Holding shares in Alnylam Pharmaceuticals (ALNY) isn’t for the weak-hearted, as seen recently in reaction to a competitor’s unexpectedly strong clinical data. While Alnylam has long been volatile, and remains risky given the nature of the diseases it targets and its reliance on biomarker data, it is also close to its first drug approval and what may well prove to be a multiyear run of drug approvals that will quickly make the company a player in rare diseases.
Earnings Mostly An Afterthought
Alnylam reported first-quarter earnings on May 3rd. The actual earnings reports for biotechs without approved drugs are typically not all that noteworthy or stock-moving, particularly for companies like Alnylam where cash is not a problem. Alnylam did end the quarter with $1.6 billion in cash and raised its full-year non-GAAP R&D spending guidance to $440 million at the midpoint. Given the expected slate of drug approvals and launches over the next three years, Alnylam looks to be in fine shape with respect to funding its ongoing R&D and commercialization priorities.
Patisiran – A Tempest In A Teapot, Or A Serious Competitive Threat?
The biggest development for Alnylam since my last update on the company was the surprisingly strong outcome of Pfizer’s (PFE) Phase III ATTR-ACT study of tafamidis. This was a phase III study of TTR amyloidosis patients with cardiomyopathy, including so-called “wild type” ATTR patients. While tafamidis has previously shown lackluster efficacy in TTR neuropathy, this study met its primary endpoint of a statistically-significant reduction in all-cause mortality and cardiovascular-related hospitalizations. Although Pfizer provided little more than notification that the study met the primary endpoint, it is known that it was powered for a 50% reduction in mortality and a 40% reduction in hospitalizations. More details should be available later this year, most likely at the August ESC meeting.
Alnylam shares are down more than 20% from where they were before the ATTR-ACT announcement. Although these results do suggest that tafamidis could be competitive in the cardiomyopathy and hybrid TTR markets (which wasn’t expected before), it seems unlikely to me that the drug will play much of a role in neuropathy – unlike Alnylam’s drug patisiran, which has been shown to reverse symptoms, tafamidis largely leads to just a slower progression for neuropathy patients. Interestingly, patisiran has also been shown to be more effective when given to polyneuropathy patients previously on stabilizers like tafamidis.
For its part, Alnylam recently released a post-hoc data analysis from the APOLLO study that indicated a 50% reduction in all-cause mortality and hospitalization and a 45% reduction in cardiac hospitalization and all-cause mortality. While that is interesting, it’s not really a good head-to-head comparison with tafamidis given different patient inclusion criteria, trial length, and so on. Still, other data points relating to patisiran’s effect on patients with cardiac involvement (stronger mNIS+7 results, improved EKG parameters, improved NT-proBNP levels, and so on) do still support a broader label.
Going on from here, the detailed results of the ATTR-ACT study likely will shape Alnylam’s trial design for ALN-ATTRsc02, a follow-on compound to patisiran with a different delivery chemistry. Should tafamidis’s benefit derive primarily from reduced hospitalizations, Alnylam will likely test ‘sc02 in wild-type patients versus a placebo, while a reduction in mortality would likely lead Alnylam to set up a head-to-head study against tafamidis. As a reminder, Alnylam is looking to develop ‘sc02 principally for TTR patients with more cardio involvement, as well as wild-type ATTR and asymptomatic hATTR.
Also the subject of patisiran, Alnylam’s rival Akcea (AKCA) announced a three-month delay from the FDA in its review of Tegsedi (the brand name for inotersen) that will likely mean patisran reaches the market first. Ionis (IONS) licensed inotersen to Akcea back in March, and while I’m sure Ionis bulls will try to argue that this is actually a superior transaction, I believe Ionis went this route after finding tepid interest among potential Big Pharma partners after GlaxoSmithKline (GSK) walked away from the program. Also of note, Akcea will be moving its own follow-on TTR compound, TTR-LRx, into human studies this year.
Going Pivotal With Givosiran And Lumasiran
Alnylam has completed enrollment of the first 30 patients into its ENVISION Phase III study of givosiran in acute hepatic porphyrias. There is an interim analysis already scheduled for September, and if the results are consistent with earlier-stage studies, the company should file its NDA around year-end, setting up a potential 2019 approval.
Thus far, the data on givosiran continue to look compelling. Data presented at EASL in April showed greater than 80% reductions in annual attack rates and hemin usage on monthly dosing, with the open-label extension study showing those numbers rising above 90%, with 44% of patients in the OLE experiencing no attacks versus a prior median of 15 per year. While there was a case of anphlyaxis related to the drug, the safety profile appears otherwise solid. This program looks quite encouraging, but I would point out that acute hepatic porphyrias are a collection of unusual, poorly-understood conditions with a lot of unknowns. Only about 10% of people with the relevant mutation experience attacks and nobody is really sure why; I mention this only in the context that there may be more risk left here than the data would otherwise suggest.
Alnylam is also moving forward with a pivotal study of lumasiran in primary hyperoxaluria type 1 (or PH1). The FDA agreed to the use of urinary oxalate (a biomarker) as the primary endpoint, and the study will be a relatively small one (around 25 patients) randomized against placebo. Like acute hepatic porphyrias, there are still some meaningful unknowns about PH1 and it is a rare disease. Rival Dicerna (DRNA), which recently settled litigation brought against it by Alnylam, is approaching the disease with an RNAi molecule that targets the LDH enzyme (which transforms glyoxylate to oxalate) before oxylate production; an approach that may be just as effective, better, or worse than Alnylam’s approach. Early-stage work has indicated that lumasiran is a potent means of reducing urinary oxalate (and presumably oxalate levels in the body), and if this study backs that up, an NDA in early 2020 is possible.
A Lot Of Balls In The Air Now
Alnylam unquestionably has a lot going on – from the expected approval and launch of patisiran in a few months (the PDUFA date is August 11) to the potential filing of givosiran and approval/launch in 2019, to the initiation of pivotal studies of ‘sc02 and lumasiran and the advancement of additional drugs into human testing (most likely for alpha-1 antitrypsin) and hepatis B). Between Alnylam’s controlled drugs and its partnerships with Sanofi (SNY) (which controls fitusiran, an RNAi drug for hemophilia in pivotal studies) and The Medicines Co. (MDCO) (which controls inclisiran, an RNAi drug for cholesterol in pivotal studies), Alnylam could be looking at six FDA approvals over the next three to four years.
Alnylam also recently announced an interesting collaboration with Regeneron (REGN). Regeneron discovered that people with loss-of-function variants in the HSD17B13 gene had meaningfully lower risk of alcoholic and non-alcoholic cirrhosis and liver disease. Under this partnership, Alnylam will attempt to develop an RNAi molecule that can replicate that loss of function for use as a treatment in non-alcoholic steatohepatitis (or NASH).
Clearly, it will not all be smooth sailing. Just as Pfizer is proving to be a bigger potential competitive threat than once believed, Akcea/Ionis could outperform with Tegsedi or its follow-on compound, and Alnylam could likewise see new entries in other target areas that prove more effective or otherwise more appealing. Even so, I like Alnylam’s strategy position today. I also like the fact that the company continues to work on its delivery technology, and perhaps the company will one day figure out a way to deliver its drugs outside the liver, opening up a wider range of addressable targets.
I believe fair value for Alnylam shares is a little above $145 now. I’m looking for over $2.5 billion in revenue from patisiran, primarily in TTR-neuropathy, but also in hybrid cases, and I believe ‘sc02, givosiran, and lumasiran could all be $1 billion-plus drugs. The biggest issues restraining the value of those compounds today is the relatively early-stage nature of the data supporting them, as well as the challenges/uncertainties of the diseases themselves. If and when Alnylam produces additional positive data, there’s meaningful upside potential from these compounds, as well as meaningful potential ($10/share each) from inclisiran and fitusiran. All told, the TTR program (patisiran and ‘sc02) continues to dominate the valuation at around $108/share combined.
The Bottom Line
Alnylam sports a robust valuation for a company with no approvals to date and a lot of its clinical development work predicated on biomarker results and early-stage results from small studies. It has also proved to be a pretty volatile biotech, but I believe management has established a strong, valuable RNAi franchise, one that is set to generate a series of product approvals in the coming years, and the shares do not fully reflect that value.
Disclosure: I am/we are long ALNY.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.