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

Hello, everyone, and thank you for joining the H.C. Wainwright 2022 Global Investment Hybrid Conference. My name is Patrick Trucchio, and I'm a senior health care analyst at H.C. Wainwright. While we're hybrid this year, we're confident we're going to be able to provide value to you with more than 550 companies presenting at this conference in multiple sector tracks. H.C. 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 24 publishing senior analysts in more than 648 companies covered across all sectors. The in-person venue for the event is the Fountain Blue Hotel in Miami. Virtual participation will be staged simultaneously with over 550 company presentations scheduled as live feed and available on demand. Please join us for one-on-one meetings, corporate presentations and panels that will be available live, and streaming on May 24 to May 26. So with that said, I have a productive and enjoyable day, and it's my pleasure to introduce our next presenter. I'd like to welcome Jeff Poulton, who is CFO of Alnylam Pharmaceuticals, which is the leading RNA therapeutic company with multiple commercial-stage products and a plethora of early, mid- and late-stage compounds in the pipeline.

So thanks, Jeff, for joining us. And maybe just so we could start with an overview of the Alnylam RNA interference platform, where it has been, where it is today and where it could be in the future?

Thanks a lot, Patrick. It's great to be here with you today. I'm sorry, I can't be in Miami, but I do appreciate the opportunity to participate via the hybrid format. So yes. Let me start with your first question. You're right. We're the leader in advancing RNAi therapeutics today, having pioneered a whole new class of medicines over the last 20 years or so. And it really started with Nobel Prize-winning research in the late '90s, and that really then started the company, frankly, in the early 2000s. The first 10 years or so were overcoming a lot of scientific and technical challenges. The most significant of which was about how to get delivery into the cell. And ultimately, after probably getting 10 years of work and billions of dollars spent on the research to figure out the challenge, lipid nanoparticles was the first delivery mechanism, and that's been further evolved into GalNAc conjugates, which is sort of advance the science even further. And that's put us to where we are today, where we've got 4 commercialized products now using our technology, 3 of which are being commercialized by Alnylam, ONPATTRO for the polyneuropathy of hATTR amyloidosis patients, GIVLAARI for patients with acute hepatic porphyria, and OXLUMO for patients with primary hyperoxaluria type 1. And on the R&D side, we've got this fantastic platform now that historically now has had about a 60% probability of success, of moving things that have started in the clinic through successful Phase III. And we've got a pipeline now that's got more than 10 clinical programs, several of which are in late stages of development. And where we're going in the future, maybe 2 things to highlight. We are starting to pivot our pipeline to include not only rare disease programs, but also now prevalent disease programs. And there's a variety of reasons why we think that makes sense now with the technology. One is the safety of the platform, we think, has been fully validated. We've probably got more than 10,000 patients that have had received RNAi therapeutics. And the biggest studies of which have been [indiscernible] to support the approval of Leqvio, which is now being commercialized by Novartis. The second element of the platform and the technology that we think serves it well on the prevalent disease population is clamp pharmacology. So that consistency of effect of the medication that we get with RNAi. And then lastly, the duration, the potential duration of dosing. We're looking at potentially 6 or even 12 months out in some of our programs. And this sort of allows us to think about in prevalent disease populations, vaccine-like duration in terms of how these diseases are treated. So that's something that we're really excited about. I think we'll have the opportunity to talk more about [ salbisirana ] as the fireside chat progresses. But that's the most advanced prevalent disease program that we have in our pipeline. And then the second thing that's to come is moving beyond the liver -- all the programs that we've brought forward to this point have been liver-directed programs. We've now started our first program outside the liver and the CNS, ALN-APP, which is targeting amyloid precursor protein both for Alzheimer's as well as cerebral amyloid angiopathy. We've started that study, Phase I, this year. And we think by the end of the year, we'll have top line data that we could share. That could be another sort of derisking event for CNS that we think we'll learn a lot about and could certainly open up a lot more opportunities for additional CNS-directed programs. So I think that gives you a pretty good summary of where we've been, where we are and where we're hoping to go.

Yes. That's terrific. And then maybe you can also provide us a recap of the P5x25 strategy. What are some of the key goals of this strategy as Alnylam looks to transition to a top-tier biotech? And how are you defining that terminology in terms of this transition over the next several years?

Yes. Great. So Alnylam has a history of laying out 5-year sets of goals to the market. And what you're asking about is what we call the P5x25, which was rolled out the start of 2021. The prior 2 5-year iterations on Alnylam met or exceeded all the goals that it laid out for itself. And so I just want to give you the sense of when we put these types of targets out into the market, our expectation is we're going to get there. And the overarching goal with P5x25 is what you stated. We want to position Alnylam as a top 5 biotech, in fact, by the end of this 5-year period, which would be by the end of 2025. And we've talked about the best way to measure that is by market cap. So that's what we intend to do. Now the P5x25 strategy itself lays out 5 very specific goals that if we think we achieve these 5 specific goals, that will support the movement of us becoming a top 5 biotech. So let's talk about what those 5 goals are. They all start with P's. First is patients. Our goal is to have over 0.5 million patients on Alnylam RNAi therapeutics, globally. That also includes patients that are on partnered products, right? And the one that will drive the most patients would be LEQVIO in the hands of Novartis for hypercholesteremia. Second P is for products. The goal is to have 6-plus marketed products in rare and prevalent diseases on the market by 2025. And we've got 4 today. and we have a fifth potential this later this year with vutrisiran. Again, I think we'll talk about that later. We've got a PDUFA date middle of this year for hATTR polyneuropathy for vutrisiran. And then pipeline is the next P. The goal is to have over 20 clinical programs with 10-plus in late stages, and generating 4-plus [indiscernible] a year. So you can tell that the anticipation is that we're going to continue to grow investment in our pipeline across the period. And then we get the 2 financial metrics, the first of which is performance. The goal is to have a top line growth rate, total revenue growth rate, which includes both product sales as well as collaboration and royalty revenues growth of at least 40% compounded annually across the period. And then the last one is about profitability. The goal is to achieve sustainable non-GAAP profitability within the period. We haven't specified a specific year for that yet. The goal or the commitment is to get to that profitability goal by the end of the period. So those are the specific P's that make up the P5x25.

Yes. That's great. Now recently, there's been jitters in the market, this has mostly been macro-driven led to a broad-based biotech selloff. So I'm wondering if you can discuss Alnylam's capital position. How this can help differentiate Alnylam in the biotech sector? And how that capital is expected to be deployed in 2022 and beyond, based on some of these variables that you just talked about with the P5x25 strategy?

Yes. We're -- obviously given today's market conditions, we feel very fortunate to have a very strong balance sheet, which we do. At the end of the first quarter, we had cash on the balance sheet of just north of $2.2 billion. And really what underpinned that was the Blackstone deal that we did really at the onset of the pandemic back in 2020, where we did a deal with them that brought in $2 billion worth of capital. And the headline on that deal was monetizing 50% of the future level royalties to Blackstone. So that was $1 billion. It was a $700 million credit facility. There was a small equity investment, and then there were some R&D funding for our hypertension program as well as for vutrisiran. So that cash is now fully on the balance sheet now. And we do think that's enough cash to get us to sustainability, so that we're not going to need to go out and do any additional financing. And again, as -- given the current market conditions, this is a fantastic position to be in. In terms of how we plan to invest that capital, I would say more of the same. It's about investing in our operations and what this means on the commercial side. We talked about the expected growth across the period. So we're going to continue to invest in the products that we've got on the market today, hopefully, vutrisiran later this year. And then really where I would start to anticipate more growth in SG&A would be, hopefully, with successes in the APOLLO-B and HELIOS-B studies, which will open up the cardiomyopathy part of the hATTR market. And given the much larger size of that market and the potential for substantial revenue growth, we will grow investment in SG&A around those -- hopefully, those 2 successful studies. On the R&D side, again, you mentioned the power of the organic platform that we've got, and our ability to continue to innovate to drive long-term growth. We've got this fantastic track record where we've got the probability of success of things that enter the clinic through Phase III that we've had a 60% success rate in driving programs. And you compare that to industry norms or standards, and we're well above that. So we want to continue to invest in R&D to drive long-term growth. I would say, the area that you're going to see growth -- the most growth over the next several years will be in that prevalent disease program that I mentioned earlier is zilebesiran for hypertension. That's now just initiated 2 Phase II studies. And if those are successful, obviously, we would move on to Phase III in larger studies. So I do anticipate growth in R&D to be driven by that program in particular. And then again, just the power of the platform. We've got goals to basically double the size of programs that we've got in the clinic as well as be bringing in by the end of this 5-year period 4 new INDs a year. So that's where we're going to invest and drive R&D growth.

Yes. No, that's helpful. And then if I can look more at the near term. So if we look -- recently, Alnylam had to reduce the revenue guidance for 2022. I'm wondering if you can discuss why that was. Were those kind of one-off items that impacted the revenues? And then as we look ahead to the second half of 2022 and 2023, you talked a bit about the TTR franchise in terms of the importance there. What are going to be those key drivers for growth in revenues as we look to the second half into next year?

Great. You're correct on the guidance. On the February call when we gave our initial guidance for 2022 on combined product sales, we guided to $900 million to $1 billion. And then on the Q1 call, a couple of weeks ago, we reduced that guidance from -- again, from $900 million to $1 billion to $870 million to $930 million. So midpoint to midpoint of $50 million reduction or about a 5% reduction. And there were 2 specific things that had changed in a short amount of time because the initial -- again, the initial guidance was given in February and then we updated it in April on the call. And the 2 things that changed, one, were the strengthening of the U.S. dollar. So that creates a foreign exchange headwind for the company. And we've got about 50% of our revenues today that are coming from outside the U.S., which I love that diversification, and I think that's a real strength of the organization. But in this regard, the strengthening of the dollar hurts us in terms of top line growth. We don't explicitly hedge that top line from a product sales perspective. We do have a natural hedge in the business because we've got operations outside the U.S. to have expenses in those same foreign currencies. And the benefit that we're getting on the expense side offsets about half of the headwind that we've got on the top line. But that's impacted us for sure. That was one of the changes that resulted in lower guidance. And then the second one, was the delay to the vutri PDUFA date. So this was, again, for hereditary PN, the initial PDUFA date was April 14. And as a result of some challenges that we had with the secondary packaging site on the original file. We updated the file and that resulted in a 3-month extension to that PDUFA. We expect vutrisiran, when approved, will be a growth driver for the hereditary franchise that we've got. We've already got ONPATTRO in the market. And even though it's likely that this is going to be pursuing the same patient population with a very similar label. We do think vutrisiran grows, that franchise, accelerates growth. So the fact that we're going to have that on the market for likely 1 less quarter than we originally expected when we gave the guidance is the other reason that we brought the guidance down about 5% on the Q1 call.

Yes. That makes sense. And then so just with vutrisiran and NDA and ATTR with polyneuropathy, this was delayed to July, as you noted. What's the status of that filing? And the level of confidence that vutri will be approved this time in July?

Yes. So just a reminder on the context here. We had an original PDUFA date for vutrisiran of April 14. And we became aware after the late-cycle review meeting with the FDA that the secondary packaging site that we had as part of the original file to the FDA. That site had a GMP inspection. Again, after the late-cycle review, we became aware of this. That inspection was not specific to vutrisiran in any way, it was a site inspection. And unfortunately, that inspection had some open items that were not resolved yet, and we're likely not to be fully resolved by the April 14 PDUFA, which would have likely resulted in a complete response letter from the FDA. So we had some dialogue with the FDA about the situation based on that dialogue, we made the decision that the best course of action for us was to replace that original secondary packaging site with a new packaging site, this one in Europe, and it's a facility actually that we have experience with as both ONPATTRO and GIVLAARI package there. So that gives us confidence in that site. And that site has also been -- was inspected in 2020 by the FDA as well as by the EMA in 2021, and both of those inspections were successful. So we feel confident that this was the best course of action to get vutrisiran to the market as soon as possible given the circumstances that were in front of us. And so we're confident that by the revised PDUFA date that will have an approved product.

Yes. That's helpful. And then just in terms of the ramp-up for vutrisiran in the second half of 2023. How much of this should we anticipate could be potential cannibalization of ONPATTRO versus expanding the market versus taking share from other drugs used in ATTR polyneuropathy?

Yes. So just a reminder for everybody. Vutrisiran is our GalNAc delivered [indiscernible] for first. It was studied and filed for the hereditary form of the version with polyneuropathy. So the same patient population, same label as well ONPATTRO's on the market for the big difference between the 2 products is because of the different delivery approach. Vutrisiran would be -- at launch would be a once-a-quarter subcu delivery ONPATTRO, which is on the market today, is an every 3-week IV-infused products. So a big advantage from a convenience perspective for patients. The data that supported the file, the Phase III study we called HELIOS-A, the data was fantastic, both from a safety as well as an efficacy standpoint relative to the data that support the ONPATTRO approval, again superimposable basically, in terms of what that data looks like. So we're excited about this product, and the innovation that this brings to the patients. We do, as I mentioned earlier, think that this accelerates the growth in this patient population. And I would say probably for 3 reasons. We think in patients that are in the wait-and-see mode, and there are some of those patients, and those are typically earlier in the course of the disease, often times younger patients, those patients care a lot about quality of life. And for an every 3-week IV-infused product, some of those patients see that as a pretty big burden. So anecdotally, we've already gotten feedback from the market that those -- there are patients like that, that are waiting for the vutrisiran approval. So we think that helps grow the market. Second area of opportunity is in switch patients. And there's probably 2 areas that we have seen switching to ONPATTRO that we think will accelerate with vutrisiran on the market. The -- one of the competitive products from analysts, TEGSEDI, is a subcu delivered product once a month, has some tolerability challenges that require the patients to be followed pretty closely. We think that some of those patients will likely see vutrisiran as an attractive option, again, once a quarter subcu dosing. And then outside the U.S., where tafamidis from Pfizer got approved many years ago in the hereditary PN population, that never happened in the U.S., but outside the U.S., that happened. And what we've seen since we launched ONPATTRO outside the U.S. is at a pretty steady flow of patients that have switched from tafamidis onto ONPATTRO. And the feedback that we get from the physician community is those are about patients that are progressing on the disease that are looking for an alternative therapy. And so we think having a much more convenient dosage profile will accelerate some of that switching. And then the last place that I would see growth is in the mixed phenotype hereditary patient population where you have patients that have both PN, and in some cases CM complications of the disease. We think this will be positioned well as a product for that patient segment, again, that will also drive incremental growth.

Yes. So when we discuss the TTR franchise, we've been talking about ATTR polyneuropathy. There is this very significant expansion that's going to occur in the next few years with this expansion to ATTR with cardiomyopathy. So the APOLLO-B program with ONPATTRO, and then there's the HELIOS-B program with vutrisiran. APOLLO-B will be the data readouts expected mid-2022. So I guess, first, what -- maybe you can frame for us the timing of the APOLLO-B readout, the program itself, some background, read through from -- that program to the HELIOS-B program with vutrisiran. And how important is this really? How important is this readout, really? How important is this indication going to be for ONPATTRO? And ultimately, why is this going to be helpful for Alnylam and shareholders?

Okay. I'm surprised it took us this long to get to this question actually, but I appreciate the question. I understand it. So you're right, we have 2 Phase III studies ongoing right now, one with ONPATTRO, APOLLO-B, which I'll get to first, and then a second one with vutrisiran, HELIOS-B, both of them are focused on tapping into the cardiomyopathy part of the ATTR market, both the wild-type and the hereditary version. The reason this is so important is that part of the market is substantially larger in the part of the market, the hereditary PN part of the market that we're in today. It's probably 10x larger -- at least, in terms of addressable patient population. And so that's why it's important for us. It's a very large potential commercial opportunity. So first, starting with APOLLO-B, and maybe just a little bit of context as to why we have 2 different studies ongoing for the same patient population. This started several years ago after the APOLLO study read out, which supported ONPATTRO's approval in the hereditary TN part of the market. Alnylam decided to start another study in ONPATTRO and patisiran and in the cardiomyopathy part of the market. And the goal is to get to market as quickly as possible. And so that informed the way the APOLLO-B study was designed. So this is a -- the primary endpoint is the 6-minute walk test. And that's studied over a 12-month period. And again, that's key. That 12-month period is the quickest way that we could get a product to market in our portfolio for cardiomyopathy. That study was fully enrolled in May of last year. Lots of questions about this study following the BridgeBio readout that happened last December where they had a failed study. And the reason that study failed -- very similar design, similar types of patients. The reason that study failed was because the placebo arm of that study did not progress as expected. So there's a variety of reasons why we remain confident in the design of that study. We expect that we're going to get a read out middle of this year. And for Alnylam, middle of the year means Q2 or Q3. But let me just tick off reasons why we remain confident about that study. One is, I think that we have got a rigorous approach to correctly diagnosing patients. So we've got the right kinds of patients in the study, and that includes patients that are diagnosed either via positive biopsy or technetium scan with a Perugini Grade 2 or 3, uptake, which is important. We think those things result in the right kinds of patients being in the study. Second reason we're confident is because we've got a lot of experience in studies and designing and executing for these types of patients in this disease. And we've got a 10-year history of conducting studies in ATTR amyloidosis. The study itself was conservatively powered. It's got a 1:1 randomization on drug, and we overenrolled the study. We ended up with 360 patients. When we initially designed it, we were targeting 300. And then we've got a lot of experience in running -- walking tests, and we understand the rigor that's required in terms of ensuring that those studies are conducted successfully. Next thing I would say is we've enrolled a broad patient population. We haven't given any specific baseline characteristics. But one of the things that we've talked about is what we targeted in terms of hereditary versus wild-type patients. We're targeting -- targeted hereditary, 80% wild-type patients. And we've got a variety of both of all 3 NYHA classes I, II and III that have been enrolled in this study. And last thing I'd say is we capped the amount of background tafamidis in the study, at 30%, at enrollment, and those patients that were enrolled that were on taf at the start of the study had to be patients that were progressing in the course of the disease. And the last thing I'd point out is we think that our mechanism of action is unique and very promising, and we've got very interesting cardiac data from both -- from the APOLLO study, from the HELIOS-A study as well as from investigator studies that have been run. All of that in totality gives us confidence in this study. The other thing that I should highlight about the study is there's a variety of secondary endpoints in APOLLO-B. One of the endpoints is an outcome end point, where we're looking at mortality and hospitalization. And I think the first thing to say is that it's not -- the study is not powered for that endpoint to reach statistical significance, but it's an important endpoint. And one thing that we're going to take a close look at, as it relates to the other study that you asked about, which is HELIOS-B. And so that's vutrisiran, right? So that's our subcu version. And this is our outcome study for the cardiomyopathy part of the market. So it's got a 30-month endpoint, and the primary endpoint here is mortality and recurrent CV events. That study -- a longer study 30-month study, needs to be longer, right, for an outcome endpoint. And it's the last patients that are enrolled, where the study will complete. When those patients reach 30 months, that's when the study completes. Patients that were enrolled earlier in the study actually will be followed for up to 36 months. That's 1 aspect of that study, and I'm not sure the market fully appreciates. So we'll actually get much longer than 30 months on a lot of the patients that have been enrolled in that study. We targeted 600 patients in that study. We ended up again, over-enrolled with 655 patients. That study completed enrollment in August of last year. Again, if we run that study all the way through to conclusion, that would have top line data in 2024. There isn't the option for an interim readout, and that's where APOLLO-B is particularly helpful. We'll get the data from APOLLO-B, including the opportunity to look at that outcome secondary end point before we would make a final decision on what to do with that interim analysis. I think 1 thing to think about though is we enrolled HELIOS-B much faster than we had anticipated. And the reason to do an interim analysis, the biggest advantage would be it gets -- potentially gets the product to market faster. But because we're waiting for the APOLLO-B data to inform what we do on the interim analysis, the time advantage of doing the interim analysis probably in that 9- to 12-month range. So not substantial, right? So that's something that we'll have to think carefully about when we get the APOLLO-B data, and make a final decision on what we want to do with the interim. So hopefully, that gives you the landscape on APOLLO-B versus HELIOS-B.

Yes. Now, that's super helpful. And then how do we think about kind of the competitive set as we look at kind of ASO and other modalities even the -- you mentioned the BridgeBio program for future for that program and then as well the gene-editing program. So how do we think about all these competitive dynamics, in ATTR specifically?

Yes. Well, it's a hard question to answer without data across all those programs. And obviously, that's what we have to wait for here. We're going to have data on APOLLO-B, as we said, middle of this year and then HELIOS-B at some point, thereafter. We do like the potential profile of vutrisiran again, that will hopefully be validated in the HELIOS-B study in particular. Again, that's the GalNAc delivered -- that allows us to deliver it via subcu injection. We talked about once a quarter for vutrisiran, if it's approved later this year. We've got an additional study that's ongoing that we think will report the possibility of moving that to once every 6 months. So really convenient in terms of the way it would be delivered. And we got to get the efficacy and safety data out of the HELIOS-B study to support the outcome endpoint. But if we're able to do that successfully, I think that we're optimistic about having a leading best-in-class kind of profile for that product. And we do see that with the possibility of creating fairly material and substantial long-term top line growth for the company, but we've got to get the data, right? And that's what we're waiting on right now.

Yes. So maybe just one last question. At the outset, you mentioned moving into more prevalent disease. You mentioned zilebesiran. You also mentioned moving beyond the liver with the CNS collaboration. So I'm wondering, as we look beyond kind of the TTR readouts and ramp-up of revenues, what are the key readouts and key studies that you think investors have to be aware of over the next 12, 24 and 36 months? And what is it -- how will we know kind of that Alnylam is on track to kind of hit those goals of that P5x25 strategy?

So let me just hit what I think are the keys over the next 18 to 24 months. We talked about some of these already, but it's starts with the vutri, PN, PDUFA, right? That's July 14 here in the U.S. Second program that we'll have top line data on in Phase II, we haven't talked about this is cemdisiran. That's in development for IgA nephropathy. It's sort of an under-the-radar program. Again, we expect data from that relatively soon. If successful, that obviously could support moving that program into Phase III. The APOLLO-B readout, which is probably the catalyst for this year for the company, and we talked about that being a midyear readout. The ALN-APP program, which I mentioned earlier upfront, that's our first CNS program. We expect top line real by the end of this year. And then what I mentioned, the hypertension programs of zilebesiran. We've got 2 Phase II studies that are enrolling now that we would expect to have data on next year. So those would be the things that I would say at least over the next 18 months that are big drivers. I mean I could go on, and list a bunch of things out to 3 years. But those are the things that I think are -- get the most focus from investors over the next 18 months.

Yes. That's really helpful, Jeff. Thank you so much. Always a pleasure to have you and the Alnylam team at our conference and -- to get the update on the broad pipeline. I also want to thank all of our presenters for taking part what's been a very productive and informative series of presentations. We appreciate the time and effort that's gone into preparing them. We're very grateful for everyone's flexibility and your presence at our conference this year. So thank you again from the H.C. Wainwright team.

Thanks, Patrick.