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

All right. Thank you, everyone, for coming today. This is to the TD Cowen Healthcare Conference and the fireside chat for Alnylam Pharmaceuticals. I am the covering analyst Ritu Baral. And with us from Alnylam, we have Kevin Fitzgerald, CSO; and Jeff Poulton, Chief Financial Officer. So guys, welcome. Thank you for being here. Let's start with AMVUTTRA because that's where every conversation of mine starts. And the revenue growth drivers, sustainability of growth specifically. How are you guys describing the key drivers behind AMVUTTRA's recent revenue growth? And how sustainable is this trajectory not just through 2026, but beyond?

Yes. Thanks for the question. I'd say there's probably 2 or 3 fundamental things that underpin our confidence in the growth going forward. One is just the growth of the category in general. This is an underdiagnosed, undertreated disease. We think probably you're at about a 20%, 25% treatment rate today. And if you look back 2 or 3 years when there was only a single therapy in the market, it's been growing fairly consistently the last several years, about 40% a year. We do anticipate that you're going to continue to see robust growth on a go-forward basis. Now you've got 3 players in the market.

You're talking about treatment or diagnosis.

We're just talking about market growth, treatment...

Treat...

Treatment, right? More patients coming onto therapy. And that 40% growth in treated patients over the last several years has been with one therapy in the market. What's been the standard of care, Pfizer's product. And you've got 3 companies in the market today, all investing behind disease awareness and driving treatment rates. And so that should be something that we have a lot of confidence in that that's going to continue to grow at a brisk pace. So that's one. Second is market access, which, as you know, Ritu, was a pretty significant debate prior to our launch in terms of being a Part B med, Part B buy-and-bill drug with a higher price than the other Part D products that are in the market. How is that going to work for Alnylam. We're in the second calendar year of the launch today, and I would say it's worked very well. We have 90%-plus percentage of patients today have access to AMVUTTRA is a first-line therapy. And so we have not seen access be a headwind for the brand, and we don't think that is going to change over a period of time. And so -- but we'll continue to stay focused on that. Payers and plans have the ability on an annual basis to look at policies. We feel very good about 2026 in terms of access to AMVUTTRA. And then lastly, of course, is preference, right? Market share, right? What's going to drive the brand first in the first-line part of the market, which is really where we have been very focused since launch is driving preference for AMVUTTRA. It's a progressive fatal disease and patient should be on the best, most potent therapy as early as they can. We think based on the data from HELIOS-B that we have the ability to argue that AMVUTTRA should be the treatment of choice. We shared some share data at JPMorgan through the end of the third quarter that showed our share in the first-line part of the market sort of mid- to high 20s. That's really been a focus for us...

And has that been increasing since then?

I mean we haven't given data for beyond the third quarter, but we feel very good about the positioning of the product in the first-line part of the market...

Was that your internal target, that level? Or are you continuing to see more room for growth...

Yes. I mean I don't think we put out a target. I mean what we've put out in terms of forward-looking information is on 2026 revenue guidance. We guided for the franchise $4.4 billion to $4.7 billion, which would be 83% growth at the midpoint, which would be more than $2 billion in revenue growth on a year-over-year basis. And then longer term, at JPMorgan with the Alnylam 2030 guidance that we put out, we did put a total revenue CAGR out over that period of a 25% total revenue CAGR. And that's not only product sales, that's collaboration revenue and royalty. But certainly, the biggest driver of that revenue CAGR over the period is going to be the TTR franchise. So again, I think that speaks to the confidence that we have in terms of the positioning of the product and the ability of that product to drive durable long-term growth for Alnylam.

As we think about commercial focus, is it really on expanding the first-line percentage and seeing that number?

Yes. I mean I think if we're success -- we think if we're successful in the first-line part of the market, which is the largest segment, that's where you have the opportunity to get access to the most patients. If we're successful there, then that we think will support also success in the second-line part of the market. And we've been very successful since launch in the second-line part of the market. But we've really been focused on driving that first-line share. That's been the focus.

How has payer contracting evolved and step edits now that you're a growing line item and therefore, are payers starting to pay attention.

I mean we've got '26 payer policies that are all set, and we have not seen any...

But not permanently, so they can always...

Every year, they have the ability to do this, but the '26 plans have been set, and there hasn't really been any change from '25 to '26 in terms of access to AMVUTTRA. Again, we're more than 90% of the patients today have access to AMVUTTRA in the first-line setting...

With no step edit.

No step edits. Again, maybe we should just talk about the payer mix. I mean this is a -- given the nature of the disease, this is a heavy-Medicare population. So it's probably about 80% of the patients that are on AMVUTTRA, whether that be for polyneuropathy or for cardiomyopathy, are Medicare patients. And then that Medicare part of the market is split roughly 50-50 between fee-for-service original Medicare part of the market and Medicare Advantage. And just as a reminder, in the original Medicare part of the market, there's no payer policies. There's no management of that part of the Medicare market. So that's obviously a very good segment for us in terms of access.

The fee-for-service.

Yes. The fee-for-service, there's no policies. There's nobody managing that part of the market. The Medicare Advantage, which is really where there was a lot of debate, I think, coming into the launch...

They do cross-manage the B and D.

Very, very little. I mean we have seen very little. Look, I think from a systems perspective to cross-manage B and D is challenging for payers. And so we've seen very little of that in the Medicare Advantage part of the market. So that's almost all first-line opportunity. The smaller part of the market is the commercial part of the market. So that's what's 15%, 20% -- and that's where we did anticipate some cross-management between B and D, and we've seen some of that, right? So that's where the steps are, right? That's where the majority of the steps are in the commercial part of the market. But again, that's a smaller part of the market.

What kind of step edits and what sort of documentation?

I mean it varies by plan, right? In terms of what you have to provide to work your way through the step. And look, we have the ability to support patients and offices when there are steps in place, but it really does vary by plan. There's not a single approach to how those steps are put in place.

How do you assess the midterm competitive threat from WAINUA? I mean, it's not near-term, that data is later this year -- the Phase III...

Yes. Look, this is -- I think one thing that's good with more competitors is what we talked about earlier that this is still largely an underdiagnosed and undertreated patient population. So the more voices that you have, the more it drives those things, and that can be good for everybody that's in the space. So I think I'd start there, number one. It's hard to comment too much further until we see their data. I mean I think there's a few things that -- number one, I'd say is just in terms of the -- how rapidly we knock down TTR, we probably have an advantage there in terms of time to get to there...

So a potential differentiator.

It could be -- I mean, we're going to have to see the data in terms of whether or not that translates into efficacy, but that's one. I think we're going to be very interested to look at the safety data in that study. I mean there's been renal tox issues with ASOs in the past. This is clearly a different molecule. But this is a -- in the cardiomyopathy setting, this is an older, frailer population. So it's going to be interesting to see if there are any safety signals there that could have an impact. In terms of how these products are dosed, we're once a quarter dosed, we're Part B, right? So that's physician administered their Part D once a month. So 4 times a year versus 12, majority of patients would prefer fewer injections to more injections. You can get our products at home. You can have it administered in the home. So that's one differentiator. And then lastly, I think maybe it's instructive to look at what's happened in the polyneuropathy space since they came into the market. So in the U.S., they launched in polyneuropathy at the start of 2024. And if you look at the growth of our PN business prior to their launch, post their launch, you really didn't see any change in the trajectory of the polyneuropathy business. And I think what's happened over time is, with the second entrant in the polyneuropathy part of the market in the U.S. The pie started to expand faster, just as what I said before in terms of another voice, but we're getting majority of that business. We probably have gotten 70% of the new patient starts since they launched in polyneuropathy. So that leadership position that we have, that kind of firmly established position was very helpful in polyneuropathy. We believe that we're going to have a similar situation in the cardiomyopathy part of the market with the head start that we've had on them.

One thing you've been able to do to really lock in that PN market was contracting, whether it was -- I'm still not sure, but I inferred there was certainly ex-U.S. contracting, national orders, national pricing in place. Is that something that you -- is that a strategy you can adopt for cardiomyopathy, whether U.S. and ex-U.S.?

Yes. I mean we're not doing any contracting in the U.S. today per se, right? So I don't think that, that's going to be part of the plan going forward in terms of competition with WAINUA ex-U.S., again, the dynamics are obviously a little bit different around sort of pricing and access than they are in the U.S.

Patient sizes as well. But...

Yes. I mean the polyneuropathy part of the market has been -- it is a much more mature market outside the U.S. because tafamidis got approved outside the U.S. for polyneuropathy and really built that part of the market. That didn't happen in the U.S. And so we were really building the polyneuropathy market in the U.S. with ONPATTRO many years ago. So the dynamics are just a little bit different in polyneuropathy, U.S., ex-U.S.

How do you hope next-gen will evolve into the TTR landscape? This is nucresiran -- and how is enrollment in TRITON.

Yes. I mean we're early days, but I would say enrollment is on track in terms of the plans that we had, and we're really excited about this opportunity. This is a next-gen, so uses different chemistry and allows us to dose less frequently. So we're looking at twice a year dosing, so once every 6 months and deeper knockdown and I would say sort of less variability around that deeper knockdown. So our belief is that, that could translate to better efficacy. We're looking at 95% knockdown versus mid-80s knockdown. And again, TRITON spread around 95% than it is around 85%.

So do you think that's going to end up representing sort of a linear improvement in outcomes?

Again, I think it's hard to say. I think the best data that we have, and looking at deeper knockdown and what efficacy benefits that you see, is in polyneuropathy on mNIS+7. And we do see certainly a relationship with deeper knockdown leads to better efficacy. So I think we're hopeful that we'll see that. We've got 2 studies underway with nucresiran, 2 Phase III studies right now, a polyneuropathy study that is very similar in design to what we did with HELIOS-A and that will read out.

With the same APOLLO-A control arm?

Yes. Yes. And that would be a 2028 launch is the expectation. And then we've got an outcome study for cardiomyopathy that's largely going to be a study that's going to be run on top of tafamidis, much bigger study than polyneuropathy study. This is about 1,200 patients...

What percentage do you think is going to be on top of.

Most will be on taf, right? And I think...

Like 80%, 90%...

I don't think we've put out a percentage, but it's certainly going to be mostly going to be on top of taf. And I think, look, the confidence level that we're going to have a successful study there is based on what we saw in the combination subgroup in HELIOS-B, where we actually saw very good efficacy on top of tafamidis. And actually, that's one of the things that we think sort of speaks to the potency of our mechanism of action that on top of tafamidis, which is 40% of the patients in HELIOS-B, we saw really good efficacy on every endpoint in the study, right? So it certainly seems that the stabilizers are leaving some efficacy on the table. So we've designed the cardiomyopathy nucresiran study with -- in terms of assumptions around powering with really good data from HELIOS-B to support the assumptions that we're making.

Going back to WAINUA for one second, just reminded me of something. One thing that the WAINUA developer has been saying is that they -- based on the design of the study -- they will be able to show stat improvement on all outcomes, I believe, all cardiac outcomes versus taf background. And you have similar data, but not exact data. Can you -- if they're saying that's their differentiator, what do you have to?

And they've got a powering -- their study is powered, right? They've got 1,400 patients in the study, 50% of those are the tafamidis subgroup. So it's a much larger study. We had 40% of the patients in HELIOS-B; it was 655 patients in total, 40% were on taf at baseline, so a much smaller sample size. So they've got a powering advantage, right? So I think our expectation is that they will show stat sig in that subgroup. Now we have data in our label on that subgroup of patients.

It's a different endpoint, but yes.

I mean the primary endpoint is very similar, right? And we have data that shows in that subgroup that there was an advantage. It's in the label, and that should be supportive of physicians using that product in combination. We are seeing some combination use today. That's more restricted, I would say, from a payer standpoint, and we don't think that, that will open up more broadly until path goes generic. But look, we think that based on that data that we can compete in that part of the market when combination therapy becomes more open from a payer standpoint. And the nucresiran study that we talked about earlier is powered, right? In that patient population on top of tafamidis based on the way we've designed that study and the cardiomyopathy readout and launch would be expected in 2030. So we feel comfortable that we're going to be able to compete effectively even in the combination part of the market, first with AMVUTTRA based on the data we have and then certainly with vutrisiran to follow.

So last question on TTR before we move to Kevin in the pipeline. How do you see nucresiran in terms of how we model things? Are you looking at it as sort of continuation of market expansion and sort of keeping the growth going? Or at that point, in 2030, are we looking at sort of duration of franchise as an asset and sort of consolidation?

Yes. I mean I think it will consolidate the TTR business if it has the profile that we think it will, meaning patients would certainly prefer to be on a less frequently administered product, particularly if we have efficacy that looks like it has an advantage. So I do think it will consolidate the TTR business, which is going to be very good for us from a financial perspective.

Margins perspective.

No royalty burden. We've talked about 30% operating margins through 2030 and then the ability to really expand to probably at least mid-40s with a successful nucresiran launch. But I think it will also continue to grow the franchise longer term. Like again, this is a large rare disease that's undertreated today. Beyond 2030, there's still going to be plenty of opportunity to keep driving penetration rates deeper. And I think nucresiran will position us to continue to not only consolidate the AMVUTTRA business, but continue to grow the franchise overall beyond 2030.

With that, we're going to move to the pipeline and the biggest topic that I get talking to investors about the pipeline. This is what I call my airport lounge bar conversation when we're all delayed on flights. What asset in the pipeline should we be focusing on now? What's an internal priority for Alnylam amongst the myriad? I mean this is the downside of having such a rich pipeline, right? Where do you focus? What's the next lever?

Let's talk about the pipeline in general -- zilebesiran. So here's we'll talk about the cardiometabolic franchise in general. We've got zilebesiran for blood pressure. We've got GRB14, which is for diabetes, right? And then we have recently put in the clinic ACVR1c for obesity. So we'll start with zilebesiran, and we can also talk a little bit about how you might combine some of those. So zilebesiran is this product that literally takes blood pressure down and holds it there, right? And so what we know similar to how it's linear between lowering LDL cholesterol and outcomes, blood pressure, if you lower it and keep it down, you do better on outcomes. And in fact, when we looked at the human genetics, the variability in blood pressure, if you go up and down, say you are taking your medication, you're off or it wears off and you spike in blood pressure, it's those spikes actually that are bad for the blood vessels. So overall, the profile of something that comes down unique in the industry and keeps your blood pressure low, we think, is really, really exciting. And we're in a Phase III outcome trial to show that, right? That over time that, that benefit accrues right? So we're very excited about that program. If you look in GRB14 there hasn't been a new novel insulin sensitizer in years, right? And so there's a program where the human genetics is clear that if you lower this protein, you actually prevent that Type 2 diabetes. And so I think it's an insulin sensitizer and that it controls the level of the insulin -- of the insulin receptor itself.

Where are we getting...

We're in Phase II. So we're going to look for data in diabetics by the end of the year.

By that proof of concept -- and that endpoint, you're just looking at HbA1c or like fasting glucose...

No, we're also doing clamps actually.

Clamps.

Both. So there's a subpopulation where we're doing -- we have our program targeting plasminogen, which that's a program where, again, the human genetics, we set out looking for something that could be a universal hemostatic agent without thrombotic risk. So as you look across the targets that people have chosen over the years, most of them genetically carry thrombotic risk because when you change that pathway more towards clotting. So this particular target, plasminogen, what we found profoundly was that individuals could lower the rates of bleeding without a thrombotic risk. And so now we're in a number, there's about 3 million or more patients that have bleeding disorders and only a small segment of them with hemophilia really have treatments. And so we're very excited about -- we've gone into HHT.

What percentage does that -- like non-hemophilia bleeding disorders?

It's the majority of...

It's like 95-plus million. Okay, 90-plus percent -- of that 3 million.

Yes. 3 million.

3 million.

So we started out in an indication HHT, which these individuals actually have fragile blood vessels. And so they bleed constantly, so they can have nosebleeds that last for 2 hours...

What's the particular prevalence for HHT?

There's about -- we probably think between 40,000 to 90,000 of those individuals, and they -- a lot of them actually need to have transfusions. And so this is not just they bleed from their gums. And so we're in a Phase II trial. They're now in patients. And so again, we'll be looking to have data by the end of the year around how that's impacting them. And then we're filing in a second indication that we haven't yet named.

You've discussed some additional indications. Can you walk us through those in the market?

Well, so again, there's a number of them. There's things like hemophilia, right? There's things like von Willebrand disease. There's a couple of others that are smaller. And so we're going to walk through them because we think that this really is going to have benefit in all of those patients.

How do you think of the development path for this asset? Is this something where like you could have 2 trials in similar -- or different, but similar disease populations that could support an approval for the drug?

I mean I think we're going to do for -- the good news is that a lot of the readouts are sort of binary, right? So you have really hard outcomes, which is bleeding, no bleeding. And so as you walk across them, we'll probably do somewhat standard trials in some of them. And as you get to the more sort of the less prevalent diseases, you might think about something like a basket trial.

You have a Phase Ib Huntington's trial with [ HTT02 ] reading out in the second half, too. Can you walk us through those key endpoints and how you see the interpretation of that mechanism evolving, given the overlap of the mechanism with gene therapy and efficacy [indiscernible] data?

Yes. So let's start out with Huntington's devastating disease. And we are going in with a very specific mechanism, which is that we're hitting this thing called exon 1, right? So there's exon 1 and there's the full length. So this is a disease where you have both of those playing an important role. So you really want to hit exon 1. And it wasn't known in the field for a long time that exon 1 was important. But now as this has evolved, it's very clear that exon 1 is part of that disease. And so we have unique mechanism here where we have an RNAi that targets that. It took us a little bit extra time to actually figure out how to do that, but we've got a really nice molecule that does that. We're in Phase I. We're looking at lowering in patients, have data by the end of the year that will look at safety of that molecule as well as a degree of lowering and we're looking for something maybe 40%, 50%. That's where the field thinks there'll be significant benefit for...

40% to 50% knockdown...

Knockdown. And so I think the uniQure data -- I don't like to comment on other people's data, it was a very small trial -- but I think if anything, that if you sort of read the tea leaves, it does look like that's the only other thing out there that's an exon 1 mechanism. I mean it maybe seemed to have some hints. I think the FDA has come back and said they want to see a bigger controlled study, but that's...

Putting the landscape together and if you do target this 40% to 50% knockdown for the next study, speculating, obviously, on contingent data, but speculating how long do you think you need to treat before you start moving the endpoints that FDA cares about?

I mean I'm not going to speculate on our Phase II design, but I think we're still looking at the data. There are natural history studies that are coming out of the progression of the disease. There are neurological endpoints that you're going to want to look at, but we're in the midst of sort of figuring out exactly how long and what those endpoints should be with all the KOLs.

In our last few minutes, I want to talk about next 5 years and long term. This is the conversation that I have with the generalists that are really looking on the long term. Are you going to be focused on maintaining and growing profitability or more on pipeline development and expansion into new therapeutic areas? I mean you guys used to be the R&D engine. You had a huge pipeline and absolutely no profits. And a huge R&D budget, which you reined in from some of your first few years, we've had that conversation. So how is that balance evolving?

Yes. This is where I think the Alnylam 2030 set of goals that we shared a couple of months ago is really helpful because I do think it sort of gives a picture of where we're going. Just to recap, I mean, that's really focused on 3 things. One is leadership in TTR, which we talked about earlier. Two is about, frankly, expanding the pipeline and creating opportunities to grow durably beyond TTR. We can talk about that more in a second. And then it's really about how we're going to scale the business financially. So we talked about the top line growth expectations, right? We set a 25% CAGR. And then we provided our view of operating margins across the period, and we're looking at 30% across the period. So let me walk through that because there were a lot of questions about that. And frankly, we anticipated that because the market, if you looked at consensus going into JPMorgan and you look out 5 years, the market's expectations in terms of profitability were frankly much higher. They were at about 50%, actually better than 50% operating margins. And that's really, really difficult, if not impossible, with the gross margin. With the cost and the royalty. Yes. Our gross margins are at about 75%. So to have operating margins of 50% when you're frankly starting at 75%, but that just doesn't leave enough room for investment in SG&A and R&D to be at that level. So we needed to be really clear about that with the market. And one of the things that we clarified is how we intend to invest in R&D across the period, and we did set a goal of 30% of revenues reinvested in R&D. We think that's a prudent allocation of capital. Kevin talked about a lot of the things that are in the pipeline today that are going to drive that growth in the years ahead. Primarily, this is going to be focused on internal innovation. And again, I think that's smart given the success that we've had with the platform and the approach that we've taken historically in terms of how we use genetics to drive targets and things that we bring into the clinic. That's not going to change. We're very focused on opening up new tissues, right? We've got a goal to be in 10 tissues by 2030. And maybe the harder R&D goal that we gave, very specific goal was to have 2-plus new therapies either in the market or line of sight to being in the market that can drive substantial growth that are beyond TTR, right? Really, we're really focused on trying to -- we're focused on protecting and growing TTR, but we want to make sure that we can diversify the business. And so that's why we've selected 30% as the place that we see the right investment rate to drive that kind of growth in the pipeline and innovation across the period.

So speaking of potential in-licensing, how -- like what therapeutic areas are you looking into? Or is it going to be more of a technology delivery focus thing to.

Maybe I'll clarify what we said about business development, and then I'll let Kevin maybe comment further on the types of things that we might be interested in. So that 30% reinvestment rate of revenues into R&D, we said primarily is going to be driven by internal, right? R&D. So our focus on RNAi. We said that we would start to add selective business development into that mix. That's included in that 30% reinvestment rate. So we do think that we will start to look at external innovation as...

And that's within the 30%...

It's within the 30%, right? We've left ourselves headroom for external innovation in that 30% -- so maybe I'll let Kevin talk about sort of our approach and how we might think about external innovation.

Yes. So I'd say I'm a drug hunter, right? So in a lot of ways, you're looking for both things that can enhance your technology, right? So what's...

Delivery...

Well, either delivery or a modality that maybe you can combine, right? With an RNAi. So as you start to think about things like that, there are -- for instance, our cemdisiran program with Regeneron for certain indications, it's an antibody with an siRNA, right? So you can get very creative about how you take RNAi as a foundation and maybe add something to it as well as if you start to think through delivery to 10 different tissues, there may be somebody that has a delivery modality that they're using for something else that you can repurpose for delivery to RNAi.

Any favorite therapeutic areas or strategic approach to therapeutic areas? I mean, you've obviously evolved from like an orphan company to targeting much larger indications. TTR is incredibly cuspy if you look at models on whether it's orphan or not. Your partner programs are large. And are you looking for commercial synergies for the marketing force as you look at?

I would say as we look at assets internally and externally, if there's something that fits within a franchise or a therapeutic area. It gets a little bit of weight. I think on the other hand, I'm always looking for what could be the next franchise right? So we're going to be very opportunistic. If there is another large indication where there's high unmet medical need where we think we can really make a huge difference, we'll go there.

And there is the willingness to spend on the SG&A in the midterm.

Yes. I mean I think external opportunities that we're looking at, probably earlier stage is probably much more likely at this point. Again, we've given a pretty robust top line growth expectation across the period. So we don't need to buy near-term revenue. So it's more likely that we're going to see things that are earlier in development that we've been investing internally...

With that, we are a little over time. Thank you, guys. Thank you, Jeff. Thank you, Kevin.

Thank you.