Alnylam Pharmaceuticals, Inc. ($ALNY)

Good morning. I'm Tazeen Ahmad. I'm one of the senior biotech analysts at the bank. It's my pleasure to have our next presenting company with us, Alnylam Pharmaceuticals. Sitting up here on stage with me is Jeff Poulton, who is, of course, Chief Financial Officer. Jeff, welcome back to Las Vegas. Thanks for making the trip.

No, I always make the trip to Vegas. I'm always here for this one. So I appreciate the invite.

Yes. We have to continue the tradition. So maybe we can start off with a quick overview of the company in case anyone in the room isn't as familiar with Alnylam and its platform.

Yes. I mean we're a 25-year-old company. It was founded based on Nobel Prize winning science. RNAi is really a new modality that we've developed. It was a long haul to figure out some of the delivery challenges with the technology. But over the last 6 or 7 years now, they figured that out, and we've had a steady stream of products launching into the market. We've built the commercial side of the business, which I know we're going to talk a lot about here in the fireside chat. We've transitioned the company from being a loss-making company to now being a profitable company. And we've put out new 2030 goals earlier this year to kind of provide a picture of where we think we're taking the company over the next 5 years. We think there's a lot of top line growth ahead. And importantly, now that we're profitable and we've got a real nice trajectory on the top line, we have the ability to significantly invest in the pipeline, which we're taking the opportunity to do because we want to be more than just a TTR company. That's an incredibly important franchise for us, and we intend to invest in that, but we want to be able to grow beyond TTR. And this next 5 years from a pipeline perspective is really about setting up that foundation so that there is growth beyond TTR. So there's a lot to be excited about here, I think.

We agree. So let's talk about Amvutra, which is the key topic of...

Yes.

So you launched the product last year. In fact, it was this time last year, we were sitting here in early innings of the launch. So now we're comfortably into a few quarters. You have the sell side had to raise estimates for last year just because of the pace with which sales grew -- you have now provided 2026 sales guidance for [indiscernible] in particular, the ranges $4.4 billion to $4.7 billion.

That's total TTR, it's almost all in both just to be clear. Yes. Yes.

And so that's healthy growth over what you reported last year.

Yes.

And you talked about very early -- very early in the year, some of the dynamics that would be impacting 1Q. So now that 1Q is reported and behind us, you've reiterated guide, maybe talk to us about what you're seeing that's giving you confidence that you at least reiterate guide, given 1Q's growth wasn't necessarily as robust as previous quarters.

Yes. Maybe I'll start there just to recap what we reported and what the kind of pushes and pulls were on Q1 and then talk about the we reiterated and why we're confident in our ability to achieve the guidance. So we reported a couple of weeks ago, we did $910 million in revenue for TTR, which is 150% plus growth year-over-year. We didn't launch until CM in Q2 last year. So obviously, a huge amount of growth compared to Q1 last year. Relative to the quarterly growth, that's what you're sort of mentioning in terms of lower growth, right? So we did -- in Q4, we did $134 million of TTR growth compared to Q3 and when we were on our year-end call, we talked about Q1 was going to be lower growth than what we delivered in Q4 for a number of reasons. One, Outside the U.S., we are actually guiding to a reduction in revenue in TTR from Q4 to Q1, about $25 million is what we said to expect. And a lot of that was going to be driven by pricing in Germany. So as we launch in new markets outside the U.S. where we've expanded the label to include CM, we are likely adjusting price downward from where it was for PN, right? And we've been on the market outside the U.S. in PN for 5 years. And so as you bring the price down to launch in CM, it has an impact on your existing PN business because we've got one price for the product. And so given the size of the market in Germany and given the price adjustment and size of the price adjustment, that was what was creating the headwind in Q1 because that price adjustment hit right at the end of the fourth quarter, so really impacted Q1. Now the result in International in Q1 was a little better than down 25%. It was down 7%. The impact in Germany was what we expected. So we did better outside of Germany than what we had anticipated. And a couple of things. One is the CM launch in Japan, which is the first market that we launched in outside the U.S. last about -- middle of last year is going very well. And actually, they did better in Q1 than what we had anticipated around CM volumes. So that was good. And then the PN business, just -- which is still the main driver outside the U.S. as we're just starting to get going in CM, the PN business is performing well, and that was a little better than we anticipated. So that's why international did a little better than we expected. In the U.S. We grew $59 million in Q1. We had grown $111 million in Q4. And when we talked about Q1 being a little bit compressed in terms of quarter-on-quarter growth, there were a couple of things that were impacting the U.S. One is insurance reauthorizations, which is pretty typical seasonality for these high-priced meds. And we did see that play out if we looked at demand, meaning shipments to patients for -- to get the injection as well as start forms, which is kind of the prescription of the start to get patients on therapy. It was slower early in Q1 than it was as we were exiting Q1. And so we do think the fact that the offices had some administrative burden earlier in the year was impacting things. And then the other thing that we highlighted for the U.S. is just the way the product gets ordered and shipped and revenue booked. We have a closed distribution network where we've got 1 major distribution partner that about 80% of the volume flows through. They order every Monday, every week on a Monday, product ships Tuesday, revenue books on Wednesday. So to the extent that there's a different number of Wednesdays when you're comparing growth across periods that can have an impact. It just so happened with the way the calendar fell that Q4 last year had 14 Wednesdays and Q1 had 12. So all that, I would say, generally played out like we expected. So now to your point, we reiterated the guidance to hit the midpoint of the guidance, we need to average $150 million of growth a quarter the rest of the year. We just did $50 million, $52 million, right? So there needs to be a step up in growth for us to achieve that. Ex U.S., like we're not going to have this dynamic that we had in Germany the rest of the year. So we absolutely expect international is going to be contributing to that $150 million growth on a quarterly basis through the rest of the year. So that will be beneficial to us. And then in the U.S., we definitely expect a step-up in growth. I think -- first of all, I would say the foundation that we've established in the last 12 months or so, particularly around access and logistics around buy and bill, we've really reduced the friction. I think, first, from a -- from a payer perspective, we've got about 90% plus of patients that can access AMVUTTRA first line, which was a huge debate as we were coming into the launch. So there's no friction there in terms of patients getting access to the product when the doctors decide to put them on AMVUTTRA. Patients, the majority of the patients have $0 and out-of-pocket co-pay. So that's not a particular burden that's preventing access to the medicine. And then as it relates to buy and bill on the provider network side, we've done a very good job in the health systems that treat a lot of these patients to get AMVUTTRA on formulary again. So when the doctors write it, the product gets filled, and we've also created a sort of pretty broad network of third-party infusion clinics, which is really important for a buy-and-bill drug. We've got a couple of thousand clinics that patients could access around the U.S. And that puts most patients within 10 miles of an infusion clinic. And where that's important is if you have a doctor, let's say, that's in the community, that's not experienced with buy and bill and they don't want to do it. They don't have to buy and bill. They refer the patient to the clinic to get the drug administered. They can still treat the patient. And so we've done that very well. So that foundation is really strong. What we have to do and obviously now to drive performance for the rest of the year is to drive demand, right? And one of the things that we talked about on the call is what we're seeing so far a year into this is when you get a physician to try AMVUTTRA for the first time, it leads them to prescribing more AMVUTTRA. And that doesn't matter if they start in second line or if they start in first line, they use more of the products. So if we look across the physician universe that's using AMVUTTRA today, we actually feel very good about the share that we have there, but we want more physicians to use AMVUTTRA, right? This is obviously a market that we've launched into in the last year where Pfizer was the only game in town for 5 or 6 years, and that has been the standard of care. So it takes time to change that. And so from a tactical perspective commercially, we are really focused now on getting to physicians that are not writing AMVUTTRA at all today and doing the hard work to get them to to experience it because we think if we can get them to use it for the first time, they'll use more of it. And that's really going to be critical to the performance of the business for the balance of the year. So that's something, I think, that we will report on quarterly is that prescriber base and how it's expanding because that's a big focus for us right now.

Okay.So we're halfway into this quarter. So can you share any qualitative feedback on what you're seeing?

No, I mean it's -- we're not going to -- I'm not going to comment specifically on Q2. Again, I do think the things that I just highlighted in terms of our expectations of what's going to drive stronger growth of the rest of the year are things that we remain confident in, but I'm not going to provide any specifics to this point on Q2 performance.

So it's more based on the confidence that you have in reiterating the guidance -- that's the reason for the question.

Yes. I mean we remain confident in our ability to achieve the guidance, which is why we reiterated. Obviously, Q2 is going to be important. We'll be halfway through the year. We need to see that growth inflection from Q1. And I'm sure people are going to be very interested to see that.

Do you expect Q1 to have similar dynamics on a go-forward basis?

Probably some of these things like the insurance reauthorization point, I think, is an issue. And that's a bit of a learning probably just because the volumes are more than when we were in PN only that it became a little more apparent. What the impact on the business was. That's something that I think that will be something every year that we'll see. Ex U.S. as we get launched in all markets for CM, that dynamic that we had in Germany, that's not going to recur, right? We're launched in Germany now, the U.K. and Italy and Japan, the other major ex-U.S. markets that we're still working on to open up access our France and Spain. They'll either be by the end of the year or early next year. So we'll have a lot of that pricing ex U.S. dynamics behind us, and it will really be about driving volume on a go-forward basis.

In general, what type of price discount do you have to take ex U.S.?

It differs by market, right? And it depends where the PN price is. And look, the way this works in most markets outside the U.S. is they will look at your package of clinical data that will compare it to the products that are in the market for the same indication, they'll assess whether or not the data is looks like better efficacy, similar efficacy and then they'll obviously benchmark your price to those existing products. So typically, we're launching somewhere around the famidous price in these markets, and that's lower than where we were. Again, we were in a much rarer much smaller part of the market in PN. And so price is coming down, but it really does differ market by market depending on where the PN price and what the benchmark it is for CM. But generally speaking, we're adjusting downward as we launch in CM.

Okay. This market is getting more crowded a second to launch, there's a [indiscernible], which is the stable -- another stabilizer.

Yes.

I think during 1Q, there was a lot of conversations at least with investors about the fact that it looked like it continued to increase its momentum throughout the quarter. Can you talk about potential differences relative to how that gets reimbursed versus how AMVUTTRA gets reimbursed as to why that's not necessarily the way of of comparing.

Yes. I mean I don't know that I'm going to talk a lot about ATTRUBY and their performance. It may or may not what might have impacted that. I mean when I look at -- I think they've done well, I think the launch to me looks consistent in terms of the amount of revenue growth that they've had quarterly. But I don't know that I'm going to get into a sort of a comparison of reimbursement dynamics in Q1 that may have been different for them because I'm not able to speak to that.

Okay. Now if you think about the next data catalyst that's going to be for [indiscernible] and [indiscernible] and they have a silencer. They were the third ones to go into pivotal. So they took their time to design a big study [indiscernible]...

I think they learned a little bit from the others that went before them.

So relative to HELIOS B, they had a bigger study which was they were able to stratify based on different patient populations. I think people are particularly interested in seeing what the effect will be when you add a silence around top of the stable. So can you talk about the different scenarios and the outcomes you think that would be impactful for Alnylam? So there's obviously the blue sky where the -- it looks good and it looks good on all the subgroups. So should we interpret that as to potential if at all, pressure on AMVUTTRA?

Yes. I mean, I think our expectations are that's going to be a successful study. As you said, it's a much larger study. So there's obviously a then HELIOS-B was. So there's a powering benefit there. I mean there are more than 1,400 patients. We were 650 patients. And you're right. My understanding is the design of the study has about half of those 1,400 patients are on background TAF. So that's going to be a pretty robust data set in combination. And -- in comparison in HELIOS-B, we had about 40% of the patients that were on background TAF at the start of the study, so 250. So they got a much larger data set there. So the powering is different than what we had. Look, I think there is a lot of discussion about that. And if they hit -- they hit in the overall study, which we think they will, then they hit in that subgroup as well. and they have a statistically significant result there. Is that going to give them a benefit commercially. We don't think so. We actually do have data in combination in our label, right, because that was a prespecified subgroup. And the results were consistent in that subgroup, like they were across all subgroups that were studied in HELIOS-B. And so physicians -- some physicians are using it in combination today, likely as a result of the data that we have in the label. So if they hit a statistically significant result in that study, our view is that will be sort of a class benefit, right, and we would get some benefit from that. There's not a huge amount of combination use going on today. There's some, and that's largely because payers are -- have policies in place certainly on the commercial side and the Medicare Advantage part of the market, they all have policies that restrict combination use, right, to manage costs. In the fee-for-service part of the market for us, which is 40% to 50% of our volume, there are no policies that are written to restrict it. So that's probably where we're getting some combination use reimbursed today, but we think the broader unlock for the -- for the combination opportunities when TAF goes generic. And now we've got more clarity on the timing of that. Obviously, with the settlements that Pfizer has recently announced that looks like that will be middle of 2031 before that big unlock occurs. And that's when I think there's going to be a different dynamic in the market likely and how these products are used together, right? And so we can talk a little bit more about that, too. And in terms of some other things that we're working on that might also position us perhaps even more strongly than the way AMVUTTRA is positioned for combination use down the line.

Yes. So we've done survey work on this. It's pretty consistent that doctors feel the best outcome over time is to combine stabilizers of silencers. As you've mentioned, I think the feedback has generally been that silencers are probably not that different from each other that if the study ends up working for one silencer the interpretation would be that you would have similar efficacy seen across all drugs in that class. So we agree on the view that -- and this is probably going to be in the 2030s and after that you see an increase in combinations. But to the point you just made, maybe we can talk about some of the efforts that you're undertaking now that could position the company well for that later on.

Yes. So we've got -- look, we view ourselves as a leader in TTR, and we're investing in this franchise as -- I think as a leader would do. So we've got our third-generation product that's in the clinic right now, 2 Phase II studies, 1 for for PN and 1 for CM and this is nucrisiran, right? And this drug has the promise of being a better drug than AMVUTTRA and hopefully better than we knew as well in terms of knockdown. We see in the Phase I study that we get to 95% knockdown AMVUTTRA is more like mid-80s, and actually, the spread, the variability around that 95% is tighter than the variability around the 85%. And we know, particularly on the PN side, when we get deeper knockdown it leads to better efficacy in the disease. And so we're hopeful that this study, because of the deeper knockdown is going to show better efficacy. So that's kind of point 1. Point 2 with this product is it's got longer duration. So this is a once every 6-month subcu administration, AMVUTTRA, once a quarter, we knew is once a month, right? So that would give us a real convenience advantage from a patient perspective. And we absolutely know patients would much prefer fewer injections than more. And so that would be positive to uptake. And then lastly, from an economic perspective for us, this is pretty meaningful that there's no royalty burden on this product like we have on AMVUTTRA, which is close to 30%, given that there's a tiering of 15% to 30%. But given the tiering and the size of the commercial opportunity, like the weighted average is going to be pretty close to 30%. And so just to touch on what that could mean for us economically and sort of margin-wise longer term. We've guided it with our Alnylam 2030 set of goals to have operating margins around 2030 -- I'm sorry, around 30% across the period out to 2030. That's weighed down by a gross margin because of the royalty we own on AMVUTTRA, that's about 75% across the period. So if nucrisiran delivers on this promise, right, having better efficacy, more convenient, and we get that into the market. That's going to be a very attractive profile, and I think it's going to drive nice uptake. And that really then unlocks a much lower gross margin and more significant operating margin post 2030. And we've talked about it, we see a clear path to mid-40s on operating margins. So this is an important product for us. But let me talk a little bit about, again, the study, the CM study that we're running for that program, nacrisiran. We expect that's a study that it's an outcome study. And one of the things that we did with that study, and this is, frankly, learning from HELIOS-B was rather than a time-bound endpoint, we've got an event-driven end point there, right? So that we sort of were more comfortable with the powering in the study as a result of that because patients are becoming diagnosed earlier and earlier, kind of less advanced in the disease -- event rates are lower. So we've got an event-driven endpoint. I think that makes us feel good about the powering. One of the things that we just announced on the Q1 call is that we've decided to increase the size of that study. We initially announced it was about a 1,250 patient study. And in the protocol, we had given ourselves the option to upsize that by 500 and we chose to do that and announced that on the call. The reason we announced it when we did is because the enrollment is going very, very well in that study. And we didn't announce it and make this decision pretty soon. That study was going to complete enrollment very soon to 1,250. So we've decided to upsize the study. That's mostly around managing time risk with the study because it's an event-driven study. and the patients that we're enrolling in the study are milder. Similar to HELIOS-B, maybe just a little bit milder but there's uncertainty around event rates and how long will it take once you get it fully enrolled to hit that number of endpoints. And so having more patients in the study obviously gives you an opportunity to accrue more events faster. So we feel actually even though we've upsized the study and we've got a little bit more enrolling to do, our confidence level in 2030 is higher. And that -- now that we know when TAF is going to go generic to have that product in the market that will have a huge amount of combination data, like that's largely going to be a combination study. We'll have enough monotherapy patients in the study as well to have that part of the label. But that's mostly a 1,750 patient going to be a combination study. And so we'll have that data. We'll have -- I was assuming that the study rolls -- the events accrue the way we think they will, we'll have that product in the market before tafamidis goes generic now given the timing of that. And again, if this becomes largely a combination market, that's good that we're going to have that product position in the market before TAF COs generic. So we're excited about that. And I think that was a meaningful change. I don't know that the market completely understood what we did and why. So I wanted to be clear about that. That's mostly about managing time line risk in the study and getting to the number of events that we need to have to complete the study. And I think the fact that it's enrolling as rapidly as it is, is a very good sign.

Okay. So you talked about making this available and that could be attractive for patients. How is thinking about switching patients from AMVUTTRA to nuclear when it does come out. how would the dynamics of that work?

I mean if -- I talked about the potential for the profile having is a progressive fatal disease. So if we have efficacy data that looks better than the existing silencers that are in the market, I think that's going to drive uptake, added to the fact that if it's twice a year rather than 4x a year or 12x a year, I think it's going to drive -- it's going to be an attractive profile for patients. And I think that will drive a lot of uptake for us.

Okay. Maybe another question about near-term competition. Assuming that Astra has positive data this year they apply and then they launch next year. What is the concern that they might try to use price as a way of trying to gain traction in the market?

Yes. I mean they're -- today, they're a Part D product. They're not in the market for CM, they're in the market for PN. And in the U.S., they're actually priced higher than we are. I think, close to 10% higher. We're already competing against 2 Part D products, both stabilizers, and they're both at a lower price point than we are today. And I talked earlier about access for us. That fact that there's 2 products on the market that are at a lower price point has not impacted our ability to get AMVUTTRA patients on a first-line basis, right? More than 90% of patients have access to it. So I don't think having a third Part D product that's at a lower price is actually going to change the dynamics that we're dealing with today and meaningfully impact access to AMVUTTRA. So again, we feel comfortable with the access dynamics at this point in time. I don't think that's going to change dramatically when they launch.

Okay. And then on discontinuations, are we tracking in line to what you would expect?

Yes. This is one of the things I believe that's underappreciated in the value of our medicine. We've got adherence and compliance on our drug that are more than 90%. And generally speaking, the biggest reasons why patients discontinue taking the therapies because they pass away, right? This is a fatal disease ultimately. And I think when you compare that just in general to patients that are on products that require them to take daily pills or some -- in the case of one of our competitors twice a day to take pills, patients even with these kinds of diseases are not compliant, right? And we have the benefit of very good compliance. I think partly because it's fairly convenient once a quarter, which aligns with physician visits that they have. I think one of the things that we also do very well is we've got a patient services hub that supports these patients and is actively working with patients to make sure that on a quarterly basis that they're getting access to the medicine that they need. But ultimately, that can lead to better outcomes, just being compliant. And so I think that's a big advantage for us, and that's something that we're going to continue to really focus on to make sure that patients are staying on the drug. And obviously, patients staying on drug and getting it every quarter also has a beneficial impact to us in terms of consistent revenue.

Okay. So let's talk about the rest of the pipeline. So maybe just remind us of what data updates do you expect from the earlier pipe?

Yes. We -- I think we've got 3 readouts in the second half of the year that are worth paying attention to. Maybe we'll start with our Huntington program. This is a program that we're -- that's in the Phase I study that we're developing in partnership with Regeneron. We've got an EXON 1 targeting approach here. We're running a Phase I study that's primarily looking at safety and PK/PD, like how much knockdown can we get? We think for a variety of reasons. We may have the right approach here to treat this disease. But what we really want to learn from this study, frankly, is what level of knockdown can we get, hopefully, safely and form a dose that we would then take forward into a study that would really be looking at efficacy. So we'll have that initial data in that program later this year. Our leading disorder program that's targeting plasminogen and this is a program that we think could ultimately be a pipeline and a product type opportunity where we have the ability across a variety of bleeding disorders to sort of improve clot stability with the genetics on this particular target without increasing the risk of thrombosis. And there's hundreds of bleeding disorders that very few of have treatments today. The first indication that we've got a Phase II ongoing right now is in a disease HHT. I'm not going to pronounce it because I'll get it wrong, but that will have a Phase II readout that's a proof-of-concept readout where we're really looking at -- we're looking at the number of nose bleeds in that study. So we'll have that in the second half of the year. In addition to we have an ongoing Phase I study in healthy volunteers. We'll have some additional data. We're actually expecting to start a second indication Phase II with that same therapy. -- this year. And so we'll actually do a -- we're going to do an R&D type webinar on this program.later in the second quarter. So pay attention to that, we'll put some news out on that. I think this is an important one that the market probably isn't as educated on us, we would like them to be. So we're going to spend some time talking about the product as well as the market opportunity that we see for that later in Q2. And then...

Do you know how many -- sorry to interrupt you, but how many HHD patients are there?

I think in the U.S., from a prevalence perspective, the number is about 70,000. Now all those patients aren't diagnosed and treated today. There are actually no on-label treatments for this disease today. This is one of the things, I think, that we'll educate on on the webinar in terms of what's the burden of treatment associated with this disease. It's a pretty horrific disease in terms of impact on quality of life. And so, we think it's an interesting opportunity. So more to come on that in the second quarter. And then the last thing, I think, from a readout perspective, is our initial obesity program, where we're targeting adipose tissue to go after ACVR1C. So this will -- again, this will be early Phase I data where we'll get PK/PD information and we'll have that by the end of the year as well.

And how big is that opportunity?

I mean to be city, it's huge, right? But this is lots of questions about some of these targets and some of the competitors have these about how much monotherapy weight loss can you get? How would you position these -- would these be monotherapy would they be combination? I think more to come on that in terms of our perspective on that.

Okay. And then last question on cash.

What was that?

The balance sheet?

Oh, yes. I mean the good thing is I don't have to think about that quite as much as I used to. We ended the year with around $3 billion in cash, and we're going to start adding cash to the balance sheet as we go now that we're profitable, which is a nice position to be in. Questions about capital allocation and as we start to come up more and more as you start to see a bigger cash balance. And we've talked about the priorities right now are 100% TTR launch continue to invest appropriately behind that to drive demand. So that's a priority. And then on innovation, certainly, internal innovation is the priority, but we have talked about starting to add external innovation into the mix as well. So I do think business development is an area that we will focus and we will start to to spend some dollars on external innovation as well. Likely earlier-stage things. I think, in particular, one of the areas that we're looking for some help externally is on delivery, right? We're trying to get to 10 tissues by 2030, and there's a lot of interesting innovation going on across the industry in delivery. And so that could be an area that we would invest from an external innovation standpoint.

Okay. And that's potentially near term that if you see something...

Yes. I mean we're building the -- I would say we're building the BD muscle now. We've hired a new head of BD in the last 6 months, and she's helping us build that team internally and sort of build the muscle on how you do these things. So we're starting down that path.

Okay. Perfect. With that, we're out of time. So Jeff, thank you.

Thank you.

[indiscernible] time with us.

Appreciate it.

Thanks, everyone, for joining.