Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) Q3 2023 Earnings Call Transcript

Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) Q3 2023 Earnings Call Transcript November 2, 2023

Alnylam Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $1.15, expectations were $-1.61.

Operator: Good day and thank you for standing by. Welcome to the Alnylam Pharmaceuticals Q3 2023 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference call over to the company.

Christine Lindenboom: Good morning. I am Christine Lindenboom, Senior Vice President of Investor Relations and Corporate Communications at Alnylam. With me today are Yvonne Greenstreet, Chief Executive Officer; Tolga Tanguler, Chief Commercial Officer; Pushkal Garg, our Chief Medical Officer; and Jeff Poulton, Chief Financial Officer. For those of you participating via conference call, the accompanying 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, Pushkal will review pipeline update 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 today’s 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’d like to turn the call over to Yvonne.

Yvonne?

Yvonne Greenstreet: Thanks Christine and thank you everyone for joining the call today. In the third quarter of 2023, we continue to make great progress across our business, while also experiencing a disappointment. As we announced last month, the U.S. Food and Drug Administration declined to approve the supplemental New Drug Application for Patisiran, an investigational RNAi therapeutic that was in development for the treatment of the cardiomyopathy of ATTR amyloidosis. As we have conveyed, we’re extremely disappointed with this outcome, particularly with regard to the needs of patients, many of whom spoke at the Advisory Committee Meeting in September. We have been steadfastly committed to this underserved application for over a decade and remain confident in our long-term strategy to building a leading TTR franchise with Patisiran and the HELIOS-B Study serving as a very important next step in this journey.

We look forward to sharing those top line results which remain on track for early 2024. As we continue to progress our plans in ATTR cardiomyopathy, our commercial strength in the third quarter was driven by the ongoing successful launch of AMVUTTRA in patients with hereditary ATTR amyloidosis with polyneuropathy. This contributed to a 35% year-over-year growth in total net product revenues compared to the third quarter of 2022. We also delivered important clinical updates from key pipeline programs in the third quarter. In September, we announced positive top line results in the KARDIA-1 Phase 2 dose ranging study of zilebesiran, which demonstrated greater than 15 mmHg reduction of systolic blood pressure at three months of treatment compared to placebo, as well as an encouraging safety and tolerability profile in adult patients with mild-to-moderate hypertension.

Additionally, the results also reflected sustained reductions of systolic blood pressure at six months, supporting the potential for quarterly or biannual dosing. We also shared updated positive interim results from the Phase 1 study of ALN-APP in patients with early onset Alzheimer’s disease, which showed rapid and robust target engagement with sustained effects out to 10 months with a single dose and an encouraging clinical safety and tolerability profile. Additionally, we presented data from the APOLLO-B study of patisiran at HFSA showing that the effects of patisiran treatment on 6- minute walk test and KCCQ were maintained through 24 months of treatment. This type of relative stabilization in what is otherwise a steadily progressive disease is very encouraging and further bolsters our confidence in PTSD.

We’re thrilled to have had these results published in the New England Journal of Medicine just a few weeks ago, which is accompanied by a favorable editorial highlighting the step forward represented by RNAi therapeutics in this disease. Lastly, we’re excited to have achieved the third place ranking in Science Magazine’s top employer survey for 2023. This marks the fifth year that our Alnylam was featured as one of the top three companies in their annual survey of industry professionals. We are poised to deliver a couple more pipeline updates by the end of the year, including top line Phase 1 results for ALN-TTRsc04 as well as ALN-KHK, our investigational RNAi therapeutics for type 2 diabetes. And I encourage you all to save the date and tune into our Annual R&D Day, which will be held virtually on December the 13th, where we will discuss all of the exciting progress across our pipeline and platform.

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 patients around the world with rare diseases and beyond, driven by a high yielding pipeline of first and/or best-in-class product candidates from our organic product engine, all while delivering exceptional financial results. With that, let me now turn the call over to Tolga for review of our commercial performance. Tolga?

Tolga Tanguler: Thanks, Yvonne, and good morning everyone. Q3 was another strong quarter for our commercial portfolio with both our TTR franchise driven by another robust quarter of AMVUTTRA performance in the U.S. market and our Ultra-Rare franchise delivering growth in excess of 30% compared with the prior year, as we continue to steadily increase the number of patients on all of our therapies. Total net product revenues grew 35% year-over-year for the third quarter or 33% at a constant exchange rate. Let me now turn to a summary of our third quarter TTR performance. Our TTR franchise achieved $230 million in global net product revenues for ONPATTRO and AMVUTTRA representing a 3% increase compared with the second quarter and 35% growth compared with the third quarter of 2022.

At the end of the third quarter, more than 3790 patients were on commercial ONPATTRO or AMVUTTRA treatment worldwide, up from over 3490 patients at the end of the second quarter, representing 8% quarterly patient growth. Now let me provide highlights of our U.S. and international TTR performance. In the U.S. combined sales of ONPATTRO and AMVUTTRA increased by 11% compared with the second quarter and a robust 47% year-over-year driven by AMVUTTRA’s launch. The U.S. growth was primarily driven by the following. A 6% increase in demand, which was driven by the strength of ongoing AMVUTTRA patient uptake, more than offsetting a decrease in ONPATTRO patients that switched to AMVUTTRA. At the end of the third quarter, more than 80% of Alnylam USP care [ph] patients are now on AMVUTTRA, a positive sign indicating how well the product profile has been received by both prescribing physicians and patients.

In addition to the demand growth, reported growth was also favorably impacted by approximately 5% due to an increase in AMVUTTRA inventory in the distribution channel. Now let me turn to our international markets where TTR franchise growth decreased by 7% compared with the second quarter. Although there was growth in patients on therapy during the quarter, this growth was offset by a variety of factors including price adjustments in Germany following the end of the six-month free pricing period, inventory destocking in Japan and the timing of orders in emerging and partner markets. It is worth noting that we have now launched AMVUTTRA in all major international markets following recent launches in Spain and Italy. I’m proud of the efforts of our Market Access team as we have made AMVUTTRA available to patients and secured reimbursements significantly faster than industry benchmarks.

Now moving to our Ultra-Rare products and the performance of GIVLAARI and OXLUMO, which delivered $83 million in combined product sales during the third quarter, representing a 1% increase compared with the second quarter and a solid 33% growth compared with the third quarter of 2022. We ended the quarter with more than 1000 patients on our two Ultra-Rare products, an exciting milestone with more than 625 patients on GIVLAARI commercial therapy and more than 375 patients on OXLUMO commercial therapy, representing 8% combined quarterly growth in patients on our Ultra-Rare products compared with the second quarter 2023. For GIVLAARI product sales declined 6% in Q3 compared with the second quarter with the following regional dynamics. A 5% increase in demand in the U.S. market driven by an increase in patients on therapy, a 25% decrease in our international markets driven by the timing of orders in emerging and partner markets, where as we previously indicated Q2 results benefited from a large order and higher gross to net deductions.

For OXLUMO, we delivered a robust 19% increase in product sales compared with the second quarter, which was driven by the following. A 10% increase in the U.S. driven by 16% demand growth, partially offset by a reduction of inventory in the distribution channel, a 23% increase in our international markets driven by increased demand and the timing of orders in our emerging and partner markets. We were pleased with the results in the quarter, particularly the strong patient growth with both our TTR and Ultra-Rare franchises delivering an 8% increase in patients on therapy during the quarter as well as delivering robust year-over-year growth in revenues with both franchises growing in excess of 30%. As we look ahead to the end of the year, we anticipate a strong fourth quarter positioning us to end the year at the approximate midpoint of our net product revenue guidance range.

With that, I will now turn it over to Pushkal to review our recent R&D and pipeline progress. Pushkal ?

Pushkal Garg: Thanks, Tolga, and good morning, everyone. Let me start with our TTR franchise. As you know, we have two products approved for the polyneuropathy of hereditary ATR amyloidosis, ONPATTRO and AMVUTTRA. We have also been pursuing expansion into ATTR cardiomyopathy through two large studies, APOLLO-B for patisiran and HELIOS-B for vutrisiran. As previously announced, while APOLLO-B delivered positive results, not just on the primary endpoint, but consistently across additional secondary and exploratory endpoints as well, all with a positive safety profile, the FDA declined to approve the SNDA for patisiran, citing insufficient evidence of clinical meaningfulness. As a result of this decision and with the top line readout from HELIOS-B expected in early 2024, we have elected not to invest further into additional development to secure approval for patisiran in ATTR cardiomyopathy in the United States.

The positive data on multiple aspects of ATTR cardiomyopathy coming out of the APOLLO-B study reaffirm our confidence and success of HELIOS-B. In particular, the 24-month data show that both 6-minute walk test and KCCQ were relatively stable over the entire period in contrast to the large expected decline expected in this disease and suggest the potential that RNAi mediated TTR silencing may result in a differentiated efficacy profile in this disease. The HELIOS-B study is designed and powered to demonstrate a benefit of vutrisiran in patients very similar to those studies in APOLLO-B on the composite outcome of all ’cause mortality and recurrent cardiovascular events over a 30 to 36-month period. The study is on track to read out in early 2024 and assuming positive data, we then plan to seek a label expansion for AMVUTTRA and if approved ultimately launch that medicine into the growing market of patients around the world with wild type or hereditary ATTR amyloidosis with cardiomyopathy.

We believe that the convenient quarterly subcutaneous dosing regimen with a therapeutic profile that includes cardiovascular outcomes data in its label could potentially position AMVUTTRA as a transformative therapy with a market leading profile for patients with this disease. Moving on, following announcement of initial human proof-of-concept data on ALN-APP, our RNAi therapeutic design for CNS delivery, which is in development for the treatment of Alzheimer’s disease and cerebral amyloid angiopathy, we are excited by the positive results we’ve seen from the Phase 1 study to date. At the clinical trials on Alzheimer’s Disease Conference a few weeks ago, we’ve presented additional positive interim results from the Phase 1 study in patients with early onset Alzheimer’s disease.

At the time of this interim look, 20 patients had been enrolled in three single dose cohorts in Part A of the ongoing Phase 1 study. To date, we’ve studied 3 dose levels, 25, 50 and 75 mg, with four to six patients dosed in each cohort. Excitingly, ALN-APP treatment resulted in rapid dose dependent and sustained reductions, both soluble APP Alpha and Beta biomarkers of target engagement in the CSF. We saw rapid knockdown as early as day 15 and observed peak mean reduction of 69% and 82% respectively for soluble APP Alpha and soluble APP Beta. Reduction was sustained with a mean reduction of 33% and 39% respectively for soluble APP Alpha and Beta ten months after a single 75 mg dose.

Ab42: The safety of single doses of ALN-APP has been encouraging as well. All adverse events were mild or moderate in severity and CSF parameters have not revealed any significant abnormalities to date. Further exploration of single doses of ALN-APP is ongoing in Part A. In addition, Part B, the multiple dose part of the study has been initiated in Canada and has now also received all required approvals to proceed in the United Kingdom and the Netherlands. A multiple dose part of the study remains on partial clinical hold in the United States due to findings observed in prior nonclinical chronic toxicology studies. In sum, I’m thrilled about these impressive human data showing the potential for RNAI to silence disease causing transcripts in the CNS and look forward to providing additional program updates in the future.

Let me now turn to recent progress with zilebesiran in development for the treatment of hypertension. We are very excited to have reported positive top line results from the KARDIA-1 Phase 2 dose-ranging study. In KARDIA-1 zilebesiran met the primary endpoint demonstrating a dose dependent clinically significant reduction in 24-hour mean systolic blood pressure measured by ambulatory blood pressure monitoring at month three, achieving a placebo subtracted reduction greater than 15 mmHg mercury with both 300 mg and 600 mg doses. The study also met key secondary endpoints, including significant change in 24-hour mean systolic blood pressure as measured by ABPM at month six, as well as significant change in office synthetic blood pressure at months three and six all zilebesiran arms compared to placebo.

The study results indicate zilebesiran was associated with dose dependent, potent and durable knockdown of serum AGT levels through month six. Importantly, zilebesiran demonstrated encouraging safety and tolerability profile. We look forward to sharing complete results for KARDIA-1 at the upcoming AHA Scientific sessions this month and we remain on track to deliver top line results from the KARDIA-2 Phase 2 combination study of zilebesiran in early 2024. Before I wrap up, I’d like to briefly update on one of our partnered programs, fitusiran, which is in development for the treatment of hemophilia A or B, with or without inhibitors. Sanofi just reported encouraging safety and efficacy data for the anti-thrombin based dosing regimen in a Phase 3 study and indicated they are currently in discussions with the FDA regarding filing an NDA in 2024.

These are just a few highlights from a broad and innovative pipeline, driven by our underlying organic product engine, that we expect will deliver sustainable innovation and represents a key growth driver for Alnylam in the years to come. With that, let me now turn it over to Jeff to review our financial results and upcoming milestones. Jeff?

Ab40: The safety of single doses of ALN-APP has been encouraging as well. All adverse events were mild or moderate in severity and CSF parameters have not revealed any significant abnormalities to date. Further exploration of single doses of ALN-APP is ongoing in Part A. In addition, Part B, the multiple dose part of the study has been initiated in Canada and has now also received all required approvals to proceed in the United Kingdom and the Netherlands. A multiple dose part of the study remains on partial clinical hold in the United States due to findings observed in prior nonclinical chronic toxicology studies. In sum, I’m thrilled about these impressive human data showing the potential for RNAI to silence disease causing transcripts in the CNS and look forward to providing additional program updates in the future.

Let me now turn to recent progress with zilebesiran in development for the treatment of hypertension. We are very excited to have reported positive top line results from the KARDIA-1 Phase 2 dose-ranging study. In KARDIA-1 zilebesiran met the primary endpoint demonstrating a dose dependent clinically significant reduction in 24-hour mean systolic blood pressure measured by ambulatory blood pressure monitoring at month three, achieving a placebo subtracted reduction greater than 15 mmHg mercury with both 300 mg and 600 mg doses. The study also met key secondary endpoints, including significant change in 24-hour mean systolic blood pressure as measured by ABPM at month six, as well as significant change in office synthetic blood pressure at months three and six all zilebesiran arms compared to placebo.

The study results indicate zilebesiran was associated with dose dependent, potent and durable knockdown of serum AGT levels through month six. Importantly, zilebesiran demonstrated encouraging safety and tolerability profile. We look forward to sharing complete results for KARDIA-1 at the upcoming AHA Scientific sessions this month and we remain on track to deliver top line results from the KARDIA-2 Phase 2 combination study of zilebesiran in early 2024. Before I wrap up, I’d like to briefly update on one of our partnered programs, fitusiran, which is in development for the treatment of hemophilia A or B, with or without inhibitors. Sanofi just reported encouraging safety and efficacy data for the anti-thrombin based dosing regimen in a Phase 3 study and indicated they are currently in discussions with the FDA regarding filing an NDA in 2024.

These are just a few highlights from a broad and innovative pipeline, driven by our underlying organic product engine, that we expect will deliver sustainable innovation and represents a key growth driver for Alnylam in the years to come. With that, let me now turn it over to Jeff to review our financial results and upcoming milestones. Jeff?

Jeff Poulton: Thanks, Pushkal and good morning everyone. I’m pleased to be presenting a summary of Alnylam’s Q3 2023 financial results and discussing our full year guidance. Starting with a summary of our P&L results for Q3 2023. Total product revenues for the quarter were $313 million or 35% growth versus Q3 2022. As Tolga previously mentioned, the increase was driven by strong growth from our TTR and Ultra-Rare franchises with both reporting growth greater than 30% during the quarter compared with the prior year. Our reported results in the quarter benefited modestly from foreign exchange as constant exchange rate product sales growth was 2% lower at 33%. Net revenue from collaborations for the third quarter was $427 million representing nearly a $400 million increase from Q3 2022, primarily due to increases in revenue from our zilebesiran co-development and co-commercialization collaboration with Roche, which included full recognition of the $310 million upfront payment received in the third quarter as well as $65 million in revenue in connection with our Regeneron collaboration.

The $65 million represents the portion of revenue recognized from a $100 million milestone earned from achieving certain criteria during early clinical development for our CNS program ALN-APP. Royalty revenue during the quarter was $10 million, which was driven by Novartis sales of Leqvio, which continued to increase following launch in the U.S. in the first quarter of 2022. Gross margin on product sales was 75% in Q3, representing a 10% decrease compared with the third quarter of 2022, primarily due to a Q3 write-off of ONPATTRO inventory that had been manufactured for future demand associated with the ATTR cardiomyopathy indication for patisiran for which we did not receive regulatory approval. Recall that I mentioned on our ONPATTRO CRL investor call on October 9th that we expect ONPATTRO demand to decrease on a go forward basis as AMVUTTRA continues to cannibalize existing ONPATTRO polyneuropathy business in markets where AMVUTTRA has launched.

As a result for 2024 we anticipate ONPATTRO product sales will be in the $200 million to $225 million range. Our non-GAAP R&D expenses increased 16% in the third quarter compared to the same period in 2022, primarily due to higher costs related to clinical activities and increased headcount to support our R&D pipeline and an expense for achievement of certain milestones payable to a partner. Our non-GAAP SG&A expenses increased 2% in the third 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. For the first time in Q3, we generated non-GAAP operating profit during the quarter equal to $278 million driven by the significant revenue recognized during the quarter from our collaborations with Roche and Regeneron.

We anticipate that in future quarters we will revert to a non-GAAP operating loss as we have not yet achieved sustainable profitability. Finally, we ended the quarter with cash, cash equivalents and marketable securities of $2.4 billion compared to $2.2 billion at the end of 2022, with the increase primarily related to the $310 million upfront payment from Roche offset by our operating loss year-to-date. 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 increasing our collaboration and royalty revenue guidance from $100 million to $175 million to $575 million to $625 million. The substantial increase is primarily attributable to two factors that were not included in our previous guidance.

First, recognition of the full $310 million upfront payment received from Roche in the third quarter in conjunction with our zilebesiran collaboration. I would also like to note that our accounting conclusions associated with the Roche collaboration are summarized on Slide 27 in the appendix of today’s presentation. And secondly, achievement of the $100 million ALN-APP milestone from Regeneron during the third quarter, the majority of which will be recognized as revenue during 2023. All other elements of our 2023 financial guidance remain unchanged. Let me now turn from financials and discuss some key goals in our upcoming milestones slated for the remainder of 2023. We will of course be executing on global commercialization of our products ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO.

We intend to report top line results from Phase 1 studies of ALN-TTRsc04 in development for the treatment of ATTR amyloidosis and ALN-KHK, and development for the treatment of Type 2 diabetes. With our partnered programs, Vir expects to report further results from Phase 2 combination trials of ALN-HBV02 in development for the treatment of chronic hepatitis B. Let me now turn it back to Christine to coordinate our Q&A session. Christine?

Christine Lindenboom: Thank you, Jeff. Operator, we will now open the call for your questions. To those dialed in we would like to ask you to limit yourself to one question each and then get back in the queue if you have additional questions.

See also 20 Best Fitness Apps in 2023 and 15 Worst Performing Disney Animated Movies of All Time.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Ritu Baral of TD Cowen. Your line is now open.

Ritu Baral: Good morning, guys. Thanks for taking the question. I wanted to ask a little bit about the HELIOS-B statistical — sorry, the statistical plan. I understand that you’re using the Anderson-Gill method, in which our statistical consultant, anyway, said that any kind of CV event would be analyzed as a recurring event and would count versus what has been used by other developers where they had ranks of — they had two rank events. Within this Anderson-Gill are events of different types in the composite weighted equally? Or are certain events like death and hospitalization weighted more such that the analysis may be more meaningful to doctors for serious events and regulators as well? Thank you.

Yvonne Greenstreet:

air and:

Pushkal Garg: Yes. Thanks, Ritu. Look, I think there’s lots of ways that people look at these types of data. As you mentioned, our focus is really on death in recurrent hospitalizations, and both a Finkelstein-Schoenfeld and an Anderson-Gill can do that. I think one of the unique aspects of the study that we’ve done to sort of increase and maximize power is actually have differential follow up for patients. So we have follow up that can range from 30 months to 36 months. And the Anderson-Gill allows us to actually incorporate that variable follow up, whereas in the Finkelstein-Schoenfeld, that follow up has to sort of be aligned to the lowest common denominator. So it actually gives us some additional power and that’s why our statisticians and our team, we’ve prioritized that in the statistical analysis plan.

So certainly it weights death, but we look at all of those death into hospitalization events as well as recurrent events as you talked about. So we think that really optimizes the power for the study.

Ritu Baral: Great, thank you.

Operator: Thank you. And one moment for our next question. Paul Matteis of Stifel. Your line is now open.

Paul Matteis: Great, thanks so much for taking the question. I appreciate it. We’ve been trying to think about what, if any, learnings there are from the recent advisory committee to HELIOS-B and, we fully understand, right that HELIOS-B is generating outcomes data and the issues with APOLLO-B at the FDA level are related to a lack of that to some extent. That said, I was curious if you think from a regulatory perspective it’s important that you show some level of added outcomes benefit on top of tafamidis. And I’m assuming the study is not really powered for a p value, but how would you kind of delineate what the line is on a clinically meaningful effect in the combo therapy subset of HELIOS-B? Thanks so much.

Yvonne Greenstreet: Pushkal that’s probably a question that goes straight to you.

Pushkal Garg: Yes. Thanks, Paul. Look, I think maybe a couple of points as reflected previously, obviously we’re disappointed in the decision that was made, but as we look at the APOLLO-B results with regard to TAP and non-TAP, the add on TAP it was a very small group, only 91 patients. Study wasn’t designed to characterize that subgroup. But we are encouraged that when we looked at the data that were presented at the AdCom and at various congresses that the outcomes data in both groups actually are trending favorably for the patisiran arm and that bodes well for HELIOS-B. The other point I would just make around that is that we have an experience now in that study, as we’ve mentioned that we targeted operationally about 50% of patients.

We’ve come in somewhat less than that, which certainly adds in the overall powering of the study while we over enrolled as well by 10%. I think with regard to the add on factor that you were mentioning from a regulatory perspective, I think one of the points that probably is worth noting is that I think that point was raised in particular because tafamidis has a mortality claim. And what APOLLO-B, what ONPATTRO was coming forward was with a functional claim in terms of six minute walk test in KCCQ. And so that raises questions about how these drugs are going to be used in combination or in sequence, et cetera. In contrast, as you’ve just highlighted, HELIOS-B is going to deliver outcomes results and so that issue becomes much less of an issue.