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

Hello, everyone, and thank you for joining the H.C. Wainwright 2021 Global Life Sciences Conference. My name is Patrick Trucchio, and I'm a biotech analyst at H.C. Wainwright. While we're virtual this year, we're confident we're going to be able to provide value to you with more than 425 companies presenting at this conference as well as in interactions through one-on-one meetings. H.W. Wainwright is a full-service investment bank dedicated to providing corporate finance, strategic advisory and related services to public and private companies across multiple sectors and regions. We have a total of 18 publishing senior analysts and 493 companies covered across all sectors. Please visit hcwco.com for more details. From a logistics standpoint, please make sure to reference your virtual conference online portal that provides you individual links to your meetings and all presentations. Panels and all presentations are live and on-demand online from March 9 to March 10. With that said, have a productive and enjoyable day, and it's my pleasure to introduce our next presenter. I'd like to introduce Jeff Poulton, the CFO of Alnylam Pharmaceuticals, the global commercial stage biopharmaceutical company developing novel therapeutics based on RNA interference or RNAi, whose efforts to date have yielded the approval of 4 first-in-class RNAi-based medicine, including ONPATTRO, GIVLAARI, OXLUMO and Leqvio. And with that, I'd like to turn over the presentation to Jeff.

Thanks a lot, Patrick. That's a great introduction, and it's nice to be here with you today. Before I dive in, let me briefly reflect on the past year. In spite of obvious challenges in 2020, it proved to be one of Alnylam's strongest years ever. We embraced our challenge accepted spirit, really taking it to heart, while remaining steadfast in our commitment to the patient communities we serve. We began 2020 with 2 products, 6 approvals and access in 14 countries. And ultimately, we ended the year with 4 products, 15 approvals, access in 41 countries and top line product revenue growth of over 100% compared to 2019. In 2021, Alnylam is poised to begin its transition toward becoming a leading biopharma company and a top 5 biotech company in market cap within the next 5 years. As a reminder, I'll be making forward-looking statements during my presentation today. From a high level, the key components of Alnylam's business are: First, transformational medicines, helping patients around the world with rare and prevalent diseases; second, a robust and high-yielding R&D pipeline, a first and/or best-in-class product candidates; and third, an organic product engine capable of delivering sustainable innovation. Now over the last 2 years alone, Alnylam's home-grown innovation has delivered 4 globally marketed products. This is a feat we're really proud of and one which we believe reflects the strength of our RNAi platform. Specifically, ONPATTRO, GIVLAARI, OXLUMO and Leqvio, formerly known as inclisiran, have all been launched in the last 2-plus years. These are all transformative medicines for patients with rare and prevalent diseases that are or are expected to be market-leading products in the years ahead. We're very pleased with 2020 performance for ONPATTRO, the first RNAi therapeutic ever approved in our breakthrough medicine for treating the polyneuropathy of hATTR amyloidosis. As we announced on our Q4 call just a few weeks ago, we achieved $306 million in full year ONPATTRO revenue with about 1,350 patients on commercial drug as of the end of the year 2020. This came in at the upper end of our full year 2020 ONPATTRO guidance, which had been $295 million to $310 million and represents more than 80% full year growth over 2019. Our Q4 results of about $90 million represent double-digit growth compared to Q3 and include double-digit growth in the U.S., driven by new patient demand. We expect strong growth in 2021, driven by many important market dynamics, including: Concomitant use with TTR stabilizers, primarily in the U.S.; patient switches from stabilizer drugs outside the U.S.; along with continued new patient finding and improved disease awareness on a global basis. We're just at the beginning of our growth opportunity for ONPATTRO and our broader ATTR franchise, including vutrisiran. Today, as seen on the left, we have 1 drug, ONPATTRO, in its initial indication in a market primed for expansion with increasing disease awareness and patient diagnosis. We plan to move to a new stage, depicted in the middle, in 2022, with our second drug, vutrisiran. Earlier this year, we reported positive top line results from our HELIOS-A Phase III study of vutrisiran in patients with hereditary ATTR amyloidosis with polyneuropathy and are on track to file our NDA for vutrisiran in the early part of this year. With a quarterly event potential biannual subcu dosing regimen, vutrisiran can significantly grow our opportunity beyond ONPATTRO, especially in mixed phenotype patients while providing clear-cut category leadership. Within the same 2-year time frame, we expect to expand ONPATTRO into the cardiomyopathy setting, including wild-type disease via APOLLO-B. If APOLLO-B successful, this could potentially create the first multibillion-dollar anchor product for Alnylam. Subsequently, as depicted on the right, we envision additional growth through potential outcomes data for vutrisiran and wild-type ATTR and disease prevention via HELIOS-B and HELIOS-C, respectively. The main takeaway here is that with our leadership, our innovation and our commitment to help patients, we have, what I believe to be, a compelling plan to enable impact for patients, generate significant growth and value creation for shareholders. We were also pleased with the 2020 performance for GIVLAARI, our innovative medicine for treating acute hepatic porphyria. For 2020, we reported full year results with about 200 patients on commercial drug and about $55 million in revenues, an incredible start for this paradigm-shifting medicine in just its first full year of launch. In 2021, we expect steady and continued growth for GIVLAARI, driven by significant geographic expansion and new patient finding efforts. Late last year, we launched the third RNAi therapeutic to market with the approval of OXLUMO in the EU following -- followed by the U.S. OXLUMO carries the distinction of being the first ever treatment for primary hyperoxaluria type 1, another devastating rare disease. Further, OXLUMO is also the first RNAi therapeutic approved in a pediatric indication. 2021 will be the first full year of launch for this transformational medicine, and we're pleased to see strong early demand thus far. In addition to ONPATTRO, GIVLAARI and OXLUMO, our partners at Novartis received EU approval for Leqvio in hypercholesterolemia or mixed dyslipidemia late last year. Leqvio is the first RNAi therapeutic approved for a patient indication -- prevalent indication and promises to be a blockbuster product for Novartis. Beyond our 4 currently marketed products, we expect 2 additional product launches over the next 12 to 24 months, significantly increasing the number of revenue-generating Alnylam assets. We believe this profile of organic generation of commercial medicines is extremely rare in biotech, and we expect to be positioned to expand on this profile in the years to come. Let me now turn to our clinical pipeline. Reflecting the strength of our organic product engine, one can see that our pipeline is broad and robust, reaching many therapeutic areas. You can also see on this slide the substantial product ownership that Alnylam has retained for its pipeline, where we have global or 50-50 rights for most of our programs. As I mentioned, the key component of our business is our high-yielding pipeline and platform. Digging deeper on this, I can say our platform has delivered outsized success rates compared with industry norms. Further, we believe the success rate of our organic product engine underscores the reproducible and modular features of our platform as well as the power of genetically validated programs. Indeed, our track record is now over 60% from IND to positive Phase III compared with industry metrics of about 10%. This is clearly a unique, sustainable difference that makes Alnylam standout. As I described earlier, the next steps in our ATTR amyloidosis franchise program relate to our cardiomyopathy studies, APOLLO-B and HELIOS-B. If positive, these studies will extend our commercialization efforts into a much larger patient population with at least 300,000 wild-type ATTR amyloidosis patients worldwide. We expect to complete enrollment in APOLLO-B with vutrisiran early this year with top line data in mid-2022. In the case of HELIOS-B with vutrisiran, the study has been enrolling well and will continue to enroll throughout 2021. From a broader perspective, an exciting part of the Alnylam story includes our efforts in expanding RNAi therapeutics beyond rare diseases into prevalence disease populations. With the positive Phase III ORION studies of inclisiran on hand, we believe that now is the time to address unmet needs in common disease populations with RNAi, including hypertension, NASH, gout, diabetes and other prevalent indications. Importantly, the pharmacologic properties of RNAi therapeutics provide the foundation for success. Durable effects enable infrequent dosing, providing an avenue to maximize adherence. Clamped pharmacology creates the potential for improved efficacy and outcomes, a safety profile supported by tens of thousands of patients in clinical trials and improved patient access achieved based on HCP administered therapies with lower patient co-pays. ALN-AGT, our program in hypertension, is a great example of how we can potentially transform the treatment of a prevalent disease with RNAi. Hypertension is the #1 modifiable risk factor for CV morbidity and mortality. Existing drugs fail to provide needed tight control of blood pressure, which is further impacted by a lack of patient adherence. With RNAi therapeutics, we can potentially transform the treatment of hypertension by providing tonic blood pressure control through clamped pharmacology. This durability could, in turn, provide patients with a highly adherent therapeutic option. Turning to preclinical activities. Alnylam's product engine will deliver 2 to 4 new INDs per year. In our P5x25 goals, we aim to achieve 4 or more INDs per year by the end of 2025. Currently, we're advancing over 25 preclinical programs and 4 tissues: Liver, CNS, eye and lung. These programs range from rare to common diseases and are advanced with the aim to be first-in-class and/or best-in-class medicines in the targeted disease indications. The majority of these programs are supported by human genetics. Looking to the CNS, we're very excited about the opportunity for RNAi therapeutics in this area of enormous unmet need. Our first CNS program, ALN-APP will enter Phase I this year. Let me close by turning to our goals and financials. We recently announced our 5-year vision and accompanying goals for Alnylam. This vision, named P5x25 marks our planned transition to a top 5 biotech by market cap in the next 5 years. The 5 Ps of this vision are patients, products, pipeline, performance and profitability. Accompanying goals and metrics are laid out at the bottom of this slide. To summarize, we aim to become one of the most successful biotech companies ever with transformative medicines in both rare and common diseases for patients around the world with additional growth through label expansion, a robust, high-yielding pipeline of first and/or best-in-class product candidates from our organic product engine, and lastly, impressive financial performance with over 40% revenue CAGR through year-end 2025, achieving sustainable profitability within this 5-year period. We have a number of specific 2021 goals for what is lined up to be a catalyst-rich year, including: Global commercial execution on 4 products, 3 driven by Alnylam and 1 by Novartis; a number of regulatory approvals in key markets; a new NDA in early '21 for what we expect to be our fifth marketed RNAi therapeutic, vutrisiran, based on our exciting HELIOS-A Phase III results; important data readouts during the year, such as a Phase III data from lumasiran in severe PH1; and our full 9-month Phase III data and then 18-month results for the vutrisiran HELIOS-A study; and lastly, 2 to 4 new IND filings, delivering on sustainable innovation. Turning to the financials. Alnylam is now on a clear path toward achieving a self-sustainable financial profile with strong revenue growth and disciplined investment in R&D and leveraged execution on SG&A. Indeed, for 2021, we have provided full year net product revenue guidance of $610 million to $660 million, representing 76% growth at the midpoint versus 2020. This includes all expected revenue from ONPATTRO, GIVLAARI and OXLUMO. With our current balance sheet of $1.9 billion in cash and cash equivalents and due to our 2020 $2 billion strategic financing with Blackstone, we're positioning to achieve profitability without the need to go to the equity markets in the future. As you can see, these are exciting times for Alnylam with a significant transformation expected over the next 5 years. We are advancing our medicines for rare and common diseases in over 4 strategic therapeutic areas to help patients around the world. Additionally, we'll leverage our organic product engine as a source of sustainable innovation over the years to come. And finally, with P5x25, we're on path to build a top 5 biotech by market cap in the next 5 years with a commitment to patients, innovation, responsibility and excellence. Thank you for your time and attention. I look forward to answering your questions.

I have a few follow-up questions. I guess, first, just starting with the P5x25 strategy. So I'm wondering what are the critical pieces that have to come into place to meet these expectations on product approvals of 6 or more marketed products in rare and prevalent diseases and the revenue guidance that calls for at least 40% CAGR through year-end 2025?

Yes. And just as a reminder, and I mentioned this in my prepared remarks that P5x25 represents our new 5-year strategy with the endgame being Alnylam transitioning to be in a top 5 biotech by market cap. And I would say 2 key success factors here to sort of enable this. One would be continued execution across our late-stage pipeline, which specifically right now means APOLLO-B and HELIOS-B, the 2 cardiomyopathy studies that we have ongoing with the fitusiran and vutrisiran, our sort of 5-year plan assumes success in these 2 studies and entering the cardiomyopathy part of the market, the TTR market, will significantly expand the opportunity for Alnylam and is key to sort of driving top line growth across the 5-year period and also in supporting the transition to becoming a profitable company. The second key element is just good commercial execution. I just commented on the fact that getting into the cardiomyopathy part of the market creates a significant opportunity for us commercially. So driving strong commercial operations and delivering top line growth as we expand into the broader part of the market is critical. And then again, we've got additional things that we're doing to drive top line growth, which include continued growth with GIVLAARI and OXLUMO, the 2 ultra-orphan drugs that we've got in the market, both of which are at the very early innings of that growth. GIVLAARI has been on the market for about a year now and OXLUMO is in its year of launch at this point. And then lastly, supporting our partners, Novartis with Leqvio and Sanofi with fitusiran, to also achieve success with the programs that they've got, which will deliver royalties, cash and earnings to the company. So those would be the things that I would say are the keys to P to the fifth.

Got it. Yes, that makes sense. And then you have this very long and very ambitious list of goals for 2021 and beyond. So I'm wondering, as we look at that, as investors look at that, if you could call out 2 or 3 or maybe there's a few more key events that we must, investors must know or be aware of in the next 6, 12 and 24 months and those events would tell us that the strategy is on track, what would those be?

Yes, let me focus maybe just on 12 and 24 months because there is a pretty long list here, which I think is a real positive for the company in terms of catalyst. So starting with 12 months, so this year, I think it starts with top line performance. We have given combined product sales guidance for this year, and that's for our 3 marketed products that are in our hands, so that's ONPATTRO, GIVLAARI and OXLUMO, of $610 million to $660 million, which represents, at the midpoint, 76% growth with actual 2020 performance and certainly is a clear signal that we're sort of on that path to the 40% CAGR across the next 5 years. It's one of the goals in the P5x25. Secondly, I would say, it's -- the data that we're going to share on HELIOS-A, the top line data, the 9-month top line data that we anticipate sharing at AAN in April and then the 18-month data that we'll share at the end of this year, we'll certainly have very good data in the hereditary polyneuropathy setting, which is really what this study was designed for. But we also have some cardiac data. We provided some of that in the top line data that we've already shared at 9 months on NT-proBNP. We'll have more data at 18 months on NT-proBNP as well as some additional cardiac data, the echo data that we'll have as well as PYP scan imaging data on these patients. I think that will be very important as well. That data perhaps will provide an early look to what we'll see hopefully later in APOLLO-B and HELIOS-B. As it relates to the cardiomyopathy studies in terms of what we expect to achieve this year, completion of enrollment in APOLLO-B, which we've said will happen early this year, which by our vernacular means either Q1 or Q2. So we're on track for that, and we'll provide an update to the market on what that's achieved, and then continued progress in enrolling on HELIOS-B. Beyond that, I would say 2 other things this year. One would be initiation of the 2 Phase II studies for ALN-AGT, which is our hypertension program. So we'll have both a mono and a combo study I think sort of kicking that off as a key milestone. And then lastly, when we enter the clinic with our first CNS program, to enter a new tissue this year, and that will be ALN-APP. So those are the next 12 months of things that I would say to watch out for. Looking beyond that or sort of 24 months out, I would say, commercially, again, when we launch fitusiran, based on the HELIOS-A study which will have the same label as ONPATTRO but will be a subcu administered version of the product, whereas ONPATTRO is an IV induced product, we think that absolutely will create growth opportunity for our franchise. And so I would keep an eye on that as we launch that drug in 2022. And then secondly, certainly, a key milestone that following year is going to be the APOLLO-B top line readout, which we expect to happen in mid '22. I've already talked about the importance of cardiomyopathy and enabling success with the P5x25 goals that we've put out. So that's a key readout. And then just continued progress with HELIOS-B. We haven't given any specific time lines yet on when we anticipate completing enrollment, but we're tracking progress there across the next 12 to 24 months will be key as well. So those would be the highlights, I would say, for catalysts over the next couple of years, Patrick.

Yes. That's really helpful. And then I'm also wondering, how do you balance achieving profitability as part of the target with pipeline expansion and decisions around clinical development, along with commercial launch execution?

Yes. It's a really good question. And just a reminder again, for what we said about profitability. We've said a couple of things, I would say, over the last 12 to 18 months. One is that getting to profitability is a priority for the company. And we said that 2019 represents our peak loss year, and we delivered on that in 2020. On a non-GAAP operating loss basis, our 2020 results were about $115 million better than 2019. And then further as part of our P5x25 goals that we've shared, we've now said that we're going to be profitable within that 5-year window. We haven't yet specified the year, but we're confident that it will occur within that 5-year window. And then there's 2 levers, I would say, that ultimately will dictate kind of how quickly we get to profitability, and that starts with top line growth. And we've talked about the results for 2020 and the guidance that we've given for 2021. Again, we doubled our -- more than doubled our revenues in 2020. And based on the guidance that we've given for '21 on product sales, we expect 76% growth at the midpoint of that guidance. So rapid growth on the top line certainly will continue to be key to getting us to profitability. But the second part of it is around operating expenses, sort of discipline in the way we invest in our operations. I think, first, with SG&A, I would expect fairly measured growth for the time being. We have built a lot of infrastructure over the last 3 years, initially to support ONPATTRO, but really with an eye towards supporting 3 products that were approved within fairly close succession. So now we want to leverage what we've built. So I think you'll see pretty measured growth there for the time being. From an R&D perspective, this is probably the biggest challenge, I would say, in terms of deciding how much to invest. We certainly want to get to profitability on a good pace. But we want to make sure that when we get there that we get there sustainably and we're in a position to continue to sort of drive top line growth and profitability going forward. So for R&D, we're going to continue to invest in R&D given the power of the platform. We also provided some goals in P5x25 about the number of clinical programs that we would like to have at the end of '25 and the number of INDs that we would like to be generating at the end of '25, which would be 4 INDs. So we're going to continue to invest, I think, appropriately in R&D, but we're also going to do it in a way that when we get to profitability during this next 5-year window that it's sustainable, that profitability and that growth are sustainable.

Got it. And I'm wondering, as we're looking at the COVID-19 pandemic and some of the effects of the pandemic, I'm wondering how has it affected the payer environment, if at all? And how -- what learnings have you taken from your commercial launch through this COVID-19 environment that you can then maybe take to the post-pandemic environment?

Yes. I think this is one of the areas that I think Alnylam has really shined as it's become a commercial company is how it's managed pricing and how we've gone to market with pricing, which includes these value-based agreements, which, I think, have really enabled, for the most part, very open access for our drugs, and that has continued throughout the pandemic. We really have not seen any headwinds that have resulted from the pandemic. We're still at greater than 98% access on ONPATTRO, we're at greater than 94% access on GIVLAARI. We've got now more than 30 VBA agreements that we've signed. So we feel really good about that. We've really not seen any change in payer mix, any appreciable change in payer mix during the pandemic, which I know some companies have seen. But just as a reminder, I think one of the things that's perhaps helped us during the pandemic is that on ONPATTRO, in particular, more than 2/3 of our patients are on Medicare, and we really have not seen any impact there for those patients. The one thing that we have seen change or shift during the pandemic, which I do think will be something that will be the lasting beyond the pandemic is around site of care. We've seen a increase in patient home infusion, in particular. We've more than doubled the number of patients that are on home care in the U.S. during the pandemic and same ex-U.S. And again, I think that's likely something that will continue and probably grow post pandemic, which I see as a positive for the company.

Got it. Well, that does bring us to the end of our time. So thank you, Jeff, for the interesting discussion, and we're looking forward to more good news on the commercial effort and on the extensive pipeline. I want to also thank our presenters for taking part on what's been a very productive and informative series of presentations. We appreciate the time and effort that went into preparing them. Hopefully, our next conference will be one that we can hold in person rather than virtually. But in the meantime, we're very grateful for your flexibility and the presence online this year. So thank you again from the H.C. Wainwright team.

Thank you.