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

All right. Good morning, everyone. Thanks for joining us for our next session. My name is Derek Archila. I'm one of the senior biotech analysts here at Wells. With us today is Alnylam Pharmaceuticals. And from the company, we have John Kennedy, Head of Commercial; as well as Pushkal Garg, the Chief of R&D. So gentlemen, thank you so much for joining us and look forward to the discussion here.

Thanks for having us.

Excellent. So maybe the first place to start here would be kind of the TTR revenue outlook for 2026. So John, during the quarter, we learned there were some things that maybe were not really reflected in the guidance, and you kind of gave us a little bit of a reset. So I guess the question now becomes what's the confidence level in kind of the reset guidance? And ultimately, how should we be thinking about future growth, not only for 2026, but kind of beyond.

Yes. Thank you for that. So maybe I'll just start by characterizing the launch. What we see when we look back and then what that means going forward, we'll talk about the guidance along the way. So first and foremost, we're about 18 months into this launch for cardiomyopathy. So which was already approved for polyneuropathy, the hereditary polyneuropathy. We added cardiomyopathy in March of 25. So we're about 18 months in, and the launch has gone exceptionally well. Just a single headline. If you think about the last quarter, we passed $1 billion quarter for the TTR franchise. So this is very, very strong. Now when we look back, there are several things that we weren't really focused on to make sure that this had the fundamentals in place for sustainable growth. And they're there. Generally speaking, the first area of focus for us has been access -- best both provider access, but also payer access and the access is very, very strong. Generally, unencumbered access to Amvutra, particularly in first line with the majority of patients paying $0 and out-of-pocket cost. That has allowed us to focus on demand. And now if we look at physician experience and demand, since the launch of the cardiomyopathy indication through the end of last quarter, we had -- we've seen more than 1,700 physicians have a first experience with but -- so there's tremendous uptake, especially in a rapidly growing category where more physicians are coming in. Now what we look for is what is that experience and a great indicator of that experience is if we look at those physicians that have experience we have north of 50% share of new starts with those physicians. So in other words, trial results in a favorable experience and preference for ambitious. So that's all very, very strong and encouraging. And of course, this is a category that has grown. It's grown for the last 6, 7 years. It will continue to grow when you think that the majority of patients, unfortunately, are still untreated. So those are all the fundamentals that we're very, very confident in and give us quite a bit of runway for opportunity moving ahead. Now as it relates to the guidance, one of the things that we talked about was just the learning in terms of the contribution of the Ambac source of business. So to back up a little bit, there is a first line segment in the second line. So first line are these newly diagnosed patients, they're looking for that very first treatment choice. First line has, from the very beginning, then our strategic area of focus. We want to establish an but as a first-line choice knowing that, again, the vast majority of patients in this category are untreated, they will come in and seek that first-line treatment choice. So that's long term, that's a significant part of the opportunity, and that has gone very well. There's a second component, which is second line. What we've seen from real-world evidence data sources is that patients treated with stabilizer, unfortunately, continue to progress. There is one analysis that looked at more than 800 patients treated on a stabilizer, mostly tafamidis. And what we saw was that within about a year on average, about half of those patients experience cardiac worsening. So these patients continue to progress, and they will be looking for another treatment choice. Now we are the first and only alternate mechanism of action in cardiomyopathy. And so we're a natural option for those patients. So going back to the guidance, what we saw early on the launch is we had many of these high-volume prescribers start using AMVUTTRA, which is a good thing. And with those higher volume physicians they had more of these patients that had been treated with a stabilizer for some period of time. And as you can imagine, many of those patients were progressing. So what we saw in the first several quarters of launch is those physicians move more of those patients to AMVUTTRA in a second-line opportunity, and that was a robust part of the opportunity. So early on, it was relatively balanced where our source of business is coming from that first line and the second line. Now take a step back, if you look at the category at large, this is more of a first-line category. Now part of that is because, there hasn't been another option for a long time, but switching behavior is a relatively new behavior. That will take some time to really form and unlock. And so when we look at the category, generally, about 80% of new treatment initiations are first-line treatment initiation. It's the minority, it's about 20% that are second line. So as you can see, when we started, we have more of a balanced contribution across both lines of therapy. But with those higher volume physicians that were early adopters, they moved more of those patients to AMVUTTRA. And so what we saw is that second line inflow has normalized. So there's still robust inflow of second line starts. It's still an opportunity. but it is normalized so that it's less of a contribution in terms of the AMVUTTRA source of business. Now the good news is our volume has continued to grow. And so it just means that a greater proportion of our volume is now in first line, which strategically was the priority for us. So the guidance is to reflect this change where there's a normalized volume of second-line inflow. It is different than what we saw in the first several quarters. And that was a learning for us. And so we had to adjust the guidance to reflect that normalized flow of second line volume starts. And that's on us in terms of the guidance. But again, just the context is prior to us, there really wasn't a second-line market. And so that was the newest part of this category where we had to observe and just see how that would play out.

Got it. No, that's very helpful. So as we think about, again, first line is where you're seeing the majority of the new starts kind of how do you think about the split between community and centers of excellence for AMVUTTRA usage? And how much does kind of the 340B kind of incentive play a role there?

Yes. For what we're looking at for the initiations of vitro, what we're seeing is it is still very balanced across these centers of excellence and the community. So just to step back, this is a category that is growing. It's growing very, very rapidly in terms of patient volume, in terms of Rx volume, but also in terms of physicians that are active in the category, meaning they're diagnosing and they're initiating treatment. So there's an expansion of the physician growth. About half of that growth is coming from these more community centers as opposed to the centers of excellence. So we still have a robust business in the centers of excellence. We continue to see depth of penetration. That's a good thing. But in terms of the growth, we're also seeing quite a bit come from the community. Now again, we're seeing balanced utilization of AMVUTTRA. The reason for that is because AMVUTTRA is very widely accessible. So I talked about the beginning. Axis is a functionable provider and payer. On the provider side, if a community cardiologist choose to engage and buy and bill, that's fine. That is a relatively well tried and easy experience. And by the way, we're not the only ones that are engaged in that space. Think of Leqvio in the lipid lowering category. There are more experiences that cardiologists are having, engaging in buy and bill. But if there's a physician that says, "I don't want to get involved for some reason," that's okay, too, because we've established a very, very broad network of buy-and-bill alternate sites of care, such that about 90% of patients anywhere in the United States, about 90% of patients can receive a veto within about 10 miles of their home, whether that's in the physician's office, in a site of care that's part of a large integrated network that the physician is part of or one of these clinics that is often down the street from where the patient lives.

Got it. So going back to kind of the first line. So I guess, where do you think you guys can peak out or what's the aspirational share in that first line? And how much of the growth is really about share gains versus stabilizers versus just overall category growth?

Yes. Moving forward, what matters is both share and category growth, both just to be there. So what we're seeing in terms of first line is very encouraging. So again, within the first couple of quarters, in terms of share of new starts, we had surpassed one competitor that launched just before us, and we are challenging the 6 at the time, 6-year incumbent in the category for share of new patient starts. And so we saw that within the first couple of quarters of launch, and we continue to work towards that ambition today. We've got a tremendous data set, again, physician experience tends to be favorable and drive greater utilization. And then on top of it, what we haven't talked about is just the dosing experience where we are a quarterly physician administered dose, that is part of the value proposition of the product, which contributes again to the patient and the physician experience. So all of that allows us to compete aggressively for first-line choice. Let's also not forget that after cardio transform presumably, there's one less competitor that we have to contemplate in the future. And then moving forward in terms of category growth, I think it's informative for me to look back before looking forward. So looking back, we have about now 7 years of category experience. You can look at tafamidis volume as a proxy of category volume for the last several years. And what you see is for years, this was stable and robust growth in excess of about, I think, 40% volume growth year-over-year for the last several years. Looking forward, the majority of these patients continue to be untreated. So I would expect that you will continue to have robust growth in the patient inflow, especially with more voices in the market driving greater awareness, more suspicion diagnosis, and we will continue to play our part to facilitate them. We can talk about it if helpful, but we have several initiatives, partnerships with others that are focused on driving even greater diagnosis and category growth also.

Got it. So maybe one of the things that post ESC, post cardio transform, a lot of us are trying to work out, is there going to be an impact to AMVUTTRA usage and is there kind of a ceiling in that first line in terms of share. So I guess like how do you think about the overall value prop for AMVUTTRA relative to stabilizers and kind of point to some of the differentiating data, maybe the doctors are really pulling and being like, hey, this is why I want to prescribe it first line.

Yes. I think first and foremost, in the aftermath of cardio transform, which is a competitor trial, One thing is true. Nothing has changed with regards to our data. So HELIOS-B is a tremendous data set. It has been part of what has driven the initial uptake in demand for AMVUTTRA, and so that continues to be true. What we saw in that was a very robust impact on cardiovascular outcomes, about 40% reduction in all-cause mortality over 4 years. And by the way, this is on top of aggressive standard of care background treatments. And so that's remarkable. In terms of what you expect to see in categories like this or in heart failure or in cardiology category is at large. That is a really, really remarkable finding. And then on top of it, to have had the impact on functional capacity with this, again, quarterly physician administered dose, which is not just a convenience thing. I'll go back to what we've seen in this category. We've seen in many categories. daily oral treatments as much as we'd like to believe patients are adherent and persistent. They're not. What we see is after about a year, about 30% of patients on a daily oral treatment stop taking their medicine by the end of the next year, another 30%. So that is -- it's a very real dynamic that we see with daily old treatment. So again, that's all part of the value proposition. Now what I've talked about is what we saw from the HEALOS B primary results. But since then, we've also had additional analyses, drawing from HELIOS-B and we have other data generation initiatives that continue in the background. Other things that we've seen is that AMVUTTRA appears to have very remarkable impact or the potential for impact on cardiac structure and function. And there are multiple ways to look at it, but we have some MRI data that has now not just been presented but published in peer-reviewed journal that showed that there is a serious signal of with the potential of showing an improvement improvement versus baseline on some parameters of the cardiac structure and function. We also know that this disease affects multiple systems, the body, and what we've seen is that not only are we having an impact on the cardiovascular manifestations, but there are some signals that suggest extra cardiac manifestation impact. So to give you an example, we have a post-hoc safety analysis that suggests that about half of patients or there was a having of the incidence of GI issues or manifestations. It all suggests that this is a very, very potent drug that is having a tremendous efficacy signal for these patients. So that matters quite a bit for share.

Understood. I guess we were talking about the second line, smaller part of the AMVUTTRA business. But I guess what are the kind of the push and pulls on that business in terms of stabilizer use being used earlier, so longer duration versus maybe less complacency around physicians looking for progression?

Yes, I think there are multiple dynamics at play. For sure, as -- there are more voices in the market. There's better awareness, better understanding of the disease. We expect that diagnosis will happen more consistently and earlier, and that's a good thing. And in fact, we intend to continue to facilitate that. But unfortunately, it's not like these patients are at the very earliest stages of manifestation, unfortunately. So these patients are still recognized later than they should. There are many pieces of the data that you can look at to get a sense of how the market is behaving, but there is one analysis that was done by the National Amyloidosis Center in the U.K. that looked at cohorts of patients over time. And then generally showed that, yes, diagnosis is, in fact, happening earlier, but the majority of these patients are still Stage II, III in terms of max staging or just, I'll say, progressed in the disease. So there's still ample opportunity for us to help these patients. What we know from the HELOSB data set is the earlier you intervene with AMVUTTRA, the better. That is clear, and we continue to communicate that. For patients that have started on a stabilizer, we've seen in real-world data sets that, unfortunately, those patients do continue to progress. They will be looking for something else. And so we are the first and only product approved in cardiomyopathy that is in a different mechanism of action. And so whether it's an add-on or a switch, we are really well positioned for that. And I do think that with increased awareness, there is greater opportunity to identify those patients that could benefit from more aggressive or more intensive treatment options, whether -- again, whether that's a switch or add. So that's all helpful. In terms of duration of time on treatment, Again, the earlier you help patients, it is likely those patients will remain on treatment for longer. I think that's particularly helpful for us because we have quarterly ACP-administered dosing. So whether that benefit accrues to the stabilizers, it remains to be seen, but I would go back to what we've observed in this category and others, where again, by the end of the first year, about 30% stop taking their medicine, that repeats again. So ample opportunity.

Understood. So we've talked a lot about the U.S., but maybe you can kind of give us a sense of how AMVUTTRA ramp in ex U.S. And we had a little bit of lumpiness earlier this year with some pricing resets in some countries. But what should we kind of expect out of that business?

Yes. So for outside the United States, we're launching in several countries. Our goal is to bring AMVUTTRA to as many patients as we can as fast as we can around the world. One of the things that you've heard us talk about in the earnings is that in Q1, we are expecting a reduction or a decline in the revenue, but then sequentially, that would improve over time. So just to give you a sense for the why. One of the earlier countries we had launched in was Germany, it's a relatively higher volume country. And when I say higher volume, don't forget that we had approval for AMVUTTRA in the hereditary polyneuropathy before adding cardiomyopathy. Now outside the U.S., the pricing reimbursement system is different from country to country. But generally, and in a country like Germany, we have a negotiated price for cardiomyopathy. That negotiated price for cardiomyopathy is lower than polyneuropathy. The reason for that is prevalence. Cardiomyopathy is about tenfold greater prevalence than polyneuropathy. And so what that means is the volume -- the legacy volume of polyneuropathy business has a correction as you reset the price for cardiomyopathy. And so that results in a transition where in the first quarter, you have a reduction in your revenue, but then sequentially, the volume grows past that, and there's ample volume to grow. And so that's kind of the dynamics that we saw in the first quarter. And so what we have said is, you saw that in Q1, but we expect quarter-over-quarter improvement in that ex U.S. contribution. And then in absolute terms, the revenue growth for 2026 outside the U.S. will be very similar to the absolute revenue growth we saw outside the U.S. for 2025. And -- but again, that's just a function of countries launching progressively throughout the course of the year. Many of them will have that kind of transitional adjustment at the beginning of the launch. And then because the cardiomyopathy volume is so much bigger, we'll continue to grow through that.

Got you. And then just a question that we get frequently is around kind of 340B and kind of the potential impact of some future legislation here. So maybe kind of talk through what you guys are thinking about and how things could be mitigated depending on that advances?

Yes. So in terms of the proposed rule, there has been a proposed rule. It remains to be seen what happens. If it happens and in what form. We just went through a comment period. So we haven't seen the conclusion of that. What I do know is that there are many voices that likely participate in a comment period that have some strong feelings about this, particularly on the provider side with regards to reimbursement rates. So I think it remains to be seen what will play out. What I can tell you is that we have secured broad access for AMVUTTRA across sites of care. And if you look at utilization, we're seeing broad utilization across sites of care. And so we are very focused on maintaining that access, and we expect that they will demand. Again, what actually happens with this proposed rule, I think, remains to be seen. And if something like that goes through, what happens in terms of provider behavior remains to be seen, but there is quite a bit of optionality on the provider behavior side. whether they participate, whether they go outside of 340B or we have alternate sites of care. So we have a broad network, broad access and broad utilization, again, across sites of care.

Got you. And we were talking earlier at the breakfast in terms of like we've had a lot of new developments with kind of more clarity around tetanus generic. Obviously, car transform and all that stuff. So I guess, how do you kind of envision that both on kind of price mix and volume mix for Ambutra in the future?

Yes. So what we're referring to is there have been a couple events in the marketplace that I think lend a little bit more certainty. So number one, we saw that the tafamidis loss of exclusivity according to Pfizer, we now expect later in 2021. And that does two things, in my opinion. Number one, it removes some of this pricing risk or pricing pressure in the midterm. And number two, it just gives us more of this time to continue to compete for first-line preference. So a net good thing. The second event is cardio transform from Ionis and AstraZeneca, which unfortunately was a failed study. Again, I think that has 2 implications. One is that likely also remove some potential for pricing pressure in that midterm -- that's a net good thing for us. And then presumably, removes a competitor from the mix. So a net good thing on share. So I think if you were to just look at where we are today in terms of what we're capturing for new patient starts, you take more certainty in the midterm in terms of the pricing dynamics in a category that continues to grow, I think there's quite a bit of reason for optimism here.