BBIO - Alnylam: FDA Rejection Of Onpattro For ATTR-CM Is A Setback But A Manageable One

2023-10-10 18:08:45 ET

Summary

• Despite a positive panel recommendation, the FDA rejected the Alnylam Pharmaceuticals, Inc. application to market Onpattro for ATTR-CM, citing a lack of meaningful evidence of clinical efficacy.
• Amvuttra has always been the bigger opportunity in ATTR-CM, and now investors await the pivotal HELIOS-B clinical data in early 2024.
• Despite a good track record of drug development, ATTR-CM has been a tough target for Alnylam, and past failures (revusiran and Onpattro) are likely to drive elevated skepticism for HELIOS-B.
• The loss of Onpattro for ATTR-CM is manageable, and Alnylam shares trade at a greater than 40% discount to my fair value estimate.

Writing about Alnylam Pharmaceuticals (ALNY) a month ago , ahead of a panel meeting on the company’s application to market Onpattro for cardiomyopathy from transthyretin-mediated amyloidosis (or ATTR-CM), I said I expected to see pointed questions about the efficacy metrics that Alnylam used for its APOLLO-B study and 10% to 20% downside risk if the panel voted against the drug.

As it happened, the FDA’s briefing documents did in fact zero in on the question of whether Alnylam’s endpoints were appropriate and whether APOLLO-B established meaningful clinical efficacy. While the panel voted 9-3 in favor of the drug despite concerns about efficacy, the FDA made a rare move in ignoring a positive panel recommendation and rejected the company’s application for the drug, citing a lack of demonstrated meaningful clinical efficacy.

Alnylam shares are now down about 16% since that last article, and the company’s hopes for ATTR-CM now rest with Amvuttra and the early 2024 read-out of the pivotal HELIOS-B study. I continue to expect positive data here, but it should be noted that Alnylam has definitely had its challenges in the ATTR-CM market and doubts/concerns are going to persist until the data are in hand. I do think Alnylam shares are undervalued, but I expect elevated market nervousness leading into those trial results.

APOLLO-B Misses The Target After All

Although Alnylam’s APOLLO-B study of Onpattro in ATTR-CM did achieve statistical significance on its primary endpoints (and positive trends in other secondary endpoints, including some cardiac measures), that wasn’t enough to convince the FDA to approve the drug. With the FDA rejection coming down on October 9, management is ending any further development of the drug for ATTR-CM and will instead focus on Amvuttra for that market.

I had previously mentioned that there were issues with the endpoints that Alnylam had selected; while the APOLLO-B study was designed in cooperation with the FDA, the 6-minute walk test (or 6MWT) and Kansas City Cardiomyopathy Questionnaire ((KCCQ)) are only surrogate markers of cardiac outcomes and don’t necessarily reflect the ultimately cardiological outcomes for patients (hospital visits, mortality, et al).

While the FDA did sign off on these endpoints, the reality is that the data did still leave a lot of questions. The 6MWT results, for instance, showed a 14.7M result that was statistically meaningful but below what has come to be seen as the threshold for clinical meaningfulness (20M-90M). What’s more, the drug showed no benefits for patients already on tafamidis, the TTR kinetic stabilizer compound sold by Pfizer (PFE) that dominates the ATTR-CM market today. All in all, then, the FDA decided that it could not approve the drug.

In the short term, this should be good news for BridgeBio (BBIO) and its stabilizer drug acoramidis; the drug won’t face immediate competition from a silencer and could prove a viable commercial threat to Pfizer. This CRL for Alnylam is also perhaps an opportunity for Intellia (NTLA) – at a minimum, it serves as a reminder of the importance of clinical trial design as the company looks to continue development of its NTLA-2001 gene therapy for ATTR-CM and ATTR-PN.

HELIOS-B Is The Next ATTR-CM Catalyst

There’s nothing good about an FDA rejection, but this is less devastating than most rejections would be for most biotechs. With the company intending to market Amvuttra (a newer compound with a different structure that allows for less frequent dosing) for ATTR-CM as soon as possible, Onpattro was only going to be a bridge or placeholder for the company in ATTR-CM – still significant in terms of near-term revenue (I estimated a peak of about $155M) and profits, but not a long-term piece of the puzzle.

Now all eyes are on the HELIOS-B study and whether Amvuttra will prove efficacious enough to win FDA approval. Thus far there hasn’t been major separation in the efficacy of Amvuttra and Onpattro in earlier-stage studies, so it’s understandable that investors are worried that the inadequate efficacy that sunk Onpattro could ultimately repeat with Amvuttra and the HELIOS-B study.

The HELIOS-B study is meaningfully different. Not only is it two times larger than the APOLLO-B study and three times longer, it is using a composite endpoint of all-cause mortality and recurrent cardiovascular events at 30-36 months. The study is also designed such that half or fewer of the patients getting Amvuttra will also be on tafamidis. Data from prior studies, including open-label extensions, have been encouraging, but “encouraging” is no substitute for actual statistically-significant results from the HELIOS-B.

I think it’s also worth mentioning that Alnylam has had meaningful challenges and setbacks with ATTR-CM drug development. Many years ago, revusiran was the company’s lead compound for ATTR-CM, but despite very encouraging early-stage results the company shocked the Street in October of 2016 when it terminated further development of the drug due to an imbalance of patient deaths and an unfavorable risk/benefit analysis. Amvuttra uses the same RNA sequence as revusiran, but the overall drug chemistry is different (lower exposure, et al) and the safety data have thus far been good.

With its focus on diseases where there are meaningful biomarkers to guide drug development and early-stage trial design, Alnylam has generated an above-average success rate with its clinical programs and generally avoided high-profile late-stage failures. Still, ATTR-CM has been the notable exception – first with safety (revusiran) and now with efficacy ( Onpattro ), and I can understand why many investors will go into the HELIOS-B read-out with elevated skepticism.

The Outlook

As I said above, I expected a peak contribution of about $155M in revenue from Onpattro in ATTR-CM. Stripping that out reduces my fair value by about $10.50/share. Amvuttra remains the key value-driver here in the near term, and the success of the HELIOS-B study is key to the near-term outlook for the company and the stock – that was always the case ( Onpattro was never going to be able to offset a clinical failure in HELIOS-B), but now it’s more front-and-center in investors’ minds.

I value the ATTR program at Alnylam at about $142.50 now, with about $100/share coming from Amvuttra . I use an 80% chance of success in that calculation (so, still including some chance/risk of failure for HELIOS-B) and I also assume around 20% to 25% market share – in other words, I explicitly expect rival compounds (be they from Pfizer, BridgeBio, Ionis (IONS), Intellia, or others) to gain and hold meaningful share in both ATTR-PN and ATTR-CM. None of this is new or different, but I felt it merited repeating.

The remainder of Alnylam’s portfolio (commercial and clinical) amounts to just under $100/share in my model, with close to $30/share from Givlaari (on the market) and $17/share from zilebesiran (in trials for hypertension). While Novo Nordisk (NVO) recently got FDA approval for Rivfloza, a competitor to Alnylam’s Oxlumo, I value Oxlumo at around $12.50/share with 30% market share (in other words, I expected and modeled competition).

The Bottom Line

The HELIOS-B study read-out isn’t the only event coming up in Alnylam’s calendar, but it is absolutely the most important. I can absolutely understand why Alnylam Pharmaceuticals, Inc. investors may not want to invest in the stock ahead of this readout given the company’s weak history with ATTR-CM development, but I do still believe that HELIOS-B will hit the mark and that Amvuttra will become a multibillion-dollar drug for Alnylam. With Alnylam Pharmaceuticals, Inc. shares now more than 40% below my fair value estimate, I think risk-tolerant investors should take another look.

For further details see: