billions of doses, which are -- is what you need for vaccines. So we obviously can deal with a different part of the production requirements as a treatment course, but we obviously will have to think about millions of doses of the drug. We do expect that the drug can be given as a single nebulized administration, and we can count on that based on the durability of target knockdown that we've seen. And we do believe that obviously will make the production requirements less extreme by virtue of just a single -- effectively a single nebulized dose of the drug. And so that will be part of the ability to serve patients out there with this treatment.

Okay. Now this partnership is your first lung targeted for humans. I'm just wondering what kind of additional indications might make sense to pursue next. And can you give us any kind of time line on that?

Well, it's interesting, Tazeen. It's actually maybe even before you were born, I guess, in 2005. Just joking. We had a...

I wish.

Yes. Me, too. We had a program targeting RSV. So that was our first clinical program ever. So we progressed that program. It used a very early manifestation of our technology with unmodified sRNA. We did show antiviral activity, but we ultimately missed on a Phase IIb end point, p equal to 0.052, and decided not to progress that program because we had other more valuable things to do like TTR and so forth. So we have experience and have experience with sRNA delivery to the lung already, and so that is the foundation in some ways of what we're doing here, although the technology or platform has been vastly improved since then. But to your point, one of the good aspects of what we're doing here with Vir is we're now advancing far faster than we ever thought we would before our lung platform and our lung delivery approaches. And then you can begin to think about other disease targets that would be acceptable for that type of approach. And there are some -- to us, some very attractive target indications, including things like IPF where there's a lot of unmet need. There are some approaches in cystic fibrosis that could make sense as well. Then there are, of course, more chronic and prevalent diseases like asthma and COPD to consider as well. We haven't yet decided which ones we'll go after first. But obviously, this now complements our broader pipeline capability beyond the liver and beyond CNS and ocular to now include opportunities for the lung, and there are important opportunities to consider.

Okay. Great. So we look forward to data from that program. So let's switch gears and go to ATTR. So we've seen cardiac data now out of the APOLLO program, but what have you seen with ONPATTRO on market so far that gives you confidence that it's going to be successful in treating cardiomyopathy?

Yes. Well, let me just start by reminding everybody that ONPATTRO is indicated for the treatment of the polyneuropathy of hereditary ATTR amyloidosis. It's not approved for the treatment of cardiomyopathy, but we do believe it has potential in cardiomyopathy. And that's based out of exploratory end point data that our hypothesis is generating from the original APOLLO study which were published in circulation a couple of years back or about 18 months back now. And those data are indeed quite encouraging. They showed that patisiran in patients -- prespecified subpopulation of patients with cardiac manifestations of disease, it showed that patisiran compared to placebo achieved statistically significant benefits on a number of cardiac end point measures, including echocardiographic measures, NT-proBNP, as well as functional measures like 10-meter walk time. So those data really gave us encouragement around the potential for ONPATTRO in cardiomyopathy, and they are the foundation of our APOLLO-B study, which is the study, randomized, controlled study which is aimed at a label expansion for ONPATTRO if positive for both hereditary cardiomyopathy as well as wild-type ATTR cardiomyopathy. Now other lines of evidence that give us encouragement come from work that's been done out of the National Amyloidosis Centre in the U.K. but also from some other clinical sites, including the Dutch site as well, where using scintigraphy, they've been able to demonstrate significant evidence for cardiac amyloid regression with ONPATTRO treatment in patients with cardiomyopathy in addition to their polyneuropathy. These are patients being treated for polyneuropathy, but they have cardiac amyloid as well. And using scintigraphy, these investigators have been able to show evidence for cardiac amyloid regression, which has not been achieved with any other agent out there before, including TTR stabilizers. So these type of data really give us encouragement, combined with the exploratory end point data from APOLLO, that with APOLLO-B that's ongoing, if that's positive, we will have a significant opportunity for ONPATTRO in patients with cardiomyopathy.

Okay. Great. So maybe on GIVLAARI, can you give us an update on what you're seeing in this early stage of launch? And what should we expect to see in terms of growth throughout the rest of the year?

Yes. Well, we're really pleased with our first full quarter of the GIVLAARI launch, $5.3 million in product revenues that beat our internal estimates and Wall Street estimates by quite a bit. And I think it really just reflects the transformational nature of the product. It is a medicine, the first ever, for the treatment of acute hepatic porphyria that in the ENVISION Phase III trial showed impressive efficacy and certainly a good safety profile in this high unmet need disease. And we're just very encouraged by the impact that this drug has been having on patients with acute hepatic porphyria. We saw -- in Q4 last year when we got approved well ahead of schedule, we saw a lot of early demand for the product. That continued to materialize in Q1 with over 50 patients on commercial GIVLAARI. We expect that to continue in Q2 and beyond. We're now launched in Germany, and we're also now doing named patient sales, including just starting a cohort ATU in France for GIVLAARI. So obviously, Q2 will be benefited by not only continued growth in the U.S. market but the expansion of the launch into Europe as well. And we also expect to see Brazil approve the product in the not-too-distant future as well. So what you'll see with GIVLAARI is going to be the type of commercial execution that we've shown with ONPATTRO. Our teams are obviously very well staffed and well able to deliver commercial results and commercial performance. And we think GIVLAARI can be an opportunity that, at peak, achieves over $500 million in peak sales based on the impact it can have on patients. It is going to be a slow and steady, continued-type growth pattern like we see with ONPATTRO and like you would expect for many underdiagnosed orphan diseases. A key part of the GIVLAARI story is improving disease awareness with medical education and improved patient diagnosis. We also have a free genetic testing program for patients with acute hepatic porphyria that we're funding. So all of these efforts will be an important part of the GIVLAARI story going forward.

Okay. I guess maybe a quick question about any differences to expect in the recovery from COVID for the cadence of launches in Europe versus the U.S., both for GIVLAARI and ONPATTRO.

Yes. Okay. So let's start with ONPATTRO. So ONPATTRO in the U.S. is in a relatively mature market where growth is driven by new patient finding, okay? And obviously, one of the reasons we've reduced our ONPATTRO revenue guidance for the year is we do expect in Q2 during the pandemic phase that new patient finding efforts will continue but will not be as robust as they were in Q1 and as we expect them to recover in Q3 and beyond. Now with the case of GIVLAARI in the U.S., it's a little bit different. This is a drug where it's administered to a younger population. It's a once-monthly subcu injection, and the drug has been shown to reduce the need for urgent hospital care or hospitalization in patients with acute hepatic porphyria. So there really is, in this time, an important benefit of GIVLAARI to keep patients out of the health care system, which, of course, is something you want to do. And given that it's a subcu injection, the treatment burden is less than an intravenous infusion, which is the case with ONPATTRO. So that's the U.S. In Europe and Japan, if we can talk about those 2 regions next. In Europe, with ONPATTRO, we have the benefit of new markets opening up. So we have continued geographic expansion. We're launched -- we've just started launching in Italy. We're now launching in Spain. We're -- so we're launching in Turkey and Israel. So these are efforts that are helping geographic expansion and growth of ONPATTRO in Europe. And it's a similar story in Japan. We're seeing a really strong launch in Japan, and that's continuing strongly in Q1. It showed continued strength in Q1, and we expect that to continue strongly in Q2. With GIVLAARI, we're just starting in Europe. So we have the benefit of whole new markets in Europe now just opening up for GIVLAARI. So it's different in each region, depending on where we are in the launch, where we are in the life cycle, and that's why you're seeing some differences. But we're excited overall to be globally commercializing these 2 important medicines. Tazeen, did I lose you?

Sorry about that. I put myself on mute while I was typing. Any other color you can provide on ONPATTRO on regions?

Yes. I thought I did. In the U.S., again, we're very much a new patient finding part of the growth curve. In Europe, we're very much in geographic expansion because of new markets opening up for P&R. And in Japan, we continue to see a lot of strength in Japan, a lot of tafamidis switching going on in Japan because of the fact that these are patients that are progressing on their TTR stabilizer. So that's some of the dynamic we see in these different markets. The other thing I'll say about ONPATTRO in the U.S., which is really interesting, is that we are seeing continued combination use of ONPATTRO with TTR stabilizers. And we now expect anywhere from 15% to 30% of patients in the U.S. are receiving combination therapy. Of course, ONPATTRO is being administered for the polyneuropathy that's happening, but reimbursement is occurring for both products, which is good. And we do expect that to increase significantly in the U.S. market, and that will be helpful for ONPATTRO and its growth over time.

Perfect. Maybe let's move on to lumasiran. Can you just give us a quick update on the time line there on what we can expect out of the upcoming top line results for the ILLUMINATE-B study and how we should think about that data for the overall opportunity for that program?

Yes. I mean, look, we're really excited about lumasiran. It is our third RNAi therapeutic that Alnylam will take to market directly ourselves, obviously the fourth along with inclisiran. We completed our NDA submission and our MAA submission within 4 months of our top line data, first time we've done that as a virtual organization. So that was quite exciting to see, and it's great to see our employees have that type of dedication and execution. Any day now, we should receive further information from the FDA as it relates to our PDUFA date and priority review. But we're optimistic that lumasiran will get to market by the end of the year pending the favorable review by regulators. Now look, we're going to be presenting our top line data in the next few weeks at the ERA-EDTA meeting in June. What's clear is that as little as a 30% lowering of urinary oxalate in patients with primary hyperoxaluria type 1 is a clinically meaningful impact, and we're hopeful that the type of impact we can show with our full data will reinforce that. Lumasiran, of course, achieved its primary end point, which is the reduction of urinary oxalate relative to placebo. And it also achieved all of its secondary end points, which includes the normalization or the near normalization of urinary oxalate in patients with PH1, which, of course, really is an important secondary end point. In addition to ILLUMINATE-A, we also have completed enrollment in ILLUMINATE-B and we expect top line results. ILLUMINATE-B is our pediatric study, and we expect top line results in mid-2020, just in a few weeks actually, which is exciting. And that will allow us to open up the label opportunity for lumasiran to include the pediatric patient population all the way down to infants. So that's what's coming. And again, we do expect approval for lumasiran by the end of the year pending favorable regulatory review.

Okay. And what kind of market opportunity do you think this is ultimately?

Yes. Well, primary hyperoxaluria type 1 is a devastating disease, ultra-rare orphan disease characterized by excessive oxalate production leading to recurrent kidney stones and end-stage renal disease. So like GIVLAARI, it addresses an ultra-rare orphan population of just a few thousand patients in the U.S. and Europe. And obviously, the type of impact we've been able to achieve will reflect the value that's being delivered to that patient population who, other than a treatment like lumasiran, have to rely ultimately in a dual liver-kidney transplant for the treatment of their disease, so a pretty dire treatment option for these patients. So we do think that this can be a meaningful ultra-rare orphan product for Alnylam. We believe that we can achieve over $500 million in annualized peak sales for the product globally, and we're obviously going to be advancing this product globally although I should say the prevalence of this disease is less -- is lower in Asian population. So it's going to be predominantly a product in North America, Latin America and Europe for Alnylam.

Okay. We could probably talk for another half hour on the rest of your pipeline, but unfortunately, we are out of time today. So with that, John, I'll thank you for taking time to speak with us today, really appreciate it. There's obviously many exciting things going on in Alnylam. We're looking forward to seeing all those catalysts play out, and we look forward to speaking with you on those in the near term.

Great. Thanks, Tazeen. And thanks, everybody, for listening. Please stay safe.

You, too. Take care.

Bye-bye.