Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) Q1 2023 Earnings Call Transcript

Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) Q1 2023 Earnings Call Transcript May 4, 2023

Alnylam Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-1.4, expectations were $-1.76.

Operator: Thank you for standing by and welcome to the Alnylam Pharmaceuticals First Quarter 2023 Financial Results Conference Call. As a reminder today’s conference call is being recorded. I would now like to turn the conference over to the company. Please go ahead.

Christine Lindenboom: Good morning. I am Christine Lindenboom, Senior Vice President of Investor Relations and Corporate Communications at Alnylam. With me today on the phone are Yvonne Greenstreet, Chief Executive Officer; Tolga Tanguler, Chief Commercial Officer; Akshay Vaishnaw, President; and Jeff Poulton, Chief Financial Officer; also in the room and available for Q&A is Pushkal Garg, our Chief Medical Officer. For those of you participating via conference call, the slides can be accessed by going to the Events section of the Investors page of our website, investors.alnylam.com/events. During today’s call, as outlined on Slide 2, Yvonne will offer some introductory remarks and provide general context, Tolga will provide an update on our global commercial progress, Akshay will review pipeline updates and clinical progress, and Jeff will review our financials and guidance, followed by a summary of upcoming milestones before we open the call to your questions.

I’d like to remind you that this call will contain remarks concerning Alnylam’s future expectations, plans, and prospects, which constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent periodic report on file with the SEC. In addition, any forward-looking statements represent our views only as to the date of this reporting and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update such statements. With that, I’ll turn the call over to Yvonne.

Yvonne?

Yvonne Greenstreet: Thanks Christine and thank you everyone for joining the call today. 2023 is off to a great start with AMVUTTRA launch continuing its strong growth with Q1 delivering 48% growth in total product sales compares the first quarter of 2022. We’ve also made great strides of our pipeline, including the recent exciting announcement of positive interim results from the Phase 1 study of ALN-APP, our investigational RNAi therapeutic in development for the treatment of Alzheimer’s disease and cerebral amyloid angiopathy. These results mark a significant milestone for Alnylam as we believe they establish human proof-of-concept for RNAi therapeutics in the CNS and potentially unlock many additional opportunities where we may be able to address significant unmet medical needs.

We also have a number of exciting upcoming milestones that highlight the depth and breadth of our pipeline, which includes the presentation of 18-month results from the APOLLO-B Phase 3 study of patisiran at ESC-HF later this month and top line results from the KARDIA-1 Phase 2 study of zilebesiran in patients with hypertension expected in mid 2023. This execution is in line with our focus on the following key drivers for Alnylam’s growth over next several years. First is the potential near-term expansion of our TTR franchise opportunity where we aim to become a global leader in delivering impactful and highly differentiated medicines to patients. Second is our expansion beyond rare diseases to also address more common disease areas. And the third growth driver for the company comes from our sustainable innovation engine comprised of new platform enhancements, opportunities with extrahepatic delivery and our ability to find new genetically validated targets, which can drive further pipeline expansion to 2025 and beyond.

We believe all of this puts us on track with our Alnylam P5x25 goals making Alnylam a top tier biotech, developing and commercializing transformative medicines for rare diseases and beyond for patients around the world driven by a high yielding pipeline of firsts and/or best-in-class product candidates from our organic products engine all while delivering exceptional financial results. With that, let me now turn the call over to Tolga for a review of our commercial performance. Tolga?

Tolga Tanguler: Thanks, Yvonne, and good morning everyone. Q1 was a strong quarter for our commercial portfolio driven by our TTR franchise and the strength of our ongoing launch of AMVUTTRA as we delivered 48% total product sales growth or 52% on a content exchange rate basis compared with the first quarter of 2022. Let me now turn to a summary of our first quarter TTR performance. Our TTR franchise achieved $204 million in global net product revenues for ONPATTRO and AMVUTTRA representing a 7% increase compared with the fourth quarter and a solid 49% growth compared with the first quarter of 2022. With the U.S. market year-over-year growth standing out at a robust 75% driven by the ongoing launch of AMVUTTRA, at the end of the first quarter over 3,160 patients were on commercial ONPATTRO or AMVUTTRA treatment worldwide, up from over 2,975 patients at the end of the fourth quarter, representing 6% quarterly patient growth.

In the U.S. combined sales of ONPATTRO or AMVUTTRA increased 5% versus the fourth quarter and were primarily impacted by the following. A 7% increase in demand, which was driven by the strength of ongoing AMVUTTRA patient uptake more than offsetting the decrease in patients on ONPATTRO that switched to AMVUTTRA, inventory dynamics decreased reported growth by approximately 3% as ONPATTRO inventory in the channel continues to decrease with ongoing patients switching to AMVUTTRA. Overall in the U.S., we continue to be very pleased with the impact we’re seeing from AMVUTTRA in expanding the opportunity for our TTR franchise as reflected by the robust 75% year-over-year quarterly growth that we achieved in Q1, representing the third consecutive quarter of achieving TTR growth in excess of 70% on a year over year basis in the US following AMVUTTRA’s launch in the third quarter of 2022.

Additionally, key operating metrics continue to trend favorably including growth in new patient start forms, the switch rate from ONPATTRO, patient compliance rates and the expansion of our prescriber base. In our international markets, total TTR Q1 product sales increased 9% versus the fourth quarter driven by strong demand in Japan following the fourth quarter launch of AMVUTTRA offset by inventory destocking in Japan. The AMVUTTRA demand growth in Japan is particularly encouraging with the new patient growth being driven by a mix of switches from tafamidis as well as patients naive to therapy. Additionally and importantly ONPATTRO continue to deliver steady growth in markets where AMVUTTRA is not yet launched, positioning these markets for the upcoming AMVUTTRA launch.

ONPATTRO also benefited from the timing of orders in our distributor markets. Our global results continue to be challenged by foreign exchange headwinds with total TTR year-over-year reported growth of 49%, held back 5 percentage points due to changes in FX rates. Now moving to our ultra rare products and the performance of GIVLAARI and OXLUMO, which delivered $72 million in combined product sales during the first quarter, representing a 2% increase compared with the fourth quarter and a more robust 45% growth compared with the first quarter of 2022. We ended the quarter with more than 550 patients on GIVLAARI commercial therapy and more than 300 patients on OXLUMO commercial therapy representing 6% and 7% quarterly growth compared with the year end 2022 for GIVLAARI and OXLUMO respectively.

For GIVLAARI, global growth of 2% in Q1 compared with the fourth quarter was impacted by the following. A decline in U.S. growth of 3% primarily due to reduced patient compliance associated with the seasonal impact from the annual pre-authorization required by payers during the first quarter that we expect will recover in subsequent quarters. Growth in our international markets increased 11% as demand increased in European markets and also benefited from the timing of orders in our distributor markets. For OXLUMO, global growth of 1% in Q1 compared with the fourth quarter was impacted by the following. U.S. reported growth increased 3% driven by an increase in patient demand. Growth in international markets was flat with a demand increase in European markets offset by the timing of orders in our distributor markets.

Additionally, changes in year-over-year foreign exchange rates negatively impacted Q1 GIVLAARI and OXLUMO reported growth by 3 and 4 percentage points respectively. In conclusion, we are pleased with the growth in revenues, particularly with the ongoing signs of strong performance associated with the AMVUTTRA launch, which we believe represents an important therapy option for hATTR amyloidosis patients with polyneuropathy and an accelerated growth opportunity for our TTR franchise. With that, I will now turn it over to Akshay to review our recent R&D and pipeline progress. Akshay?

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Akshay Vaishnaw: Thanks Tolga and good morning everyone. I’d like to start today with a recap of recent news that marks a very important milestone for Alnylam and the broader field of RNAi therapeutics, which is our progress with ALN-APP, an investigational RNAi therapeutics in development for the treatment of Alzheimer’s disease and cerebral amyloid angiopathy. As announced last week, we reported the first ever clinical results within RNAi therapeutic directed to the CNS. Given the importance of the positive data and the intense interest in the study from all parties concerned not least patients and physicians, I think it’s worthwhile to further discuss the interim findings from our ALN-APP program. ALN-APP targets amyloid precursor protein, or APP, which we’re investigating as a potential treatment for Alzheimer’s disease and cerebral amyloid angiopathy, or CAA.

Human genetics have shown that certain mutations or duplications in the APP gene can cause early onset Alzheimer’s disease where amyloid plaques forming brain tissue and are associated with neurodegeneration. Other mutations in the same gene can cause CAA where A beta fragments distinct from those that aggregate to form Alzheimer’s plaque deposit within the walls of blood vessels in the brain and results bleeds. CAA is in fact the second leading cause of intracerebral hemorrhage. So this one parent protein APP can be harmful into distinct pathophysiological processes. In animal studies, we’ve shown that targeting APP with an siRNA show great promise with broad CNS biodistribution after a single intrathecal injection as shown on the left here with knockdown in all major CNS cell types to the neuron, oligodendrocytes, microglia and astrocytes.

On the right, we can see that a single 60 milligram intrathecal dose in non-human primates results in significant and sustained target knockdown with durable – durability out to six months at which time the experiment was terminated, but APP suppression was still ongoing. These pharmacologic findings, which were reliable, reproducible and appeared safe, increased their excitement around the therapeutic hypothesis, specifically that by lowering APP protein production in the CNS, the RNAi mechanism, we could reduce the downstream fragments that aggregate and deposit in tissues and that therefore hopefully alter the disease force. To support advancement to clinical testing, we conducted short-term IND-enabling GLP toxicology studies in the rat and non-human primate where two low, medium and high doses were given them on the part, i.e., where we greatly exaggerated dose and regimen relative to that expected in the clinic.

These studies demonstrated a supportive safety profile and no significant CNS histopathology and thereby enable the ALN-APP Phase 1 study. The Phase 1 trial is designed as a two-part study, a single ascending dose, Part A, followed by a multiple dose, Part B. Part A was enabled by the GLP toxicology studies I’ve just mentioned. The Phase 1 is being conducted in patients with early onset Alzheimer’s disease. The primary endpoint of this study is safety and tolerability of ALN-APP. Secondary objectives are focused on characterizing the pharmacology of ALN-APP. The study also includes a variety of exploratory biomarkers, which will allow us to assess whether the ALN-APP is showing any impact on other biomarkers of disease progression. The interim data shared from the initial single-ascending dose cohorts and we continue enrolling in Part A as we explore further doses.

Excuse me. At the time of this interim look, 20 patients with early onset Alzheimer’s disease have been enrolled in three single dose cohorts in Part A of the ongoing Phase 1 study. Today, ALN-APP has been well tolerated with no study dropouts and all adverse events being mild or moderate in severity. Available CSF data from white blood cells and protein appear similar to placebo. Neurofilament light chain or NFL, which is a mark of neuronal damage and which may be elevated in drug-induced neurotoxicity, was also monitored. Reassuringly early data for NFL, which are currently available from two out of the three cohorts study to date also, looked comparable to the placebo. Now let’s look at the pharmacodynamic results after single intrathecal doses.

To date, we’ve studied three dose levels, 25 milligrams, 50 milligrams and 75 milligrams; all available data to three-month time point are shown. Excitingly, we observed that unlike placebo, ALN-APP treatment resulted in rapid, dose-dependent and sustained reductions of both sAPPα and soluble APPβ. Both biomarkers of target engagement in the CSF. We saw rapid knockdown as early as Day 15 and observed maximum knockdown of up to 84%, 90% respectively for APPα and APPβ. At the highest dose tested 75 milligrams, the median lockdown was greater than 70% for both biomarkers and sustained for at least three months. Initially, per protocol, we intended to dose escalate from 75 to 225 milligrams. However, given that the knockdown observed at 75 milligrams substantially exceeded our initial target of 50% biomarker knockdown, we chose to deescalate to 50 milligrams.

As you can see at 50 milligrams, while we have more limited data set, it appears equally promising and similar to the 75 milligram dose with substantial knockdown for both APPα and beta. Now notably, the durability we see in humans reflects what we saw in non-human primary studies where single doses gave similar profound durable knockdown extending to six months or beyond. Accordingly, we anticipate that the responses we see here in Part A will continue. Indeed, for the data available beyond three months in this human study, we see continued target suppression. This durability of effect is important for ALN-APP, as well as our overall CNS assays as it suggests the potential for infrequent dosing. We look forward to seeing with longer follow-up indeed how long this knockdown effect is sustained.

We believe these data suggest that the drug will be able to dosed quarterly at most, and based on animal data and the translation of our platform in humans, we believe that the potential team dose every six months or less frequently. Enrollment in the single sending dose portion of the Phase 1 study is ongoing in Canada, the Netherlands, the UK, and the United States. Additionally, enrollment in Part A will allow us to continue to explore single dose PK and PD and characterize the durability and effect – and long-term safety. Results from Part A will also inform the doses and regimens to be put forward into Part B, a multiple dose portion of the study, which will include patients from Part A. In parallel to Part A of the Phase 1 study, we conducted chronic GLP toxicology studies in animals to support the multi-dose Part B of the Phase 1.

These chronic GLP tox studies were conducted without knowledge of the impressive knockdown and durability we see today at low doses of ALN-APP, we see in this Phase 1 study. So, as a standard practice, we exaggerated doses and dosing frequency relative to any dose and regimen that would ultimately be used in clinical testing. Specifically, we administered low, medium, and high intrathecal doses monthly for six months in the rat and every other month for nine months in the non-human primates. The data from the chronic studies have been shared with regulatory authorities. Before, we have already received regulatory approval to begin Part B in Canada, where in fact the majority of the chronic patients have been enrolled to date and approval is pending in the UK and Netherlands.

In the U.S. the FDA has currently placed a partial clinical hold on the multidose Part B of the Phase 1 study due to findings observed in chronic toxicology studies. Of course, given the high exposure that we achieved with frequent administration of high doses, it’s not unexpected that we would observe findings in these chronic toxicology studies. However, it’s important to contextualize exposures by relative CSF volumes between toxicology species and humans. For example, relative to a potential clinical dose and regimen of 75 milligrams, given every six months, there is a more than ten-fold greater annualized exposure at all doses tested in the rat and non-human primate. And at the top doses evaluated in those chronic tox studies there’s a 75-fold and 50-fold greater annualized exposure in rat and non-human primates respectively, relative to the same potential human dose.

And if we scale based on organ weight, then these are annualized exposures would be even greater in the chronic tox studies. I want to nevertheless acknowledge that the FDA will be the ultimate arbiter of the data and we look forward to getting further guidance from them. Accordingly, we plan to engage with them to discuss all preclinical information, as well as these new interim Phase 1 clinical data, which provides important context to support potentially initiation of Part B in the U.S. To close this part of the discussion, I’m absolutely thrilled about these incredible human data that provide the first ever evidence that we may be able to use RNAi to find those disease causing transcription in the CNS. In animal studies, we’ve already demonstrated the reproducible and modular nature of our CNS platform with the knockdown against the diverse range of targets and hope that we can address disease causing genes not just for Alzheimer’s, CAA, ALS and Huntington’s, but also many other disorders.

We look forward to presenting these interim data from Part A of the Phase 1 ALN-APP study at an upcoming medical congress. With that, let me turn to our efforts in ATTR amyloidosis where we are advancing three clinical stage product candidates, namely patisiran, vutrisiran and ALN-TTRsc04. As you know, ONPATTRO currently approved in multiple markets around the world to treat hereditary ATTR Amyloidosis with polyneuropathy and we are committed to expanding the product’s label for the treatment of cardiomyopathy in both hereditary and wild-type ATTR amyloidosis patients. As announced in February, we are delighted that our supplemental New Drug Application patisiran for cardiomyopathy of ATTR Amyloidosis has been accepted by the FDA with a standard review and a PDUFA date of October 8.

In their file acceptance letter, the FDA stated that they have not identified any review issues. The agency also noted that they’re planning to hold an advisory committee meeting to discuss the application. Currently, we have no further details from the FDA regarding the timing of the outcome or the specific topics they wish to discuss. When we learn more, we will communicate that information in due course. If the sNDA is approved, this will allow us to extend the potential benefits of patisiran to many patients with wild-type and hereditary ATTR amyloidosis with cardiomyopathy. This filing is based on the pivotal APOLLO-B study, which demonstrated improved functional status and quality of life in patients with at ATTR Amyloidosis with cardiomyopathy given patisiran for 12 months relative to placebo.

The clinical profile of patisiran is supported by an encouraging safety profile and exploratory data that favored patisiran treatment relative to placebo on various biomarkers of disease progression at month 12. We’ve announced this morning that 18-month data from the APOLLO-B study have been submitted to the FDA as part of the sNDA review and we will be presenting these results at the ESC heart failure meet at the end of May. Now, similar to ONPATTRO, we are also committed to expanding the label for AMVUTTRA to include the treatment of cardiomyopathy in both hereditary and wild-type ATTR amyloidosis. This is being done with the HELIOS-B Phase 3 study of investigational vutrisiran. HELIOS-B, which is fully enrolled, has an endpoint of all-cause mortality and CV events assessed after at least 30 and up to 36 months, and we remain on track to share top line results in early 2024.

Wrapping up with ALN-TTRsc04 is an investigational RNAi therapeutic based on our IKARIA platform offers the potential for more durable and potent TTR silencing with the possibility for annual dosing, a potentially transformative profile. ALN-TTRsc04 has entered the clinic and begun dosing in the Phase 1 study, and we expect top line results in late 2023. In addition to our late-stage clinical programs, we believe we’ve also been making great progress with our early- and mid-stage programs. Notable, our highlight includes zilebesiran, our investigational RNAi therapeutic for hypertension, which we believe could transform the treatment of the disease and offer a highly differentiated profile from all existing antihypertensives, including oral RAS inhibitors.

We look forward to the important upcoming milestones from the Phase 2 program and remain on track to deliver top line results from KARDIA-1 in mid-2023 and top line results from KARDIA-2 at or around year-end 2023. These are just a few of the highlights from our broad and innovative pipeline driven by our underlying organic product engine – where we expect to deliver sustainable innovation representing a key growth driver for Alnylam in the years to come. To wrap up these highlights, we’re excited to have initiated dosing in the Phase 1 study of ALN-KHK for the potential treatment of Type 2 diabetes with Regeneron has announced initiation of a Phase 2 study of ALN-HSD in patients with NASH. Now with that, let me now turn it over to Jeff to review you our financials and upcoming milestones.

Jeff?

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Q&A Session

Jeff Poulton: Thanks, Akshay. And good morning, everyone. I am pleased to be presenting a summary of Alnylam’s Q1 2023 financial results and discussing our full year guidance. Starting with a summary of our P&L results for the first quarter. Total product revenues for the quarter were $276 million or 48% growth versus Q1 2022. As Tolga previously indicated, the increase is primarily related to growth in TTR product revenues driven by the launch of AMVUTTRA in the U.S. in the third quarter of 2022 as well as increased patients on GIVLAARI and OXLUMO therapies. It’s also worth noting that year-over-year growth in combined product revenues was held back by approximately four percentage points due to impact of changes in foreign exchange rates.

Net revenue from collaborations for the first quarter was approximately $36 million, representing a 41% increase compared with Q1 2022, primarily due to an increase in revenue from our collaboration arrangements with Regeneron attributed to an increase in reimbursable activities under our research services arrangement in addition to an increase in revenue recognized associated with license programs within the collaboration. Royalty revenue during the quarter was $7 million, which was driven by Novartis’ sales of Leqvio, which launched in the U.S. in the first quarter of 2022. Gross margin on product sales was 85% in Q1, representing a 2% decrease compared with the first quarter of 2022. The decrease was primarily driven by increased royalties due to Sanofi on sales of AMVUTTRA, which was partially offset by lower manufacturing costs for AMVUTTRA compared with ONPATTRO.

Our non-GAAP R&D expenses increased 35% in the first quarter compared to the same period in 2022, primarily due to increases in headcount to support our R&D pipeline, development expenses associated with the APOLLO-B, HELIOS-B and KARDIA-1, KARDIA-2 clinical studies and manufacturing-related expenses with our preclinical activities. Q1 2022 non-GAAP R&D OpEx was disproportionately lower than all other quarters during 2022. Thus, we expect lower year-over-year quarterly growth rates for R&D in the remaining quarters of 2023. Our non-GAAP SG&A expenses increased 17% in the first quarter compared to the same period in 2022, primarily due to increased headcount and other investments supporting our strategic growth, including the global launch of AMVUTTRA.

Our non-GAAP operating loss for Q1 2023 was $110 million, representing a $7 million improvement compared with Q1 2022 driven by strong top-line growth, offset by more moderate growth in operating expenses. Finally, we ended the quarter with cash, cash equivalents and marketable securities of $2.1 billion compared to $2.2 billion at the end of 2022 with the decrease primarily due to our operating loss in the quarter. We continue to believe our current cash balance is sufficient to bridge us to a self-sustainable financial profile. Now I’d like to turn to our full year 2023 financial guidance. We are reiterating the financial guidance we provided on our year-end results call in February. Starting with net product revenues, we continue to anticipate combined net product revenues for our four commercialized products will be between $1.2 billion and $1.285 billion.