ALNY - Alnylam's Huge Opportunity

2024-01-12 10:35:06 ET

Summary

• Pfizer's drug tafamidis has shown positive results in treating transthyretin amyloidosis cardiomyopathy (ATTR-CM), but there is still room for improvement.
• Alnylam's gene silencer treatments, ONPATTRO and vutrisiran, have shown promise in reducing levels of the transthyretin protein in the body.
• Alnylam's Phase 3 trial for vutrisiran in ATTR-CM, HELIOS-B, is expected to release results in early 2024 and could be a game changer in the market.

One niche area of biotech that I've followed closely over the past several years has been the treatment and pipeline for transthyretin amyloidosis (ATTR). ATTR is a rare genetic disease where a mutation in the TTR gene causes the liver to produce a misfolded protein called transthyretin, which can build up in the body resulting in polyneuropathy and cardiomyopathy. This progressive disease is often diagnosed later in life only after patients start to experience a high disease burden, which includes heart failure, shortness of breath and an overall poor quality of life from progressively worsening symptoms. The biggest opportunity and also biggest need for effective therapies is in the transthyretin amyloidosis cardiomyopathy (ATTR-CM) space. Due to the progressive buildup of the misfolded protein, the average life expectancy in ATTR-CM is just 2-7 years after diagnosis.

Pfizer ( PFE ) was the first company to show positive data in ATTR-CM with its drug tafamidis. Tafamidis is a stabilizer which works by binding to the thyroxine-binding sites of the transthyretin tetramer and inhibits its dissociation into monomers, which is the rate-limiting step in the amyloidogenic process. Back in 2018, Pfizer reported Tafamidis showed a 30% reduction in mortality and a 32% reduction in cardiovascular related hospitalizations. Pfizer has built up this franchise to a multi-billion dollar business with $2.4 billion in sales in 2022 and likely well over $3 billion in 2023. Even with Pfizer's effective and well established treatment, there is significant room for progress in ATTR-CM. Tafamidis is less effective in more advanced stages of the disease and still only delays the progression of the disease over placebo.

Alnylam's Silencer Approach

Alnylam ( ALNY ) has been one of the most talked about companies in the ATTR field in recent years due to its novel RNAi (RNA interference) approach. Alnylam's first 2 treatments, ONPATTRO and vutrisiran, are classified as gene silencers, which inhibit production of the transthyretin (TTR) protein in the liver and thus reduce levels of TTR in the body. The company's first generation product, ONPATTRO, is approved in ATTR-polyneuropathy (ATTR-PN), but was recently rejected by the FDA in ATTR-CM. According to Alnylam's press release , the FDA indicated,

the clinical meaningfulness of patisiran's treatment effects for the cardiomyopathy of ATTR amyloidosis had not been established, and therefore, the sNDA for patisiran could not be approved in its present form.

While ONPATTRO did show signs of slowing the progression of symptoms, it did not show statistically significant differences in all-cause mortality at 18 months versus placebo. However, during the company's most recent R&D day , Alnylam highlighted that the Tafamidis Phase 3 trial only showed a divergence in all-cause mortality versus placebo at month 18 and only at the cut off of at least 30 months was there a strong statistical difference. Alnylam submitted ONPATTRO's Phase 3 APOLLO-B data to the FDA after only 12 months and added an amendment with additional 18 month data. The company was quick to not dwell on the FDA rejection or send additional data which shows stronger efficacy at 24 months, because the company is confident its second generation treatment for ATTR-CM will achieve success and its results are just around the corner.

HELIOS-B

HELIOS-B is the current Phase 3 trial for the company's second gen treatment for ATTR-CM, vutrisiran. The company is confident it will achieve success, in part, because all patients will reach at least 30 months of follow-up and the extended timeline will enable a strong statistical difference versus placebo. In addition, it is a much larger trial with a total patient population of 655. In total, HELIOS-B has 2x as many patients compared to the APOLLO-B trial and will report data for all patients with at least 30 months of follow-up compared to 12 to 18 months in APOLLO-B. The company expects to release these Phase 3 results in the HELIOS-B trial in early 2024.

In the areas where ONPATTRO came up just short in its Phase 3 trial, vutrisiran should show greater efficacy. This thesis starts with lowering the offending TTR protein. Since the misfolded TTR protein slowly builds up in the body, the first step needs to be reducing the level of misfolded TTR in the blood stream to limit more damage. Here vutrisiran achieves a great TTR knockdown versus ONPATTRO, with TTR reduction surpassing 80% over a year from first treatment. In addition, vutrisiran is only administered once every 3 months compared to once every 3 weeks for ONPATTRO. On nearly every metric, vutrisiran's profile beats ONPATTRO. The likeliness of success for vutrisiran in the HELIOS-B trial for ATTR-CM, while not guaranteed, is fairly high in my opinion. There is much room for improvement in treatment options for those suffering from ATTR-CM. It's important to remember, this is a progressively fatal disease and is often only diagnosed after the patient begins to experience debilitating symptoms with a high disease burden. While Tafamidis is an established treatment, it only delays progression of symptoms and does little to reverse the disease in advanced stages.

Financial Opportunity

Alnylam's current TTR franchise (ONPATTRO and AMVUTTRA-vutrisiran) approved for ATTR-Polyneuropathy achieved revenue of $893 million in 2023, which marked a healthy 40% increase from 2022. Even without FDA approval for ATTR-CM, it should easily surpass the $1 billion mark in 2024 as it gains market share. At the end of 2023, over 4,060 patients were using either ONPATTRO or AMVUTTRA. However, this is only a small piece of the pie compared to Pfizer's Tafamidis at around $3 billion in annual sales.

There are around 50,000 ATTR-CM patients and 200,000-500,000 ATTR-PN patients worldwide and the number continues to grow with the advancement of genetic testing accurately identifying the source of heart failure and neuropathy for many individuals. By 2029, the commercial opportunity for ATTR amyloidosis treatment is expected to surpass $11 billion. Alnylam's HELIOS-B trial, if successful, has the potential to be the front-line treatment.

Alnylam presented data at their R&D Day that shows how the percentage of TTR reduction corresponds to improved outcomes in their APOLLO clinical trials. As the graph below shows, as the TTR reduction moves beyond the 80% range and into 90+% reduction, the improvement is exponential. Luckily for Alnylam and patients alike, the company has a potentially transformational therapy in the pipeline that can achieve a much greater knock down than the 80-90% seen with vutrisiran.

Alnylam's Potential Game Changer

Alnylam's next-gen Phase 1 candidate, ALN-TTRsc04, has the potential to blow the doors off the ATTR amyloidosis market. Recently presented data at the company's R&D day showed preliminary results from their Phase 1 study showing ALN-TTRsc04 at a dose of 300mg having a TTR knockdown of 97% at day 29 and 93% at day 180. Looking back at the company's chart of patient improvements with increased TTR knockdown beyond 90% and you can understand why the company is excited with this new treatment. In addition, the company believes these reductions can be sustained with an annual subcutaneous dosing regimen.

Clearly, this treatment is still a long way off from clinical approval, but it holds the possibility to gain massive market share based on efficacy and ease of use in once-a-year injections. It's Phase 1 study is still in dose escalation, which means completion is still at least 9 months away before it can collect 180 days of observation in all 6 cohorts. The company said they believe a Phase 3 study is expected to be initiated at or around year-end 2024. This would likely be a best-case scenario for the company to file an Investigational New Drug ('IND') application for ALN-TTRsc04. The FDA would the need to review it and if approved the company would need a few months to get everything ready to start dosing patients in an approved Phase 3 trial. Best case scenario for Phase 3 patient dosing would likely be mid-2025. If the Phase 3 trial design followed HELIOS-B, all patients would need to be followed for upwards of 30 months. Given ONPATTRO's Phase 3 failure due to lack of follow-up, it'd be unlikely the company would want to reduce the observation period. With all of this information included a Phase 3 outcome shouldn't be expected until 2028, if everything falls perfectly into place and there are no hiccups along the way.

Risks

Biotech is inherently one of the riskiest industries due to high rate of clinical failures and strong competition. Alnylam's APOLLO-B trial was already rejected by the FDA in ATTR-CM, so in no way is HELIOS-B assured success. Based on several factors, including greater TTR reduction, larger patient population and longer patient observation times, it improves the likelihood of success. The biggest question that Alnylam needs to answer is whether or not vutrisiran improves patient outcomes when compared to Tafamidis.

As biotech companies move up the food chain and begin to recognize cash flow, the prospects of dilution get diminished but are still present. For 2023, Alnylam will recognize net product revenue around $1.2 billion, but at the same time will likely lose in excess $500 million for the year. This is because the company is aggressively investing in R&D for its pipeline while simultaneously conducting large clinical trials. Luckily for Alnylam investors, the company has strong revenue growth and a strong balance sheet. The company has $2.4 billion in cash on hand. Because the company is seeing revenue growth and has a large cash balance, it's unlikely the company would raise funds through share offerings at this point.

Take Away

Alnylam has the opportunity to really dominate the ATTR amlyiodosis industry for the foreseeable future. While competition is strong, a successful HELIOS-B trial would be a game changer for the company. It would immediately begin to eat into Pfizer's $3 billion market share and potentially offer patients an easier and more effective treatment. In addition, its ALN-TTRsc04 treatment could keep up and coming competitors like, Intellia ( NTLA ), at bay.

In early 2024, the company will announce results from their HELIOS-B trial. Due to the massive market opportunity in ATTR-CM, a successful announcement (superior to Tafamidis) would likely result in a share price pushing past recent highs in the $240 range. This would be a 20-25% increase and $5 billion increase to its market cap. However, if results are questionable, the market will smell another FDA rejection similar to the APOLLO-B trial and make the current share price around $190-$195 look extremely expensive and likely trade back to $125 levels, which has been a previous level of support.

On a whole, I believe Alnylam is setting itself up for success. There is clearly room for improvement in the ATTR-CM space and the patients with the highest disease burden desperately need an improvement beyond Tafamidis. Over the next few weeks to months, investors will get to see if Alnylam dominates the ATTR-CM space or remains a niche treatment in polyneuropathy.

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