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

Good morning, everyone. Thank you for joining the 24th Annual Needham Healthcare Conference. My name is Joey Stringer, and I'm one of the biotech analysts at Needham & Company. It's my pleasure to introduce our next presenting company, Alnylam Pharmaceuticals. And joining us today from the company is John Kennedy, who is VP of the TTR franchise, Global Commercial Lead; and Sandeep Menon, Chief Development Officer. For those of you joining on the webcast, if you would like to ask a question, please do so at anytime. So with that, we'll get started. John and Sandeep, thanks so much for joining us today.

Yes. Thank you.

Thank you.

Great. Well, I guess we'll start high level here. A lot going on lately. But can you give us your high-level thoughts on the recent tariffs and Alnylam's exposure here? How big of an impact does this have on your business?

Thanks, Joe. The majority of our commercial products is manufactured in the U.S. So our exposure to this new tariffs is very modest. So that's all we can say as of now. And as things evolve, we'll see how it goes.

Got it. And what's your take on some of the recent developments and layoffs within HHS and FDA? And what specifically -- what impact do you think it could have on some of your programs?

Yes, you're right. I think there's a lot of uncertainty right now, right? We can't predict where things will land. We have been extremely fortunate up to now. So happy to have achieved our approval for the sNDA for the vutrisiran 2 weeks ago as well as the Qfitlia approval. This is for our -- the fitusiran last week. So we continue to have good engagements with the rank and the file members of the FDA in the review divisions. And our hope in that is those individuals will be protected as they are PDUFA-funded roles. And as far as the experienced leaders at the top leaving, it's a little bit hard to predict the ramifications, Joey, on all of that. However, we remain very confident that the agency will continue to do what it is best for the patients and the science, right? We understand Dr. [ Maury ] is very supportive of innovation. So beyond that, at this time, I don't know what else we can comment on given all the changes there.

Got it. That's fair enough and helpful insight. 2025 revenue guidance for Alnylam. Specifically, I want to focus on the TTR front, $1.6 million to $1.725 million just in TTR sales. So I guess, what are the key areas that if you execute very well, could drive revenue to the high end of that guidance or potentially in a best case, even exceed it?

Yes, I'll take that. So yes, we provided full year guidance and specific to TTR. And I think that is unique to the players that are in this category. And I think it's a sense that we understand that this is an important launch. It's an important launch for us. It's an important launch for those of us who are watching. And the fact that we put out financial guidance for 2025, I think, really conveys our confidence. So the guidance that we provided, as you said, is $1.6 billion to $1.725 billion for the TTR franchise. Now at the midpoint of that range, that's about a 36% growth. So it's an acceleration of growth on an already robust base where there's been significant growth to date, so it's an acceleration. That was ahead of consensus at the time that we provided that guidance. And if you talk about the top end of that guidance, that's about a 40%, 41% growth. So it's an acceleration of growth. And again, we're very confident and we put out that guidance for a reason. In terms of the types of things that have to happen for us to achieve that I think we have everything that we need to be able to execute the strategy. We've got a tremendous medicine. We had a great data package that has been talked about. And we now have the approval with a label that broadly reflects the data package that we have, so we can begin that important work. We expect that we're going to see utilization as a first-line treatment. And we also know in this category, there are some patients that have been treated with a stabilizer and unfortunately, continue to progress. And so some of those patients will continue to seek an alternate treatment option. The fact that we are the first and only silencer in ATTR cardiomyopathy, an alternate treatment option, I think, really positions us well for that as well. So that gives you a sense of what we're thinking about in the guidance. But again, that reflects our understanding that this is important and are confident to be able to put that up there.

Yes. And still sticking with polyneuropathy before we get into cardiomyopathy, you mentioned the strong growth, just referencing your 4Q numbers, $343 million, you mentioned it grew 35% year-over-year. Strong -- you're seeing strong growth both in the U.S. and rest of world. So -- it's impressive given your drug was approved in 2018, and there's been a recent launch of a competitor in the space. So -- what's been driving the overall growth in the polyneuropathy market here? And any metrics you can share around that? And I guess, as a follow-up to that, what gives you the confidence that you can maintain that majority share?

Yes, great question. So yes, in the last quarter, 35% growth. So for the full year, about 34% growth in that polyneuropathy business. And -- what's interesting, you said that this is the first full year we've had a competitor in the polyneuropathy space. Now if you were to go back and look at the year-over-year growth in the last quarter before we had a competitor, it was in the same ballpark. So essentially, our volume growth has continued unabated. What that means is essentially more voices in this category have accelerated category expansion. And that's not entirely a surprise. So consider polyneuropathy of ATTR and cardiomyopathy, these are rare diseases. And so the majority of patients worldwide, the majority of patients are still untreated. And again, more voices help. We think polyneuropathy will continue to be a growth story. We also think it's a helpful analog to what we expect in ATTR cardiomyopathy, where we also think it's a growth story. More voices will continue to help more patients find their way to diagnosis and treatment. Now in polyneuropathy, we really have done a lot of work to establish AMVUTTRA as a market leader in polyneuropathy. We still continue to be a market leader in polyneuropathy, and we continue -- we expect to maintain that. But again, it's, I think, a good analog of what we expect across both of these indications in terms of the growth story.

Got it. And last one on polyneuropathy, just given the metrics that you mentioned and the strong growth, market is increasing here. How big of an opportunity is the polyneuropathy alone, just any quantitative metrics that you can provide there?

Yes. We have historically estimated the size of the ATTR -- hereditary ATTR polyneuropathy segment to be about 25,000 to 30,000 patients worldwide. So that gives you a sense of the size of that. And again, we still think that there is more opportunity to help more patients find their way to diagnosis and treatment. So we expect that we'll see continued growth in polyneuropathy.

Great. Well, the recent approval to cardiomyopathy, AMVUTTRA, I want to touch on the price there. You had announced that you're maintaining the current annual price of around $477,000 per year on average, but that you decrease this price over time as more patients get on the drug. So I guess, that said, what are the potential risks in taking this approach given that the oral stabilizers are priced much lower around $240,000 to $270,000 per year?

I think probably the underlying question here is do we expect to face step edits behind tafamidis or somehow have payers [indiscernible] to the second line. And I would say, no. In majority of cases, I do not expect that we would be stepped behind tafamidis. And that's for a handful of reasons. Number one, we've engaged with payers, significantly done research. We've been in the ATTR space, obviously, for polyneuropathy to data. But what is very clear in these conversations, number one, this is a rare and devastating disease that's generally been underserved to date. So that's a component of the consideration set for payers. Number two, many payers are saying they're looking for treatment choice and optionality, we feel really, really well positioned as the first and only of an alternate mechanism of action that works upstream. And again, the first and only in a new class of medicines for ATTR cardiomyopathy. Payers also consider the clinical data package. And with HELIOS-B as a really rigorous study. It essentially set a high bar in terms of just the study design and the results were really compelling. And happy to go through those, of course. But really compelling and consistent results from that. And then we also hear from payers that the dosing regimen matters. So again, with quarterly dosing, ACP administered, that is peace of mind that the patient will actually receive the medicine as intended. So by and large, we don't expect to be stepped for all these reasons. Now could there be some examples where there's a step? There may be. In those cases, number one, it won't be the majority. We think it's more exception. And we do have the tools to help mitigate or manage that, whether that's engaging in value-based agreements with payers to mitigate that risk and/or continue to provide our patient support services so that those patients can find their way to therapy if that's what the physician and patient determine is the best for them.

Got it. How big do you think the total cardiomyopathy market is, just given what we know about tafamidis -- 2024 was $5.5 billion, which historically, you kind of use that as a proxy for the cardiomyopathy market and some of the commentary from Pfizer around perhaps the drugs only 20% penetrated of the market. So collectively, what are your thoughts on how big this market could be?

Yes, we've estimated that we think the ATTR cardiomyopathy population worldwide is about 300,000 patients. And again, I'll go back to what you said. I do see this as a growth story. There have been improvements in diagnosis and treatment rates. But we really scratched the surface. Worldwide, about 80% of these patients are still untreated. And So we do see it's a significant opportunity. So as that manifests on a kind of more acute basis, we expect that there are about 18,000 globally, about 18,000 new-to-treatment patients coming in on an annual basis. And if these diagnosis and treatment rates improve, we'll see potentially an acceleration of that.

And big picture, how do you see the cardiomyopathy market playing out given the competitive dynamics? I mean, obviously, 2 oral stabilizers on market. A third silencer is in Phase III development. What percentage of TTR patients would you anticipate would be on -- in the buckets of stabilizer only, combo therapy and then maybe silencer only at "steady state," if you will?

Yes. I mean I don't want to get in front of ourselves and kind of speculate on share allocation. But what I will tell you is that, number one, lots of opportunity to help more patients. Number two, if you look at the segments of where we can help patients, again, there's that new-to-treatment patient population on a global basis, about 18,000. So in the U.S., call it, about half of that new [ patients ] on an annual basis. There are patients in the U.S., about 25 stabilizer treated -- 25,000 patients treating with a stabilizer today. We've seen in the literature estimates of how many progress could be about half of those patients, and we expect that -- is an opportunity again for uniquely for a product that is the first and only of a different mechanism of action. But what I'll tell you is that on the basis of HELIOS-B, our priority is to position AMVUTTRA as a first-line treatment choice, and HELIOS-B does that. If you look at the patient population that was studied, this reflects the patient that is showing up for that first treatment decision today. Generally, healthier patients in terms of earlier in the disease progression, substantial background treatments including in the study of HELIOS-B, about half of those patients on a stabilizer, about 30% on SGLT2 inhibitors and majority on diuretics. So -- on the basis of that, the effectiveness we've been able to show really position us well as a first-line treatment option.

What percentage of total patients are on AMVUTTRA or currently on value-based agreements? And how do you see this changing following the cardiomyopathy approval?

In terms of value-based agreements, let me just back up and say, yes, we're really pleased that we've been -- I would argue a pioneer in establishing value-based agreements. We've had them for many years here within the ATTR polyneuropathy and we've done that across our portfolio. So we've been in the value-based agreement space for a long time. If we look at our experience to date, which is in the hereditary ATTR polyneuropathy, we have engagement contracts with the majority of payers, call it, about 90%. The majority of those are covered by some form of a value-based agreement. So that gives you a sense of scale. But it's a tool in our toolbox and something that we've really learned from the experience that we have in this category.

Got it. Makes sense. In terms of the patients on ONPATTRO and AMVUTTRA, what's the relative split in terms of community setting versus centers of excellence or, I guess, more general noncommunity setting? And with the larger cardiomyopathy indication coming online, how do you see the split evolving?

Yes. It's actually pretty balanced. I mean there's maybe a little bit of a skew towards concentration in academic or centers of excellence, but it's generally balanced. A part of why we think it's been balanced is we've been able to establish this really robust network of buy-and-bill-ready alternate sites of care. So -- the implication of that is the vast majority of physicians, whether they're in the center of excellence or they're out in the community, are either affiliated with and/or have access to an alternate site of care that is very, very familiar and accustomed to engaging and [ buy ]. And so that is just essentially a network that's been built up over time. And so we see in polyneuropathy, it's generally balanced, and I expect something similar as we move to cardiomyopathy.

You kind of touched on this before, but in terms of monotherapy versus combo therapy use in combo meaning silencer plus stabilizer, what percentage of patients currently on AMVUTTRA are on combo therapy? And how do you think this will change with the cardiomyopathy approval?

Yes. So for the time when we had hereditary ATTR polyneuropathy indication, we did see some combination use where there's nonoverlapping label with a stabilizer. So it was -- call it, in the double digits in terms of what we saw. Now more generally, how do I see this playing out in cardiomyopathy. I think for the next several years, we do expect it as predominantly a monotherapy market. Once we have tafamidis generic, that could be potentially an unlock of more combination treatment. But in that case, I think we're set up for durability given the data set that we have. Again, if you look at HELIOS-B, about half -- were on stabilizer in the background, and we saw a tremendous consistency of effect with or without. So I think we're set up for durability.

Great. Yes, you mentioned the tafamidis LOE late 2028. How do you think this will impact AMVUTTRA use? Would you anticipate that it would increase slow or stay about the same? I guess you could make theoretical arguments for both sides, but what are your thoughts on that?

I mean, the first thing I'll say is I don't think our fate is necessarily tied to anybody else's IP, so to speak. But just to kind of build on what we were just talking about. I do think that when tafamidis is available as a generic, that could be an unlock of more combination use in this category. So that could be kind of the pivot that you see. But again, based on the HELIOS-B data set in the label that we have, we're really well positioned for durability if that were to come to pass.

Okay. Great. Nucresiran, your next-gen TTR therapy, you guys have talked about the advantages here, totally owned, more continued dosing, potentially better efficacy, and of course, better economics to Alnylam. So I guess the question is, in terms of the positioning of this drug, what's the goal here? Would it be that ultimately, all patients on ONPATTRO and AMVUTTRA would eventually transition to this drug? And I know we're a long ways away from data, but how realistic would that be in a real-world setting that switching dynamic?

Sure. I can take that. I'll start with the Nucresiran benefits, right? Because we are seeing 95% TTR knockdown, right? So there is a lot of data that is coming, that is durability supporting bianual dosing, right? So there is, in this case, and plus we will not have any third-party royalties here. And the IP is going to possibly extend to the 2040s. So this is the key benefits. And then what we have seen from both the ONPATTRO and the AMVUTTRA data in the -- in polyneuropathy is that greater TTR knockdown is associated with better clinical outcomes. In this case, mNIS+7. Similarly, we know for other amyloidosis diseases in general, right? Like, for example, AL amyloidosis that, that the more you remove the insulting protein, in this case, the toxic protein, the better the clinical outcomes are. So we have also seen that basically in our CM study as well for HELIOS-B. We are starting to see that the patients with a better knockdown has got a better outcome. So for our -- from our vantage point, we want to bring in something that is going to be even better. [ Vutri ] is already a differentiated profile. We want to bring things that is even better in terms of both the efficacy and safety and the patient convenience. From an uptake perspective, having a safe and effective therapeutic option could be potentially game changing because this is going to be only twice a year and could be very highly attractive option for patients. Now in terms of the switch and other things, and I'm sure, John, you will agree, it's a little bit too far for us to sort of make all of these projections. But what we are seeing from a scientific perspective is that we are seeing based on a better knockdown, better profile, that's the bottom line. John, you want to add anything here?

I think you covered it well. I mean, look, I think our goal is to make sure that we continue to drive innovation for the sake of patient. And if we're able to bring forward a treatment option that delivers that type of profile that Sandeep had talked about, I think that will be compelling.

One more on nucresiran, obviously, Alnylam markets, ONPATTRO and AMVUTTRA, but Sanofi has a significant economic interest in the revenue stream. So I guess, in the scenario where nucresiran is ultimately approved in TTR, how could you see this commercialization dynamic play out?

So I guess I can start and then, John, you can build in it, right? I guess I mentioned that we'll definitely don't have any third-party royalties. And from our perspective, it will be a fully differentiated profile clinically. And beyond that, I'll let John comment on the commercial play.

Yes. I mean, look, I don't want to get ahead of ourselves. So we're very excited that we have approval for AMVUTTRA in ATTR cardiomyopathy. We're very excited about what we can accomplish in the near term. In terms of nucresiran, obviously, there's more development work as Sandeep explained to be done. When we get to that point, we are able to nucresiran. And so we'll educate customers on the profile that we're able to deliver with nucresiran and create optionality for patients. So yes, I think we'll take that in time as we continue to build a long and durable experience here in this ATTR market.

Great. Fair enough. But Alnylam, they have an expansive pipeline. We don't have time to cover everything, but I guess if you had to pick one outside of your marketed therapies, which one are you most excited about and you think could be a meaningful value driver for shareholders and why?

Thank you. From our perspective, I'm going to share a few of them, not just one, but a few of them were just fantastic opportunities, right? So we have shared in the R&D Day that the current pipeline the way we are positioned is a huge unmet need for patients and from a commercial perspective and a multibillion-dollar opportunity. So I've already talked about nucresiran because you know what it can do to the TTR franchise. The next one is zilebesiran. So we are almost reimagining the opportunity for treatment of hypertension, okay? So we have read two data sets now, which has been positive, KARDIA-1 and KARDIA-2. We are expecting the data by the end of this year for the second half of this year for KARDIA-3. And then the Phase III CVOT is expected to start in the second half of year for zilebesiran. The next one is mivelsiran, which is another differentiated -- potentially differentiated profile that should come. It's targeting the amyloid precursor protein. So this is almost like the mother of all the protein -- amyloid proteins that goes. So we are switching off the tap here. So we have a differentiated approach, both for the cerebral amyloid angiopathy, which is the CAA and Alzheimer's disease. And we have shown some data in the Phase I ongoing early onset Alzheimer's disease patients, where we have got encouraging results so far, showing robust target engagement, but also moving the pathogenic peptides, we are bringing it down, which is much more closer to the disease. And then finally, for the CAA, which is the second leading cause of the intracerebral hemorrhage, which is about 80,000 patients in U.S. alone. So what we are doing is we are running the Phase II study, and it is going on. So far, it's recruiting well. And then finally, it's the Huntington's program, and this is -- we have a very differentiated approach again in terms of how we are targeting the exon 1, which is one of the differentiation we bring in for the Huntington's disease patients where this is -- it will help us prevent widespread neurodegeneration and reduce progression of the Huntington's disease. So we have a bunch of programs exciting in terms of the -- what it can give to the patient community and a multibillion-dollar opportunity.

Great. Very helpful, Sandeep. And last question from us, it's a financial question. So sustainable non-GAAP profitability was a big goal for Alnylam, and it looks like you're on track to hit that in 2025. So I guess what's the next financial goal here? And we start to think more about operating margins, deployment of capital, what's the right balance between investment in the pipeline and maximizing profitability?

I'll take that. And John, you can build if I miss anything. So we are actually actively thinking about our next 5-year set of strategies, as we are looking at our new exciting chapter for the next 5 years. So we definitely want to ensure we can continue to grow the operating income. At the same time, we always believe in sustaining the innovative engine and an R&D strategy that is sustainable, that is differentiated, that can yield higher rates of success -- that has already yielded higher rates of success than the other industry standards known to date. So therefore, as we have highlighted in our recent R&D Day in Feb, it makes us -- for us a lot of sense for us to continue to invest in the organic innovation, which we have been very committed to. So as months go on, we will share more of our long-term strategy at a later time. John, you want to add anything?

I think you covered it. I mean it starts with a successful launch of AMVUTTRA in cardiomyopathy, and we provided the guidance, and we're confident and we're ready. So I think that's where it starts, and Sandeep finished the story well.

John and Sandeep, thanks so much for the excellent discussion. It was very informative.

Yes. Thank you.

Thank you, John. Thank you, everyone.

And thank you, everyone, for joining on the webcast.