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

It's my pleasure to introduce our next guest from Alnylam Pharmaceuticals, Chief Executive Officer, John Maraganore. The format of this session is a roughly 25-minute fireside chat. [Operator Instructions] With that, John, welcome. Thank you so much for joining us. And to start, could you just provide a couple of minutes of introductory comments about the state of business for Alnylam, summarizing your differentiated approach? And what's been achieved in 2021 year-to-date?

Yes. Thanks, Keay, and thanks for having us here. It's great to have this conversation with you. Well, as you know, Alnylam really has led the discovery of RNAi therapeutics as a whole new class of medicines. We pioneered this approach. We brought 4 products to the market now that are being sold in over 30 countries around the world. That includes ONPATTRO for the treatment of the polyneuropathy of hereditary ATTR amyloidosis in adults. It includes GIVLAARI for acute hepatic porphyria, OXLUMO for primary hyperoxaluria type 1. And then partnered with Novartis is Leqvio, which is approved in Europe and other countries around the world, still pending in the U.S. for the treatment of hypercholesterolemia or mixed dyslipidemia. And these are the marketed products that we brought forward. In addition, we've got a clinical pipeline of over a dozen programs in active development, including vutrisiran, which is in registration both in the U.S. and Europe. We also have programs in other rare diseases and also in prevalent diseases, including an exciting program in hypertension. And of course, the soul of Alnylam is the organic product engine that we have, delivering 1 to 2 new INDs per year. And this year, we're going to see our first CNS program filed. I'm sure we'll have a chance to talk about that. That's ALN-APP. And we'll have another prevalent disease program go into the clinic that's for gout, ALN-XDH. So we're really in an exciting stage of the company. This year, I think the highlight for sure was the positive HELIOS-A data for vutrisiran. We're going to have more HELIOS-A data, 18-month data, in the not-too-distant future here by the end of the year, 2 new INDs to cap off the year as well. And we've completed enrollment in both the APOLLO-B and the HELIOS-B studies this year. So really a remarkable year from an achievement standpoint overall.

So John, obviously, you got a very impressive pipeline that you just outlined. At our conference, we've got a lot of earlier-stage companies who are great companies who have some really big ambitions. And you guys have taken your Nobel-winning science and been able to commercialize it. You're a commercial company now. You've done so much and your investors are asking when you're going to be profitable. So all of the success, I think you didn't get there without having a strong company culture. So with this discussion, I want to start out there. And "culture eats strategy for breakfast" is the famous quote attributed to Peter Drucker. And given all that you've accomplished and all, like I said, a lot of these companies here, they want to be able to have the same success you have in getting from point A to point B. Describe the key characteristics of the culture you've established at Alnylam that have underpinned the success of the company that you've achieved to date.

Yes. Keay, thanks for the question. I don't get this question as often as I should to be perfectly honest with you. So thanks for thinking about it. Yes, Drucker said I think it was lunch. He said, "culture eats strategy for lunch." I actually think culture eats strategy for breakfast, lunch and dinner, to be perfectly honest with you. It's such a critical part of doing what a company has to do to especially when you're on the frontiers of medicine. It's one thing if you're executing on a relatively straightforward single asset type of company. But if you're a company that's really trying to conquer technology hurdles and advance a whole new class of medicines and be in the frontier of medicine, culture really is critical. And the elements of culture at Alnylam that have really been important link back to our core values. And these include innovation and discovery, obviously, an important area for a science-based organization. We do a lot to promote an innovative culture within the company. We, for example, we allow our scientists to spend as much as 20% of their time freely on innovative projects that they might have ideas about. And we continue to see opportunities that emerge from our scientific organization that we never would have expected to occur. I mean our CNS delivery is a great example of a skunk project that was done in the company with that 20% time that led ultimately to the development of a whole new part of our pipeline. So that's a key part of our company for sure. The second cultural element that is really important to what we do is our open culture and our sharing of ideas. We have a very -- even as a company with over 1,500 global employees, we have a very open culture where employees are transparent with each other. They share ideas very freely. We encourage people to always feel free to come forward with their thoughts or ideas or concerns, whatever the case might be. The third element here, Keay, is the passion for excellence. We have, as a company, we have extremely high standards. We really are driven by excellence in science and business and everything we do as a company. And that also really underscores the perseverance we have as a team to really get through the tough stuff to get to the other side. Fourth area is our commitment to people and patients. Obviously, patients remain our north star, and we're motivated by helping patients with the treatments that we can bring forward. And then finally, a sense of urgency, something which at Alnylam, we're really proud about. We realize that patients need the medicines that we can discover today, not sometime. And so we're really urgent about bringing things forward. And it's a high-paced environment, as it should be, for a company that really wants to do something very impactful and very difference -- very different in terms of new medicines and helping patients.

Great. So with that backdrop, with the approval of your first product, ONPATTRO in 2018, you did transition to a commercial organization. And you've made the significant investment to establish a sales and marketing infrastructure, which now supports 3 products globally. So further leveraging your sales and marketing will be a key driver in your goal to achieve profitability and beyond. So let me ask you a couple of questions about this. With an expanded cardiomyopathy label for ONPATTRO in 2023, how should investors think about the increased revenue opportunity relative to the additional amount of sales and marketing investment needed to capture this opportunity?

Yes, absolutely. Well, we're very excited about the potential for ONPATTRO, and then in the future, vutrisiran for ATTR patients with cardiomyopathy. Again as a reminder, today we're labeled for polyneuropathy of hATTR amyloidosis. But with the APOLLO-B study we're doing and the HELIOS-B study that we're doing, we hope that those studies are positive to open up the impact we can have for patients to a much larger part of the market, which includes the wild-type ATTR indication. Now the overall opportunity is quite significant when we -- if we're successful in doing this. It expands the opportunity from the roughly 20,000 to 30,000 patients with polyneuropathy today, to a patient size that exceeds 200,000, 300,000 worldwide based on the wild-type ATTR segment. Now I'm not going to go into any specifics around how we think about increasing our sales force but we will certainly need to increase more or add more field-based employees, customer-facing professionals to help us communicate the features of our products to a broader market audience who look after patients with wild-type ATTR. We certainly will have to do increases there with our field team. But we will be able to leverage existing global commercial capabilities and infrastructure that we've already established as a company to support 3 commercial brands. And so there will be a lot of leveraging that goes on in terms of some of the core elements of our overall global commercial infrastructure. And look, the opportunity in the wild-type ATTR market is very significant by our estimations. And so any increases we do in our sales and marketing investment is going to be consistent with the real impact we can have for patients and the real value we can create by accessing that market. I think we've shown that we know how to do commercial as a company. And we're certainly going to demonstrate that -- those chops when we -- if and when we expand into the wild-type ATTR segment.

Okay. So beyond cardiomyopathy for ONPATTRO and vutrisiran, you have potential large addressable market opportunities for zilebesiran in hypertension, ALN-HBV for hepatitis B. So let's start with hepatitis B. And given that there will likely be competition from big pharma, how differentiated will Vir's data need to be for you to opt in for 50/50 commercial rights prior to Phase III?

Yes. Well, I mean look, we are partnered with Vir on our HBV program. We're really happy to have done that partnership, in particular because we have a free opt-in right that we can exercise prior to the start of Phase III, which allows us to have a 50/50 stake in the asset at the end of the day. So it really is a very attractive way of partnering. Vir is making all the investments at this point and doing all the clinical studies to come up with a Phase III regimen that will result in functional cures. And Alnylam gets the benefit of being able to come in prior to start of Phase III to co-invest with Vir to have basically 50% of the value of that product. The approach that we're taking is with HBV02 is we're targeting highly conserved sites, highly conserved site in all 4 transcripts of the HBV genome. And we've demonstrated over 1 to 1.5 log reductions in surface antigen following dose administration in patients with chronic HBV. Now the real unmet need here is not just lowering surface antigen, it's about achieving functional cures. And to that end, one of the reasons we partnered with Vir is that they have additional assets, both assets that they have themselves but assets that they partnered with Gilead, for combining with HBV02 for the purpose of generating a functional cure. They presented some initial data with interferon therapy that show even further reductions of surface antigen when combined with PEG interferon. They also have an antibody, VIR-3434, which is entering a Phase II study combined with HBV02. So we're really optimistic that these regimens, these combinations will result ultimately in functional cures, and that will be the true differentiation for our approach relative to other efforts in the field. One last thing that I'll say, Keay, is that we have very strong IP around RNAi therapeutics for HBV. And so any of the other players out there that are advancing RNAi-based approaches are certainly at some point going to have to talk to Alnylam regarding the IP landscape that we have secured. And that's certainly true with our GalNAc platform as well. And that has really led the way for treating any liver target, let alone HBV.

So let's talk about zilebesiran for hypertension. It certainly checks a number of boxes to validate a liver target, easily measured biomarker. And it was no real surprise that the initial interim data from the Phase I demonstrated significant and durable knockdown of the target. So you're now advancing it into the Phase II KARDIA-1 and KARDIA-2 studies for monotherapy and combo with ACE inhibitors, diuretics, calcium channel blockers. So should we view the strategy as to first obtain an approval for a more limited population, and then Pacman your way, so to speak, to a larger population?

Yes. No, it's a great question. So as a reminder, zilebesiran targets angiotensinogen, which is the substrate for angiotensin peptides that are vasoactive. And we are acting upstream of RAS inhibitors that are out there, either ACE inhibitors or ARBs. We are also liver specific in our approach, which we believe will have a potential safety advantage as it relates to the risk of kidney injury, which can happen with RAS inhibitors. And we have a durability profile that we believe will support a quarterly, but more likely a biannual dosing regimen. The Phase I data that we presented so far is really compelling. We've generated data showing well over 90% knockdown of angiotensinogen with a single dose that lasts for well over 12 weeks, again after a single dose. We've shown reductions of blood pressure that exceed 10-millimeter mercury systolic blood pressure reductions and at the highest dose, over 15-millimeter mercury reductions in systolic blood pressure. And this is all with zilebesiran as monotherapy. So we're not even talking about the potential benefits of combining it with other orthogonal or RAS inhibitor antihypertensive drugs. Now to your point, we're currently in Phase II. The plan is to obviously explore the efficacy and safety as monotherapy, but also in KARDIA-2 in combination with other treatments as well. Now while it's too early to get into the detailed regulatory strategy, we do think that patients with underlying cardiovascular risk and morbidity, like the ASCVD population who are otherwise uncontrolled in their hypertension with existing antihypertensive drugs, really is sort of the sweet spot of where we can make an impact. Because in that population, we believe that achieving a tonic control of blood pressure as well as providing a therapy that would be well adhered to, because compliance is a big issue in hypertension management, we think that tonic control and a well-adhered therapy would basically provide a very attractive treatment option for patients, especially with underlying risk factors for CV morbidity and mortality. And so that's the thinking. It's not to go small initially, Keay, but rather to go after the appropriate population where we think we can make a big impact with our mechanism of action and our overall product profile.

Okay. And then just a similar question on how you lever the existing sales and marketing sales force. For this market opportunity, how much expansion would you need to do to commercialize for hypertension?

Well, we're going to have to build a bigger boat. That's the bottom line. We understand that. But again, we do think there's a lot of evolution of the go-to-market model that's occurring in the prevalent disease space. For example, look at what Novartis is doing with the NHS in the United Kingdom for Leqvio, where they have established a very innovative arrangement with the government that will secure access. It's almost like a vaccine-like agreement that has been done in this case for a therapeutic. And we believe those type of opportunities will be available in other countries around the world. And potentially also with major provider systems in the U.S. where drugs like Leqvio and in the future, zilebesiran, where there is an ability to really have a big impact on CV morbidity and mortality in a population level, those type of medicines make a lot of sense economically to strike arrangements with the innovator company together with either governments or major provider systems as a way of ensuring access. Now of course, at the end of the day, we are planning on building a PCP-based sales force. That would be a very large marketing and selling effort. If we feel the need to access PCPs with our program, we can always set up a co-promotional agreement with one of the major multinationals. Of course, we won't give up control of the asset, and we won't give up all the economic benefits of the asset, but we can share in the detailing and some of the profits with a third-party partner as well. But for the most part, we're taking this one to market ourselves, And we're going to leverage a lot of the innovation in commercial models that is taking place as we speak in other cases as well.

Well, you mentioned Leqvio. Royalties will also be a significant contributor to your profitability. I guess an asset that gets overlooked in this bucket is fitusiran for hemophilia, which is under the control of Sanofi, but expected to report top line Phase III data in the first half of '22. So can you remind us of the market opportunity here and the royalty structure?

Yes. So fitusiran is in development with Sanofi for the treatment of hemophilia with or without inhibitors. That's hemophilia A and B. And it's a very innovative approach for hemophilia, where we're targeting antithrombin to stimulate thrombin generation and therefore enable hemostasis to occur in people that are deficient because of a factor VIII or factor IX loss of function mutation. The Phase III ATLAS trials are ongoing, and we are expecting data early next year, in fact potentially even at ASH this year. Fitusiran is really an exciting molecule. It stands out as a bimonthly subcutaneous therapeutic that has the potential to treat all forms of hemophilia. Another attribute is that it doesn't require cold chain storage, which is going to be a very attractive feature of the drug because it really allows patients to use a drug without having to worry about cold chain distribution, which can be quite challenging, especially in many parts of the world. Sanofi is going to commercialize the product. They have an existing hemophilia franchise that they acquired through their acquisition of Bioverativ, and they're very committed to the area overall. They're an excellent partner for this product. In terms of royalties, we get 15% to 30% royalties on the product. We have very, very attractive economics on the asset. And we look forward to Sanofi bringing this product to market and ultimately making it very successful, but we know they're very committed to it. And we're excited about where this can go because it could be transformative for patients, which is what matters at the end of the day.

Okay. Great. Well, let's shift gears a little bit. At our conference yesterday and today, we've heard from a number of companies developing gene therapy, gene editing approaches. Dr. Jennifer Doudna was a keynote speaker yesterday. And earlier this year, Intellia reported the first demonstration of successful CRISPR-based in vivo gene editing in humans, coincidentally in hATTR patients. So John, within this landscape of emerging new classes of medicine, how should investors be thinking about what RNA's seat at the table will look like going forward?

Yes, I think the RNA seat at the table is going to be the big chair, Keay, in a nutshell. But let me take you through why. Look, the -- first of all, I am excited about where gene editing is going, base pair editing is going, whether it's at the DNA level or the RNA level. There's really a lot of innovation going on right now. And it's fantastic for patients. And the Intellia data, without a doubt, was a major milestone in the gene editing field, and I applaud it. I personally reached out to John Leonard to congratulate him, and I think it's just fantastic. Now within TTR, I think that RNAi therapeutics like ONPATTRO, vutrisiran and in the future, a once-annual medicine that we're advancing, TTRsc04, really will continue to be the market-leading approach in gene silencing for ATTR amyloidosis for many years to come. And our confidence stems from multiple factors. First, on the safety side, there's a lot that has to get worked up on gene editing. As you know, approaches that induce double-stranded DNA breaks have the potential for off-target effects, which could result in insertions, translocations, deletions; and even on-target effects that can result in chromothripsis, the degradation of the chromosomes, that's been documented now. And so I think we're going to have to just see where from a safety standpoint, these gene editing technologies ultimately go, especially the ones that are inducing double-stranded DNA breaks like the Intellia approach. On the development side, there's also going to be some challenges because Intellia will have to do randomized studies against active control. It would be unethical and -- unable, they would be unable to do studies against placebo that's been proven by BridgeBio stopping their polyneuropathy study because they weren't able to do a placebo-controlled study. And then on the cardiac side, they're going to have to do active control studies as well. And they're likely going to have to use outcomes as the ultimate end point if they want to establish a value proposition that's going to be important for patients. So the challenging development path is something to take note of as well. Then of course, access and pricing will be very challenging for them. They're going to have a one-and-done therapy, likely cost in the 7-digit per treatment course. Payers are going to have to look at that in light of the existing competitive landscape. Patients with wild-type ATTR are in their 60s, 70s and 80s. Really skeptical that the payer community would welcome a 7-digit type of price tag for treating people that are really at that stage of life. And so I'm skeptical there on the access side for them as well. But look, even if they get there, and I'm sure over time they will, this is not a market share indication. This is a market growth story, and I think it's always great for patients to have multiple options. Now more broadly speaking, beyond TTR in terms of where does RNAi sit at the table of all these new exciting new genetic medicines, look, I think that for many, many diseases, having -- even high unmet need diseases, having a pharmacologically predictable, dose-dependent, reversible, safe and effective therapy for many patients and doctors is the way that they want to go in the treatment of their disease. I mean to take it to one extreme, if you've got a headache, you don't go ahead and try to figure out a way to edit your genome for that headache. Or if you've got hypercholesterolemia, I'm skeptical that you're going to want to edit your genome to manage your hypercholesterolemia. There are other -- of course, there are diseases where you might want to edit your genome, especially in the setting of rare genetic diseases with high morbidity and mortality risk, that might make a lot of sense. But for the direction of travel that RNAi is going after, in terms of its migration to more prevalent diseases, I think that our seat at the table is going to be very important and part of the whole equation, without a doubt. No doubt about it.

Let me ask you one final question, John. Despite all of your success, what do you think investors are still underappreciating about the Alnylam story?

Yes. I mean there's a lot there. It includes our complement programs with cemdisiran and pozelimab in particular in combination, which I think will be an exciting approach here for myasthenia gravis. Regeneron is going to start a Phase III. It includes our NASH programs that are currently treating NASH patients. ALN-HSD, which targets HSD17B13, which is really the PCSK9 of NASH, a really exciting program. We have our first extrahepatic program going into the clinic this year, ALN-APP. If we -- this time next year, we should have our initial human proof-of-concept data. If we can recapitulate what we've seen in primates, we're going to have a really exciting story that can grow with many assets in the neurodegenerative space with RNA interference. And then other prevalent disease opportunities in the pipeline such as our gout program, that's about to go into the clinic, ALN-XDH, which I think will be an exciting program to watch in the years to come. So there's a lot that people aren't seeing or aren't yet acknowledging or valuing but it's fine. We're continuing to build our company, build our pipeline with these new transformational medicines, and that remains our focus.

Well, great. Well, thank you so much for joining us today, John.

Thank you, Keay, and thanks, everybody. Bye-bye now.