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

All right. Good day, everybody. My name is Ash Verma, I cover SMID-cap biotech and spec pharma here at UBS, and welcome to UBS Healthcare Conference. And next company, really excited to present Alnylam Pharmaceuticals. And I have Jeff Poulton, who is the CFO; and John Vest, who is the Senior Vice President of Clinical Research. Thank you, guys, for joining us.

Nice to be here.

Yes. So a lot of excitement around the story. It's been one of the best performers on XBI in the last 2 or 3 years. Maybe if you can just give me a little bit of a sense on key highlights coming out of third quarter earnings, and then we can get into more.

Yes, there's obviously still a lot of focus right now on the cardiomyopathy launch in the U.S. We got approval right at the end of the first quarter. So we've now got 2 quarters under our belt. In Q2, we did $150 million in CM revenue in the second quarter, raised guidance on our second quarter earnings call and then doubled that in Q3. So we think we did $300 million in CM revenue in the third quarter and also upgraded the guidance a second time for the full year, driven by the TTR business. So we raised guidance at the midpoint by $275 million. And so really pleased with the early momentum that we're generating in that business. And I know you're going to have other questions about that. But that's been the focus, I think, for the company this year in terms of what investors have really focused their questions on.

Yes. Got it. Okay. So just maybe like big picture, I mean, you have been providing these 5-year goals, right? So in 2025, if you can like give us an update on where we are.

Yes. It's -- this is something that I think that's unique for Alnylam, and this has gone on for 15 years now. So the current set of 5-year goals that ends at the end of this year is the third iteration. And it's really been something that company has done to put bold goals out into the public marketplace that then really focus the organization to really drive performance and be very accountable for the goals that we put out. When the company has done this again, 3 times now, we've achieved the goals that we've set out every time. So that's kind of how we think about this when we put these goals out. The P5x25 set of goals was really about establishing Alnylam over this period as a leading biotech company. And I think based on where we are now almost at the end of '25, we've achieved that. There were 5 goals: patients, 500,000 patients on an RNAi therapeutic; products, 6 commercial products that have come out of our research laboratories in the market; pipeline, 20 clinical programs. And then 2 financial goals, one around top line growth across the period. The goal was for a 40% CAGR across that 5-year period. Based on the guidance that we've given from -- for this year, we'll well exceed that goal. And then the last one was around profitability that we had guided to get to non-GAAP profitability within that 5-year window. And based on the guidance we've given this year, we're going to achieve that as well. So I think we feel very good about the performance against those 5-year goals. Next question is, will we do it again? And I do think that we will at JPMorgan roll out a new set of goals that we'll be looking out to 2030.

And like for 2030 goals, like is the focus going to be revenue, margin or EPS? Like how does that start?

Yes. I don't want to steal the Evan's thunder. That's obviously something that she'll do at JPM. But I think the sort of the general areas that those goals will focus on are not going to come as a surprise to people. I think one will likely focus around TTR leadership and how do we define that across the 5-year period. We'll look at the pipeline in terms of progressing the pipeline to generate confidence that there's growth beyond TTR. So how would we think about that across the next 5 years? And then lastly, what you're asking about is how will the financial profile of the company evolve over that time period, likely both sort of top line as well as what would the margin profile look like? Those would all likely be things that we'll be talking about at JPMorgan.

Got it. Got it. Yes. I know you mentioned that like you always think about kind of putting ambitious goals out there, right? And 2030 consensus for the Street, actually, like I was just looking at it before getting on here, it's pretty decent place to begin with already with the $10.5 billion in revenue and a pretty substantial margin profile. Like I mean, maybe if you can -- to the extent that you can comment on that and just like qualitatively, what are the elements that you have to achieve that?

I mean I think that's what the goals will focus on in terms of expectations across the period, right? Again, from a financial perspective, I think we'll be talking about top line expectations as well as how the margin profile will emerge as we've now just become profitable and kind of how profitable, how fast will the company become? I think that's what will want to guide people on.

Great. So yes, in terms of the dynamics for the launch then, so can you give us a sense of like what are the drivers behind this acceleration?

I think the thing that went better and faster than we expected, and this was really what we talked about for the second quarter call was around access. So this is a buy-and-bill drug. So there were a couple of things that we were really focused on as we got the approval and launched the drug on the provider side, so those that are actually purchasing the product, administering it and then getting reimbursed for it. There's about 170 health systems. So think of these are networks of hospitals where the vast majority of these CM patients are being treated. We had to get the drug on formulary at these health systems to enable those health systems to start ordering the drug. And we, generally speaking, completed almost a vast majority of that in Q2 and now completely done in Q3. That went faster than we had anticipated. We had been talking about the revenue trajectory as being a second half of the year story before we launched. So that was one very early unlock that enabled faster revenue trajectory. And then the second component of access is around the payer side. And what you have to do is work with the payers to get policies in place to enable access to the drug. And we've done that very effectively as well. So for the most part, we've got first-line access to the drug. We're not seeing a lot of step edits where you have to go through another product to get access to AMVUTTRA. It's a heavy Medicare population. It's about 80% Medicare split evenly between fee-for-service and Medicare Advantage. And then a smaller part of the market is commercial. But from a payer standpoint, we're really pleased with that first-line access for the product because that's really how we're positioning the product as a first-line product. It's a progressive fatal disease. Physicians have choices to make in terms of what product do I put the patient on first. And given the nature of the disease, we're making the case to physicians that this should be the product that you reach for first. And again, from an access perspective, they have the ability to get the patients on it as a first-line choice.

All right. So there, like just like you said, like second quarter in the launch, like where is most of the focus coming from the patients? Like is it first line as you're seeing? Or is it -- what's the mix like?

Yes. I mean, right out of the gate in the second quarter, there was a larger portion of the initial kind of prescriptions or start forms that were coming through in the U.S. that were second line. So there probably was a little bit of waiting for the product to be approved where maybe patients weren't doing well on the existing therapies where there was a pretty quick sort of switch to AMVUTTRA. But over the course of the second quarter, that first-line versus second-line source of business really balanced out and then that continued through the third quarter. So we're really seeing growth and equal growth, I would say, in terms of sources of business from both first line and second line. And I do think that positions us uniquely among the 3 products that are in the market that we've got a good source of both first-line growth as well as second line growth. So that's what we really have seen now for 2 quarters in the U.S. Good balance.

Yes. I know just like early in the launch, there's a lot of different dynamics that can be at play, like one of the things about the combo use for like how much of that are you seeing?

Yes. I mean that's predominantly monotherapy, which is what we have expected just given the cost of putting 2 drugs like this together. There is some combo use, and there's interest in that. But from a payer standpoint, they're going to make that pretty restrictive, I think, until we get to a point where you get a generic product in the market, which right now, I think the expectation is the end of 2028 in the U.S. is when we'll likely see a tafamidis generic. That will likely unlock the opportunity for more combination therapy at that point. We're seeing some of it today, but it's primarily still monotherapy.

Got it. Okay. I think -- so you have the volume growth pretty significant lined ahead of you. And sometimes when these like new market formation, I think there is a tendency that investors are kind of worried about like is there a pricing degradation that can happen going from here? So effectively like what happened with GLP-1s in the last few years, right? So I'm trying to understand like on the TTR side, is that something that is possible? Like where does the gross to net like go in the long run?

Yes. I mean I think what we said when we launched where we -- on the approval call for the cardiomyopathy indication, we talked about leaving list price where it was in the U.S. So no change. But we did anticipate net price gradually coming down over time as we ramp volume for the business. And I think for 2025, what we talked about specifically was we expected a mid-single-digit year-over-year price decline for the TTR business. We're on -- I think we're on track to sort of deliver that. I mean the volume opportunity is so significant in CM that is price is coming down gradually, which I do think will be the sort of the general direction that this will go. The volume opportunity obviously more than offsets what you're giving up in price. So that's the way we're thinking about it right now. We feel good about '26. I mean most of these payers have kind of got policies locked in for '26 and what I described for '25 in terms of broad first-line access, we anticipate that to be the case for '26 as well.

So it's kind of the continuation of the same trend that we are seeing in '25?

I think that's -- our expectation is gradual reduction in net price over time as the volume in our business continues to ramp up.

Right. And then the other aspect of this, just if you can talk about like the Part B versus Part D dynamic on how that shakes out different.

Look, we've -- I've talked already about the success that we've had on the payer side, right, both on the provider and the payer side. We've unlocked the provider side where we've got the drug on formulary. So these hospital networks have the ability to buy and build a product now. We've talked about on the payer side, the success that we've had in getting policies written that enable first-line access. One of the things I think that's unique that Alnylam does that's enabled some of that on the payer side are value-based agreements that we have in place across all of our products, but we've extended those for cardiomyopathy as we're launching in CM. And essentially, what that does is that it gives the payers confidence that the patients are going to -- what they're paying for, they're going to get because if the patients stay on the drug, there's no rebate. If the patient starts on the drug and then drops off, discontinues, then rebates kick in. Payers really like that for a rare disease, high-priced product like this that what they're paying for, they're going to get the benefit of because they're worried about the downstream costs if these patients are not staying compliant to the drug. So we're given a commitment from a compliance perspective. And I think that's been part of the story that's enabled the access that we have.

Got it. And then just in terms of the competing dynamics so between the 3 products that you talked about, yes, like where is the -- is it ultimately like expanding the pie? Or where are you taking share?

Yes, I think the expectation is that over time, as you've got more voices in the market that you are going to see accelerating growth. It's probably a little early to say precisely that that's happening, but we do expect that, that will happen. Look, we're very focused on that first line positioning right now, and I think we're competing very effectively there. I think the second line business is going to come for us. But again, both of those right now are sources of growth for the franchise, which is the place that we want to be.

Great. Excellent. So with that, I'll switch over to you, John. Maybe just if you can talk about the next-gen science here and maybe give us an idea like where we are in the development cycle?

Yes, sure. So I mean, look, we're obviously absolutely thrilled with the profile of AMVUTTRA, but you're asking about nucresiran, which is our next generation, and we really think we can take things to the next level with that. Based on the results that we had in our Phase I study with nucresiran, we're highly confident that we'll be able to achieve upwards of 95% TTR reduction compared to we get about 85% with vutrisiran. And we're also anticipating very low interpatient variability, meaning that the vast majority of patients will reach that -- those high levels of knockdown of 90% plus. And this is with a twice annual dosing treatment regimen. So we're really, really excited about that based on everything that we've seen. We know in the hereditary TTR polyneuropathy space, lower TTR reduction drives better outcomes. And this has also been something that's observed consistently in other forms of amyloidosis like AL amyloidosis, where the deeper you can knock down that pathogenic protein, the better the outcomes are. So it's certainly our hope not only that we'll achieve this profile, achieve more convenient dosing for patients, but we believe that will drive better outcomes. So we're really excited. We've already kicked off our TRITON-CM. So this is an outcome study in ATTR cardiomyopathy. And we are in parallel initiating a study in hereditary TRITON-PN. So as a study in hereditary polyneuropathy, and we're off to a great start. So we're very excited about this.

Yes. Maybe just on TRITON-CM. Yes, great to see that start. Like where are you on the enrollment progression? And like when can we expect the top line for that?

Yes. I can't comment in detail on enrollment, but we're pleased with where we are. We're leveraging our now vast experience in this space in operationalizing these studies around the world. We're capitalizing on that experience, and we're really pleased with where we are. But I can't comment too much on exactly where enrollment is at this point of time. We've guided that we would anticipate launching this in CM in the 2030 time frame and that the hereditary PN is an opportunity for early to market that we can bring that based on that study design. More streamlined approach that we can bring that to market a year or 2 earlier.

One, I mean, one of the benefits of this financially is that there's not a royalty burden on the third-generation product. And so if the product has the profile that John described in terms of better efficacy, better outcomes, combined with the more convenient dosing, we would think that this would be a business that we could switch fairly quickly as we launch into the market. And that from a gross margin and obviously, a bottom line perspective would really allow us to expand, we think, margins fairly quickly for the company. So this is an important one for us.

Yes. Like as these trials are progressing, is there any like competition that you see from the new product launch? Or like are you able to enroll patients in the study irrespective of the...

Yes. That's a fair question. Again, I would point to the experience we have here. We know how to run these studies. We know how to enroll them, and it's a big world. And certainly, we will take that into account in our footprint and where we are and how we roll out that study, but we're really comfortable.

We're targeting 1,200 patients in this study globally, right? We did -- we talked about patient numbers at Q2. We think we put 1,400 CM patients in the second quarter just in the U.S. on therapy. So it's -- the market is big, right? So I do think that we're going to be able to enroll the study without having much of an impact at all on the commercial opportunity that we're seeing.

Yes. Got it. And then just in terms of the design of these studies, if you can talk about that a little bit, like what effectively for CM and PN, what is the construct of the study? And what type of patients are you essentially looking for?

Yes. Let me start with the CM study. That's as Jeff said, that we're targeting about 1,200 patients. This will be placebo-controlled. Importantly, and these are patients with ATTR-CM, so both hereditary and wild type. There will be no restriction on stabilizers in the study. So we would certainly anticipate and we've designed the study with the anticipation that the large majority of the patients will be on background of stabilizers. But we're -- our anticipation here with the global footprint, we'll be able to thoroughly characterize the experience with that drug, both in combination with the stabilizer as well as the monotherapy experience. It's going to be an event-driven outcome study. So we'll run until we've got the requisite number of events to be highly confident that we'll achieve our primary endpoint. And the way that the dynamic in that space has happened, we'd anticipate that these patients will -- as we saw with HELIOS-B, which was reflective of a contemporary population with disease that's more reflective of what's out there today, patients a little bit milder on lots of background therapy, we'll continue that trajectory in TRITON-CM so that we're able to characterize this in today's patients.

Got it. Okay. And then you also have some data that you reported for zilebesiran. So for that, this KARDIA-3 study, right, just overall, like I wanted to understand like what are the key highlights from that and how the physician feedback has been?

Yes. And I would encourage everybody -- but I'll certainly comment, but I would encourage everybody to go and it's on our website. You can see the cast from the ESC Congress and the KOLs who are luminaries in the hypertension space who presented, there really paint this picture well. We are really excited about this, and we believe that the prescribing physicians out there share this excitement for this to really redefine paradigm of how hypertension is treated. And I'd point to a couple of key things here. Number one, this addresses the issues around adherence that we see with hypertension. A big, big problem in this space is that patients -- there are effective therapies out there, but patients don't take them with a high pill burden and having to do it every single day. Here, we have a profile where we'll be able with the twice annual subcutaneous injection to have tonic control of blood pressure, which is point two, that with currently available therapies, there's more variation both throughout the day, diurnal variation and over time as well, we're able here to have clamped control of blood pressure over time. And then just what we see in the population that we'll be looking at in the ZENITH study, which is our outcome study, we've kicked off patients who are on a background of at least 2 antihypertensive medications, including a diuretic, we're seeing 8 to 10 millimeters of blood pressure reduction, which is certainly 5 millimeters or greater is very clearly associated with the benefits and outcomes that we're looking at. So collectively, we really think we have an opportunity here to not just impact the patients with this disease, but to completely redefine the way people think about treating it.

Got it. Maybe just like coming back to you, Jeff, I think for the next 5 years, there's 2 different dynamics at play, right? So hopefully, you get the next gen in the market by 2030, let's say, and then you also have the tafamidis IP going away. So in terms of like what you see the impact of that on AMVUTTRA from like a revenue standpoint and when do you start to sort of convert the patient? So you have a few different dynamics here. Like maybe if you can talk about like how do you think that will play on?

Look, I think we're confident in the durability of the TTR franchise that we've got to be able to sort of grow through that period when taf would go generic. I do think that at that point that the market will likely start to pivot more towards a combination market. I think we've got some really interesting data actually in the combination setting, which John can probably speak to from HELIOS-B that does show up in our label. And so I do think that would be supportive of using the product that way at the point in time where the payers will allow more of that. And John also described for the third-generation product that the design of that study is largely going to be on top of a stabilizer. And that will be a much larger study than HELIOS-B and likely will allow us to have a specific claim associated with that. So I think we're well positioned to grow through that period given the profile of the product that we've got that would support using it in combination with a stabilizer.

Great. Yes. A couple of other pipeline questions. And before that, I'll just ask for the audience in the room, if you have any questions, feel free to send them or through the QR code, and we can take them over. But just some of the early stage pipeline. So mivelsiran, so this is just kind of the status on the Alzheimer's and CAA, like where are we on that? And what's the next step?

Yes. So mivelsiran, which targets amyloid precursor protein, really exciting program, which is currently in the clinic for both Alzheimer's disease as well as CAA, cerebral amyloid angiopathy which is a leading cause of hemorrhagic stroke. And we released data from our Alzheimer's disease program earlier this summer, multi-dose data, very encouraged with what we're seeing both in terms of target engagement and the pharmacodynamic profile, where with twice annual -- every 6-month dosing, we're seeing profound and sustained impact on the target protein and very importantly, also encouraged with the safety profile of the drug. So that's -- we're moving on there. I don't know that we can comment on when we will release data from that next. But then I think also just to highlight that we're also in the cerebral amyloid angiopathy, and this is a real blue ocean scenario. There's really nothing to offer these patients. And again, it's a devastating cause of hemorrhagic stroke, and we're really excited about that opportunity as well. We have what we think is a differentiated approach and profile here. APP is genetically validated as being important -- fundamental importance in both of these diseases. With our approach, we're able to knock down both intracellular and extracellular components of this protein, which is differentiated from, say, antibody approaches to treating Alzheimer's disease where you can only get at the extracellular protein. So we'll update as U.S. results become available, but really excited about the progress we're making here.

A tough area with a lot of room for innovation there. So exciting opportunity. And then I know like the HTT02 in Huntington disease, so that's another one. So yes, if you can talk about like what's the differentiation that you're trying to draw from that and where we are?

Yes. Again, as with the APP programs, this HTT is just -- there is hard to think of a disease with a more devastating consequence and greater unmet need than Huntington's. And we have what we believe, again, is a really differentiated approach. Our exon 1 targeting strategy, we're knocking down not only the full-length Huntington's protein, but also a shorter segment HTT1a variant of the protein. And it's -- we believe it's a hypothesis that targeting both of these is going to be fundamental to unlocking the full potential of the drug. We're in the clinic. And I guess I would -- I probably can't comment specifically on when we'll update. We have at some point next year at a scientific congress we'll update on the results of that Phase I study. . I think in terms of differentiating, maybe just to point to a couple of other things, though. We are able to broadly penetrate all regions of the brain as opposed to some of the other -- I suppose the uniQure's frequently a question we get that's targeted to a very specific region of the brain. So we believe that we're going to be able to both widely target different areas of the brain and also based on what we've seen in clinic so far, optimistic that we'll be able to push knockdown of the drug. Some other competitor programs have run into platform toxicities as they've tried to get to deeper levels of their pharmacodynamic effect. So we think we can really push and test this therapeutic hypothesis with this compound. We're very optimistic.

Got it. Yes. I mean you do have a bunch of different early phase trials going on, right? Like I mean, outside of the ones that we talked about, like which ones do you think you're most excited about?

One thing I would highlight is ALN-6400. This is -- we're targeting plasminogen that we believe has the potential to be a universal hemostatic agent. So we talk about this as the potential for a pipeline and a product. We've disclosed that we'll be starting by the end of this year. We've disclosed our first or initial disease, HHT or hereditary hemorrhagic telangiectasia, which, again, is a devastating disease with a very large unmet need. But based on our preclinical data, what we've seen in the clinic to date, we're optimistic that this concept could be applied across a wide range of bleeding disorders with the potential to achieve hemostasis without increasing risk of thrombosis, which is the -- that's sort of the holy grail in treatment of bleeding disorders. So that's one. And then also just to speak about we had highlighted, I believe, at our last R&D Day, our ambition that we would be in every major tissue by the year 2030, and we're well on our way to first of 2 new tissues adipose with ACVR1 as well as our muscle programs. We haven't disclosed the targets or indications there, but we're well on our way in getting into the clinic in both of those new tissues within the next few months. So we're very excited about that. More to follow on the muscle program and other tissues over time.

Good stuff. Great. So any closing remarks, Jeff, from you?

I think you wrap it up. You've covered the sort of the key focus areas, and we look forward to laying out that kind of the 2030 equity story at JPMorgan.

Great. Excellent. Thank you guys for this. And yes, very excited for your future and looking forward to keeping in touch.

Thank you.

Thank you.