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Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)

Q1 2014 Earnings Conference Call

May 8, 2014 4:30 PM ET

Executives

Cynthia Clayton – VP, IR and Corporate Communications

John Maraganore – CEO

Akshay Vaishnaw – EVP and Chief Medical Officer

Mike Mason – VP, Finance and Treasurer

Barry Greene – President and COO

Analysts

Mark Monane – Needham & Company

Mike King – JMP Securities

Marko Kozul – Leerink Partners

Carter Gould – JPMorgan

Stephen Willey – Stifel

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Alnylam Pharmaceuticals’ Conference Call to discuss their First Quarter 2014 Financial Results. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the company’s request.

I’d now like to turn the call over to the company.

Cynthia Clayton

Good afternoon. I’m Cynthia Clayton, Vice President of Investor Relations and Corporate Communications at Alnylam. With me today are John Maraganore, our Chief Executive Officer; Barry Greene, President and Chief Operating Officer; Akshay Vaishnaw, Executive Vice President and Chief Medical Officer; and Mike Mason, Vice President of Finance and Treasurer. Laurence Reid, our Chief Business Officer, is also here and available for Q&A.

For those of you participating via conference call, the slides we have made available via webcast can also be accessed by going to the Investors page of our website, at www.alnylam.com.

During today’s call, as outlined in slide 2, John, will provide some introductory remarks and provide general context for some of our recent progress and activities. Akshay will summarize the clinical progress with our Alnylam 5x15 and broader genetic medicine pipeline. Mike will review our financials and guidance. And Barry will provide a brief summary of our business highlights and goals for 2014, before we open up the call to your questions.

Before we begin, I would 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 annual report on file with the SEC.

In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements.

I will now turn the call over to John.

John Maraganore

Thank you, Cynthia. Welcome and thanks everyone, for joining us this afternoon. The first quarter and recent period have truly been game-changing for Alnylam and our continued efforts to advance RNAi therapeutics as a whole new class of medicines.

For starters, I think there is little doubt that our recent alliance with Genzyme is transformational, for both the advancement of RNAi Therapeutics and also for our commitment to and prospects for building a leading independent biopharma company that delivers value to patients and then to our shareholders.

This alliance provides Alnylam with expanded development and commercial opportunities for our Alnylam 5x15 and broader genetic medicine pipeline through Genzyme’s established global infrastructure and proven in fact pioneering track record in rare diseases.

Moreover, this alliance crystallizes Alnylam strategy to develop and commercialize our products in North America and Western Europe, while Genzyme advances our products in the rest of the world.

And you’ll hear from Mike in just a minute, it is also significantly solidified our balance sheet enabling an increased investment and an expanded number of RNAi therapeutic programs, while securing a cash runway that we believe provides us with financial independence to develop and launch multiple products.

In addition, we’re making terrific progress on our pipeline and I’ve recently presented some key clinical and preclinical data. And Akshay is going to go through that in just a minute, but I want to highlight some key points. And some highlights of these recent efforts. These include positive initial data from our Phase II Open Label extension study with patisiran, which has a study of the patients with ATTR polyneuropathy.

Excellent progress on our ALN-TTRsc Phase II study as we’re reporting today in TTR cardiomyopathy, initiation of our Phase I study with ALN-AT3 and innovative RNAi therapeutic targeting anti-thrombin for the treatment of hemophilia, selection of development candidates in our ALN-AT alpha-1 antitrypsin deficiency program.

And as of today, we’re very pleased to announce that we’ve selected our development candidate for ALN-CC5 compliment C5 program.

And then finally, new preclinical results with ALN-PCSsc demonstrating very robust knockdown of PCSK9 and reductions in LDL cholesterol with the potential for a once monthly and possibly even once quarterly subcutaneous dosing regimen.

We believe this profile could be highly competitive with anti-PCSK9 monoclonal antibodies in a very significant market opportunity. Notably, our AT3 PSCsc CC5 and AAT programs are in fact all future programs are using our enhanced stabilization chemistry for ESC GalNAc conjugate platform, which enables subcutaneous dosing with increased potency and durability with a wide therapeutic index. We are very encouraged by the potent knock-down and durability results emerging from our programs that utilize this improved technology.

In sum, we’re very excited about our overall pipeline progress and the accumulation of the robust datasets which are defining a very attractive product profile for our RNAi therapeutic medicines, including the ability to clamp down disease targets in a predictable, sustainable and durable manner. We certainly look forward to sharing additional updates from our pipeline in the coming weeks.

I’ll now turn the call over to Akshay, to provide you with some more details. Akshay?

Akshay Vaishnaw

Thanks John. We’ve indeed had a steady stream of data from our pipeline of RNAi Therapeutics. I’ll start with patisiran. Patisiran is our lead 5x15 program, and is aimed at the treatment of patients with TTR-mediated amyloidosis or ATTR who have familial amyloidotic polyneuropathy of FAP.

This program is in a Phase III trial with over 10 sites active in four countries. As the company’s first ever Phase III study, this is a very significant milestone in our history. And also for the entire field of RNAi Therapeutics.

The APOLLO Phase III trial is a randomized double-blind placebo-controlled study designed to evaluate the efficacy and safety of patisiran in ATTR patients with FAP. The primary endpoint of the study is the difference in the change in the Neuropathy Impairment score called mNIS+7 between patisiran and placebo at 18 months.

At the international symposium on amyloidosis just last week, we presented updated results from our patisiran Phase II study, which was conducted in 29 patients with FAP, where patients received two doses of patisiran administered intravenous infusion.

In this study, and as you can see on slide 8, patisiran demonstrated a rapid dose dependent and durable knockdown of serum TTR of up of 96%, and then average TTR knockdown of approximately 80%.

Patients who are in this Phase II study, have rolled over into an Open Label Expansion or as we refer to it, OLE study, where they are eligible to receive continued dosing with patisiran. The OLE study is measuring a number of clinical endpoints every six months, including mNIS+7. Off the 29 eligible patients, we expect 27 to roll over into the OLE study. We view this as an encouraging number of patients that have agreed to receive continued dosing.

At IFA and as shown here on slide 9, we presented initial positive results from 23 patients showing that the TTR knockdown observed following the first dose in the OLE study closely matched TTR knockdown showed in the Phase II study, with essentially super imposable pharmacodynamic.

Furthermore, repeat dosing of patisiran led to a sustained TTR knockdown of approximately 80% through up to day 168. This is equivalent to up to 8 doses of drug and these data provide the first clinical evidence of sustained RNAi mediated TTR knockdown in FAP patients beyond two doses of patisiran.

In fact, for those of you that have been following our progress over the years, these data document the most clear and sustained RNAi effects in man to date.

Repeat dosing of patisiran was found to be well tolerated with minimal adverse events and the use of our proprietary micro-dosing infusion regimen, found to be significant – was found to significantly reduce the incidence of infusion related reactions.

As long-term dosing continues, we continue to plan on reporting initial clinical endpoint data from this study in late 2014. And specifically, we expect the initial dataset to include six months and this plus seven results from approximately 20 patients. We look forward to sharing these results later in the year.

Also, at ISA we presented results of the national history cross-section analysis study of 283 FAP patients. These findings showed rapid progression of the neuropathy impairment score in correlation with disease severity providing support for our ongoing Phase III APOLLO trial.

And finally, we presented a preclinical update from our ATTR program. Specifically, we showed data confirming that the degree of TTR knockdown in a mouse disease model was highly correlated with regression TTR tissue deposit.

In addition, results from comparative studies with TTR stabilizer tafamidis, and the TTR-specific antisense oligonucleotide or ASO showed RNAi therapeutics have superior pharmacologic profile.

First, we showed that tafamidis had only a marginal effect on TTR-tissue deposition in a mouse disease model. Plus our RNAi therapeutics resulted in significant reductions in TTR tissue deposit in all tissues examined.

In the case of comparative studies with the TTR specific ASO, we showed clear evidence that the RNAi therapeutics considerably more potent and achieved TTR knockdown with over 100-Fold tissue exposure in the liver and over 1,000-Fold tissue exposure of the kidney, which is considered an off-target tissue.

In our view, these data strongly support the potential for RNAi therapeutics to emergency optimal therapeutic approach for the treatment of ATTR.

Also from our ATTR program, we’re advancing ALT-TTRsc for the treatment of ATTR patients with cardiac amyloidosis. This program is in a Phase II study aimed at evaluating the tolerability and preliminary clinical activity of ALT-TTCsc in patients with familial amyloidotic cardiomyopathy which is caused by autosomal dominant mutations in the TTR gene, or senile systemic amyloidosis, which is caused by idiopathic accumulation of wild-type TTR in the heart.

Based on the encouraging enrollment in this study to date, we recently amended the protocol to enroll up to 25 FAC or SSA patients, the previous enrollment target had been 15 patients. We remain on track to present data from this trial in late 2014.

Patients completing our Phase II trial will be eligible to participate in an early study for further assessment of general tolerability in clinical activity with long-term dosing and we expect to initiate that study in mid-2014.

We plan to begin a Phase III trial in TTR cardiac amyloidosis patients by the end of 2014. In addition, related to our ALN-TTRsc program, we’ve amended the protocol for our original Phase I study with ALN-TTRsc to enroll additional human voluntary subjects. As you may recall, we presented positive data from this study in September of last year.

This amendment is being done to evaluate a fixed or non-weight adjusted dose regimen in support of the planned Phase III trial.

In the quarter, we also made significant progress with our ALN-AT3 program for the treatment of hemophilia and rare bleeding disorders advancing it into a Phase I clinical trial.

We view this as a very exciting and innovative program since anti-thrombin knockdown has the potential to rebalance the coagulation cascade in patients with hemophilia and other rare bleeding disorders, resulting in the potential for enhanced thrombin generation and improved hemostasis.

In the first quarter, we initiated a Phase I clinical trial with ALN-AT3, as a reminder, this is our second GalNAc-siRNA conjugate program to enter clinical testing and the first employing our enhanced stabilization conjugate technology that John mentioned earlier.

This Phase I study is being conducted in the U.K. as a single and then multi-dose escalation study comprised of two parts. Part A, is a randomized single-blind placebo-controlled single dose escalation study enrolling up to 24 healthy volunteer subjects.

The primary objective of this part of the study is to evaluate the safety and tolerability of a single low dose of ALN-AT3 with the potential secondarily to show changes in AT plasma levels at sub-pharmacologic doses. We’re administering low doses of ALN-AT3 in this part of the study and we have a dose escalation stopping rule to achieve no more than 40% knockdown of AT.

Part B of the study will be an open-label, multi-dose, dose-escalation study enrolling up to 18 people with moderate to severe hemophilia A or B. The primary objective of this part of the study is to evaluate the safety and tolerability of multiple doses of subcutaneously administered ALN-AT3 in hemophilia subjects.

Secondary objectives include assessment of clinical activity as determined by knockdown of circulating AT levels and increase in thrombin generation at pharmacologic doses of ALN-AT3. We remain on track to initiate Part B in mid-2014 and we plan to present initial clinical results from this study by the end of the year. We also planned to have an update on the ALN-AT3 program at the World Federation of Hemophilia meeting taking place next week.

I’d like now to turn to ALN-CC5, a subcutaneously administered RNAi therapeutic targeting complement component C5 for the treatment of complement-mediated diseases. The complement system plays a central role in immunity as a protective mechanism for host defense. But its deregulation results in life-threatening complications in a broad range of human diseases including paroxysmal nocturnal hemoglobinuria or PNH, atypical hemolytic-uremic syndrome or aHUS and neuromyelitis optica, amongst many others.

C5 which is predominately expressed in liver salt is a genetically and clinically validated target. Loss of function human mutations are associated with a attenuated immune response again an infection and intravenous anti-C5 monoclonal antibody therapy has demonstrated clinical activity and tolerability in a number of complement-mediated diseases.

We believe that the subcutaneously administered RNAi therapeutic thus balances C5 represents a novel approach to the treatment of complement-mediated diseases with many potential advantages over eculizumab, the only Anti-C5 monoclonal available to patients today.

Previously and as shown on slide 13, we had presented preclinical data from this program demonstrating the subcutaneous administration of ALN-CC5 in non-human primates, led to up to 98% knockdown of serum C5 and up to 94% inhibition of serum hemolytic activity. This level of complement activity inhibition exceeds the 80% inhibition threshold that has being validated as providing clinical benefit in patients with PNH.

We’re very pleased to announce today that we’ve selected our development candidate to move into clinical trials with this program. This new development candidate will also utilize our ESC GalNAc conjugate technology. We believe this program can be a compelling opportunity for Alnylam and we’re now expecting to file an IND by the end of this year.

In addition, we’ll be presenting updated preclinical results from our CC5 program in June, at the Compliments Therapeutics Meeting being held in Greece.

Moving to our cardiometabolic, these programs, we’re excited to show a new preclinical data at the Arteriosclerosis, Thrombosis and Vascular Biology that was held last week.

From our ALN-PSCsc program, we presented new single-dose data in primates showing robust knockdown of PCSK9 of up to 96% and a reduction in LDLc of up to 77%. You can view those results on slide 14. Importantly these results were deserved in the absence of starting co-administration.

A single dose of ALN-PSCsc maintaining about 50% reduction in LDLc for over three months, a level of durability that we believe supports a once-monthly and possibly once-quarterly subcutaneous dosing regimen.

To stay at lease, this represents what we believe could be a highly competitive profile with anti-PSCK9 monoclonal antibodies. ALN-PCSsc also employs the company’s ESC GalNAc conjugate technology. We plan to file and IND or equivalent for ALN-PCSsc by late 2014 or early 2015. As a reminder, this program is partnered with the Medicines Company.

In addition, at ATVB, we presented preclinical data from a new program, ALN-AT3, and RNAi therapeutic targeting apolipoprotein C-III for the treatment of hypertriglyceridemia. Specifically, administration of GalNAc conjugate SRNA targeting APO C-III resulted in knockdown of APO C-III levels of up to 95% and a reduction in serum triglyceride levels of up to 68% with durability out over 20 days. We plan to continue additional preclinical work in this program to finalize our development candidate.

And finally, just this week, we announced that we have selected our development candidate for ALN-AT targeting alpha-1 antitrypsin for the treatment of AAT deficiency associated liver disease. AAT deficiency liver disease is caused by accumulation of mutant-AAT protein in liver tissue with subsequent liver injury, fibrosis, cirrhosis, and, in some cases, hepatocellular carcinoma.

At the Digestive Disease Week Meeting, we showed new preclinical data from this program that highlights the potential for ALN-AAT as a novel therapeutic approach. We’re now initiating IND enabling studies with this program and have a goal of filing an IND in mid-2015. This would position ALN-AAT as the seventh clinical program as part of our Alnylam 5x15 guidance that we extended earlier this year.

In summary, I hope you’ll agree that it’s been an especially exciting time for us as we continue to leave the translation of the science of RNAi towards the development of innovative medicines.

I will now turn the call over to Mike, for a review of our financials. Mike.

Mike Mason

Thanks, Akshay. I’ll be referring to slide 16 for a discussion of our first quarter 2014 financial results. This quarter, we significantly strengthened our balance sheet with just over $1 billion in cash, cash equivalents and marketable securities.

Our GAAP revenues for the first quarter of 2014 were $8.3 million as compared to $18.6 million in the first quarter of 2013.

GAAP revenues this quarter included $5.5 million related to our collaborations with Takeda, $1.4 million related to our collaboration with Monsanto and $1.4 million related to our collaboration with the Medicines Company.

The decrease in GAAP revenues this compared to the first quarter in 2013 was due primarily to the recognition of the remaining deferred revenue under the Cubist agreement of $9.7 million due to the termination of that agreement in the first quarter of 2013.

Regarding the GAAP accounting related to the upfront payment from our recent Genzyme agreement, we recorded this share issuance using the price of our common stock on the date the shares were issued to Genzyme at closing, which was approximately $50 million, in excess of the proceeds received from Genzyme.

We are amortizing this difference of $50 million offset by the remaining deferred revenue of $33 million from our 2012 Genzyme alliance over a 5-year period, resulting in an approximate $900,000 per quarter reduction in GAAP revenue.

Moving to expenses, R&D expenses were $43.8 million this quarter as compared to $22.2 million in the prior year period. This increase was due to additional expenses related to the advancement of our patisiran and ALN-TTRsc programs as well as licensees due to certain third parties as a result of our Genzyme collaboration.

The company expects that research and development expenses will increase for the remainder of 2014 excluding the one-time licensing in the first quarter due to, as a result of our 2014 Genzyme collaboration.

In addition, in the first quarter, we incurred a $224.7 million charge to in-process R&D expense, in connection with the purchase of the Sirna RNAi assets from Merck. As a reminder, at the closing of the transaction, we paid Merck $25 million in cash and issued approximately 2.1 million shares of Alnylam common stock.

We will issue and additional 387,000 shares of common stock to Merck upon the completion of certain technology transfer activities, which are expected to be completed in the second quarter of 2014.

G&A expenses were $8.9 million in the first quarter of 2014, as compared to $6.3 million in the first quarter of 2013. The increase in G&A expenses in the first quarter of 2014 as compared to the first quarter of the prior year, was due primarily to an increase in consulting and professional service expenses related to business development activities.

For the remainder of 2014, the company expects that general and administrative expenses on a quarterly basis will remain consistent with the first quarter of 2014.

The non-GAAP net loss for the first quarter of 2014 was $26.3 million as compared to a non-GAAP net loss of $9 million for the same period in the previous year. The non-GAAP net loss for the first quarter of 2014 excludes the $224.7 million charge to in-process R&D expense for the purchase of the Sirna RNAi assets for Merck.

With respect to guidance for 2014, we expect we’ll finish the year with greater than $825 million in cash, which provides us with a strong balance sheet to invest in our broad pipeline of genetic medicine and to maintain financial independence through to multiple product launches.

Of course, starting in 2015, we expect that significant share of our expenses on our patisiran and TTRsc programs to be shared with Genzyme pursuant to the terms of our alliance agreement. Accordingly, we see our non-GAAP net loss to be beneficially impacted by this alliance started in Q1 2015.

I will now turn the call over to Barry.

Barry Greene

Thanks Mike, and hello everyone. As you’ve heard from John and Akshay, we had a tremendously productive first quarter in recent period.

In addition to kicking off the year with our Genzyme Sanofi partnership, we completed a major acquisition of Sirna Therapeutics for Merck. Specifically, we’ve acquired the entirety of Merck’s RNAi assets including their wholly owned Sirna Therapeutic subsidiary.

Following the acquisition of Sirna by Merck in 2006, Merck scientists made significant advances in siRNA chemistry and delivery including GalNAc-siRNA conjugates, which we view to be best in class approach for liver delivery of RNAi therapeutics.

Our acquisition of Sirna brings those assets and technologies to Alnylam in a manner that accelerates and advances our overall efforts in RNAi therapeutics and cements our continued leadership in the RNAi field. As part of the acquisition, In we obtained over 125 issued patents, one of these patents is the McSwiggen Patent which was recently upheld Oral Opposition Proceedings in Europe.

The McSwiggen Patent estate broadly describes chemical modifications of RNAi therapeutics that we believe are critical for achieving drug-like properties in siRNA. Specifically, the McSwiggen patent covers chemical modifications in siRNA that are required to achieve potent GalNAc-siRNA conjugates, such as those delivered in our ESC-GalNAc-conjugate platform.

These patents are now owned and controlled by Alnylam. When coupled with our legacy Alnylam IP estate, we believe that the McSwiggen acquisition gives us the broadest and deepest patent portfolio in the fields of RNA therapeutics and provides us, and provides our partners an unparalleled level of exclusivity for our clinical and preclinical programs.

A final component of the Sirna acquisition was a couple of later state preclinical assets. We’ll give you one of these as an attractive new opportunity for Alnylam and we look forward to sharing some of the details of that program with you in the future.

Let me now turn to our 2014 goals and guidance. First, as we announced at the start of the year, we now expect to significantly exceed our original 5x15 guidance. When we launched our 5x15 guidance in early 2011, we stated that we expected to have five programs in clinical developments by the end of 2015.

We now expect to significantly exceed that with guidance of six to seven programs in clinical development by the end of 2016, including at least two programs in Phase III and five to six programs we will have achieved human proof-of-concept results.

We view the coming period, as one that promises to bring us closer to the market with our Phase III trials, yield multiple data readouts that we believe will provide expanded proof-of-concept and broaden our opportunities with a significant growth in our clinical pipeline of potential high-impact genetic medicines.

Specifically, with regard to our patisiran program, we continue to enroll patients in our Phase III APOLLO study. We believe this study will read out in about two-and-a-half to three-and-a-half years from now. And if positive, we expect that this study will enable a possible NDA submission in the 2017 timeframe.

We also continue to enroll and treat patients in our Phase II OLE study and we remain on track to share more findings from the study by the end of the year. Additionally, we continue to enroll patients in our Phase II ALN-TTRsc study and are on track to present data from that study later this year as well. Assuming positive results, we plan to start a Phase III study with ALN-TTRsc in the TTR cardiac amyloidosis indication by the end of the year.

Now, regarding our ALN-AT3 hemophilia program, where we initiated our Phase I study earlier this year, we expect to present initial data by the end of the year. And importantly, we’ll also have an update from this program next week, at the World Federation of Hemophilia taking place in Melbourne, Australia.

Turning to other programs, we’ve been successful in accelerating our ALN CC5 program and we now plan to file an IND this year. From our ALN-AS1 and ALN-PCSsc program, we plan to file IND late this year or early next.

Over the course of the year, we can also expect to see us continue to advance our genetic medicine pipeline as we’ve done it recently with ALN-AAT but we now plan to file and IND in mid-2015. As Mike said, we plan to end the year with greater than $825 million.

In summary, 2014 continues to be a very promising and extremely exciting year for Alnylam. And we look forward to sharing more updates from our pipeline in the coming weeks.

Cynthia, I’d now like to turn the call back to you.

Cynthia Clayton

Thanks, Barry. We will now open the call up to your questions. As a reminder, we ask you to limit your questions to two each and jump back in the queue if you need to. Sam, we’ll take questions now.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from Alan Carr of Needham & Company. Your line is now opened.

Mark Monane – Needham & Company

Hi guys, this is actually Mark on for Alan, thanks very much for taking my questions.

John Maraganore

Sure.

Mark Monane – Needham & Company

I was wondering if you guys could talk a little bit about how our discussions with payers are going right, TTR you talked about conducting some surveys with payers. I was wondering if you could give us an update on that.

John Maraganore

Yes, that’s a great question. We’ve just in fact a few – about a month ago now we had an excellent panel here at the company with payers. Barry, you want to summarize some of the key findings?

Barry Greene

Yes. The bottom line is, as discussions are going incredibly well, we’ve talked to U.S. private and government payers and we have been talking to payers throughout Europe and with our Genzyme partnership of annual pace with payers in other parts of the world.

I think to summarize it, the payers recognized that ATTR is an orphan disease and it’s a fatal disease where they have the onset of symptoms people die within 5 to 15 years. They recognized that TTR is a pathogenic protein, they’re actually quite excited by seeing our data and ability to knock down or remove that pathogen of protein.

It’s not every day they run across a modality that actually reads out so early in the clinical trials. And at least for the Phase III study that we’ve articulated now for APOLLO there is complete buy-in, the mNIS+7 readout accompanied with a secondary endpoint should provide good proof and good health benefits for orphan like pricing. So, I think we got good buy in there.

On TTRsc, we haven’t yet declared exactly what the Phase III design looks like. We’ve talked generally about it. But again, they recognize that this is a fatal disease, patients are very sick. And there is extreme cost to the healthcare systems. And the kind of outcomes we’ve been talking about are very attractive to them for this patient population as well. That answers your question?

Mark Monane – Needham & Company

Yes, that’s great. Thanks very much. And good luck on everything going in ‘14.

John Maraganore

Good. Thank you.

Operator

Thank you. Our next question comes from Mike King of JMP Securities. Your line is now opened.

Mike King – JMP Securities

Thanks guys for taking the question and congrats on all the progress to date. I just wanted to maybe follow-up on that question on TTRsc because I received a couple of questions from clients.

Regarding perhaps the difference in the economics for that market relative to patisiran and FAC, with respect to I guess, I missed it at ISA but I understand it was a Pfizer epi-study of tafamidis population being more of a Medicare population and whether that had any aspect on pricing. And would that be less of sort of the orphan pricing and more towards pricing of some of the other drugs that are out there for rare disorders like either the general drug or some of the drugs for PAH etcetera, I wonder if you could comment?

John Maraganore

Sure, Barry?

Barry Greene

Yes, so, Mike, we’re not at a point where we’re crafting exact pricing for a drug. But I think that today the cardiac amyloidosis patient consists of the FAC population where the mutation holds and for genetic counseling you can track people and their families earlier. And then the SSA population in which the idiopathic form of wild type TTR creates a cardiac amyloidosis.

In that disease, particularly picked up in the healthcare system, prelate their disease may tend to be much, much older. The thought is that in the mutation side, because it’s a known mutation you can start picking up people earlier, we’ll in fact be able to intervene earlier in the disease. And instead of people expiring in two to four years after disease diagnosis people can live much longer with much less core morbidities.

And at least in our case, by removing the pathogen of protein. And if we can achieve that profile, there will be health economic arguments that achieved orphan like pricing. And that’s right now our perspective on it.

Mike King – JMP Securities

Okay. So does that mean you’d see a couple of Phase IIIs Barry in terms of one Phase III for FSA and then another Phase III for the patients with the mutation?

John Maraganore

Yes, Mike, this is John. We believe at present and we’re beginning our dialog with regulators as we speak. So, we don’t want to get too far ahead of our skis on this one. But we do believe that there is going to be benefit in studying these populations in Phase III trials separately.

Right, and so, our current thinking is around studies that would work initially at FAC and then would also ultimately look at the SSA population as well. And of course, that is subject to change if our dialog with the agencies gives us encouragement to do something different. But at least as we sit here today, we think that’s the right strategy with the goal of having a more homogenous population that we would study in our clinical studies.

I mean, actually anything to add to that?

Barry Greene

No, I think that’s exactly where our thinking is right now, from a clinical trial strategy and regulatory strategy if you point, it makes lower sense to that. But let’s engage with folks and report back.

John Maraganore

Yes, good.

Mike King – JMP Securities

Okay. Thanks. I’ll hop back in queue. Yes, it does, I’ll jump back in queue.

John Maraganore

Terrific.

Operator

Thank you. (Operator Instructions). Our next question comes from Marko Kozul of Leerink Partners. Your line is now opened.

Marko Kozul – Leerink Partners

Hi, good afternoon. Congrats on your progress and thanks for taking my questions.

John Maraganore

Thank you Marko.

Marko Kozul – Leerink Partners

Maybe just upon the last one, so, with regardless thinking maybe being or different studies for SSA and FAC. Can you comment on whether these would still be small studies, possibly for FAC? Does your dialog with the agency suggest anything about risk associated with combing the two indications in 300, 400 patient study?

John Maraganore

Okay, good question. Akshay, you want to tackle that one?

Akshay Vaishnaw

Yes, I mean, I want to use the Skiing metaphor again and let’s not get too far ahead of our skis. Because I think we’ve been studying this whole landscape very carefully. And we were discussing with Mike King just now, certainly doing two separate studies to reduce heterogeneity seems like a smart thing to do.

And we’re working very hard in terms of thinking on our endpoints when the trial designed around those two populations. And we really want to engage regulation, we’re very excited about it. I think the pharmacodynamic activity strongly suggest that we’ll have a very significant clinical impact in both populations. But that’s about as far as we can go today.

John Maraganore

Marko, I’ll just add one other thing which and we haven’t yet presented this data. But not unlike our natural history dataset that we’ve generated with FAC, we’ve been looking very closely at rates of progression in different disease measures in the FAC and SSA setting. And so, we’ve certainly been working closely at those types of datasets to help guide our thinking about the Phase III trial development.

Marko Kozul – Leerink Partners

Terrific, thanks. And actually I had two of my own bigger picture questions. First one being, while you’re making progress with your enhanced stabilization chemistry, GalNAc conjugate technology, can you give us your views on any growing trends in the space, and in the delivery field towards an increasing number of companies exploring use of GalNAc conjugate strategies in the – well, it seems like all roads lead to GalNAc …?

John Maraganore

Yes. I mean, at the end of the day, we were surprised that the ISA meeting to hear our friends at Isis talking about GalNAc conjugates now. And so, and of course Regulus has been doing that for quite some time. I think the bottom line is, that’s a technology that’s superior, it works, it works great. Of course, we have an approach with RNAi which is very potent with low tissue exposures. And so we feel that we are clearly a best in class approach.

I think the latest PCSK9 data also highlights a very important differentiation strategy which is really once monthly, maybe even once quarterly type dose frequencies. So we’re in a great position but we’re flattered that other companies are admiring our progress with GalNAc conjugates. And are pursuing and advancing that approach as well. It’s a good sign. It certainly provides some important validation of our efforts.

Marko Kozul – Leerink Partners

Thanks. And just a last one here, looking out beyond 5x16 or 5x17 or 7x15 sorry. And some of your emerging programs, can you talk a little bit about your collective experience and what that’s alluding to as far as how quickly you can go bench to clinic with new programs that we may be seeing a year or two down the line?

John Maraganore

Yes, we’re operating at about 12 to 18 month clip from light bulb to the start of developing candidates that’s robust and one that we believe in. And then you can add depending on the program six to nine months predominantly. So, we’re at a pretty fast cliff from where we are.

And we’re really at a stage of significant expansion of our pipeline, I think you’re seeing that already we’ll have two additional INDs this year, so by the end of the year we’ll have five programs in clinical development, the six rolling into early 2015. And AAT obviously will be in the clinic next year as well so that will take us up to seven programs.

We think a pretty remarkable increase in our productivity. And that we only expect to continue significantly.

Barry Greene

Let me just add to that Marko, as you know, our business model at least in the genetic medicine pipeline is to commercialize in North American Western Europe assuming Genzymes in. So, we have been very diligent the targets we’re picking, how good those targets are, what the clinical development plan looks like and what our commercial opportunity aligned with the strategic imperatives of the 5x15 progress.

So, you’re seeing, as John said an acceleration expansion of our pipeline. But for programs, we think meaningful impact on patients, represent robust development plans with very significant commercial opportunities that will commercialize on our own.

John Maraganore

Does that answer your question Marko?

Marko Kozul – Leerink Partners

It does, perfect. Thanks for taking it. And congrats on the progress. Thanks.

John Maraganore

Thank you.

Operator

Thank you. Our next question comes from Geoff Meacham of JPMorgan. Your line is now opened.

Carter Gould – JPMorgan

Hi, hello.

John Maraganore

Hi, how are you?

Carter Gould – JPMorgan

Hi, John and Barry, this is Carter on for Geoff.

John Maraganore

Hi Carter.

Carter Gould – JPMorgan

Just some quick questions on AT3, I know in the past you spoke about trusting decisions for inhibitor patients. Can you give us some additional color on how your – you’re thinking about this market opportunity, thinking the number of patients, frequency of dosing and things like that?

And then with the coming approval of new agents for Hemophilia A and B the promise of lower rates in neutralizing antibodies, how, if at all has this color are you thinking? Thank you.

John Maraganore

Yes. So Carter, couple of comments. I mean, one is, just as an overlay and Akshay, you should jump in here too. We are going to be presenting some updated data next week at the World Federation of Hemophilia so that will be I think helpful on understanding the overall opportunity and promise with this approach. But we do view there to be significant unmet need in the inhibitor population, but also a significant opportunity in patients that are using their replacement factor on demand.

And that’s a very significant proportion of U.S. population than in fact populations in many parts of the world where rigorous prophylaxes is not always at here too. And so, that’s a population where the possibility or the opportunity or a once weekly sub-Q injection to reduce their need for On-Demand therapy would be highly attractive for those patients.

So I think it’s the inhibitor patients, I think its On-Demand patients, I think it’s rare bleeding disorder patients with factor 10 deficiencies, 7 deficiency, 5 deficiency, possibly type 3, with a brand. It’s an opportunity that will expand substantially over time. Akshay, you want to add anything to that?

Akshay Vaishnaw

No, I mean, I think that’s completely right. The On-Demand situation is very interesting because it comes from a number of angles, one of the chief ones the current therapies or intravenous. And many patients that may have been on prophylaxes during childhood fallout and as time goes on. Because they can’t maintain three times a week IV etcetera.

And so, there are lots of youth and adult patients, about 50% in the U.S. with Hemophilia A and B, who are on-demand because they can’t manage their lifestyles with an intravenous therapeutic. And so, what we hear from speaking to experts is that for individuals like that a subcutaneous once a week would be extremely advantageous and attractive.

Mike Mason

And I think Carter, you mentioned something about the dual agents in the rate of inhibitor formation. There is certainly no rigorous evidence at all that suggests that there is a change in the incidents of inhibitors with some of the newer agents that are emerging. So I think we’ll just have to wait and see how that plays out.

In the meantime, there are an estimated 2,000 to 3,000 patients worldwide that have inhibitors who are bleeding frequently because they have no prophylactic option. And so, we view that as an important unmet need.

Carter Gould – JPMorgan

Thank you.

Operator

Thank you. Our next question comes from Stephen Willey of Stifel. Your line is now opened.

Stephen Willey – Stifel

Yes, hi, thanks for taking my question. Maybe just follow-up on a prior question. With respect to the cardiomyopathy indication, are you guys thinking about endpoint selection in the context of pricing?

Are you looking maybe at something more that’s – more on the lines of venture with endpoint maybe like what percentage of this is using as being something that could secure greater pricing power with payers or do you think you could maybe go ahead with some kind of measurement of surrogacy and then supplement with longer term outcomes data?

John Maraganore

Well, Steve, I don’t – I sure don’t know how you can have any pricing discussion with other consideration what the endpoints are both primary endpoints of the study and also secondary. So that’s factored into every aspect of our thinking on this. And certainly again, we are in the midst of discussions with regulators on the program and the page with trial design.

And so, let’s get through that process, we certainly know the range of different endpoints that can be considered this is pretty well documented in the literature. And there is certainly a lot of thinking that we’ve had, the benefit with our KOLs to help guidance in this regard. But it would be premature to sort of say what we think it would be. Again that trial would be starting toward the end of the year this year. And but it’s not locked down yet from probably there. Barry, do you want to add anything to that?

Barry Greene

No, I think you got it.

Stephen Willey – Stifel

And would your kind of review of the natural history data confirm that 30-month follow-up in terms of looking at EV driven events would be appropriate from a powering perspective?

John Maraganore

I don’t think we view that as needed, Steve. I think with any of these diseases, there is no question that the longer you treat, the more likely it is that is better. But we believe that earlier endpoints and that duration can be used in the design of the study.

And again, and the conduct of study, and again, we’ll – we have evidence to support that. And we’ll bring that evidence in front of our friends in Washington and in the EU and we’ll certainly get their alignment with that. And we’ll report back at the right time.

Stephen Willey – Stifel

Okay. And then, just with respect to CC5, how are you guys thinking about establishing proof of concept there?

John Maraganore

Well, great question, great question.

Stephen Willey – Stifel

Would that be something a switching study or do you think you could actually do something on a head-to-head basis or find naïve patients?

John Maraganore

Yes, Akshay you want to handle it?

Akshay Vaishnaw

Yes, I mean, Steve, there are a number of components to think about there. And we’re mapping that out all very carefully. But the types of things to think about and of course the experience with that coliseum map in the literature provides rich information on this. So, for example, reduction in red-salt hemolysis is associated with the rapid reduction in a serum, bio-marketed and LDH or lack dehydrogenize.

Another aspect is taking serum from patients or individuals that have been treated with a drug like ALN-CC5 and treating PNH red-salts with that and assessing the level of hemolysis. And that could be a powerful insight into how it would look ALN-CC5 and how PNH patients.

And ultimately the outright clinical evidence such as change in Hemoglobin, change in hemolytic crisis, transfusion needs. And so, there is really the very rich landscape here. And I think we’re very confident that both in the short-term with very sophisticated with informative invitro studies and biomarkers as well as in the long-run with clinical studies, we cannot equivocally show the benefit of our drug.

John Maraganore

And I think that just have one other interesting population Steve, which we’re certainly looking at it patients that have probably more prisms than C5 that are completely resistant to eculizumab. And that’s certainly a very small population but one that it does define potentially an interesting development strategy that we might consider.

Stephen Willey – Stifel Okay, thank you. And congrats on the progress.

John Maraganore

Great, thanks Steve.

Operator

Thank you. And our final question comes from Mike King of JMP Securities. Your line is now opened.

John Maraganore

Hi Mike.

Mike King – JMP Securities

Hi, good afternoon again guys. I was just wondering, would you – and I just wanted to go to the milestone chart here. And look at APOLLO and you’ve got ongoing accrual in the Phase III throughout the rest of 2014. But I was just wondering if you might want a venture guess as to when we could contemplate full enrollment of APOLLO?

John Maraganore

Well, I mean, that’s a great question. I mean, look, it’s going well. It’s not without a lot of effort on our part. But I must say and I wouldn’t have said this and I think I didn’t say this the last time we were on a call, while back that we feel encouraged with what we are, we were making good progress.

The ISA meeting was another encouraging data-point, it helps with accrual. And we know where our competitors are at this point in time and we’re aiming to meet them at the same item (ph) or beat them to that item (ph). So that’s where we’re heading.

Mike King – JMP Securities

Okay. And, you said 10-10 sites, four countries, did I hear that correctly?

John Maraganore

That’s right, that’s correct.

Mike King – JMP Securities

Then what would you think you would ultimately get to in terms of sites and then how many countries?

John Maraganore

Well, we’re going to keep that a little bit close to our vest. As you can imagine, we’re playing a little bit of a tactical chess game here with the other side. And I don’t think we need to disclose that information.

Mike King – JMP Securities

Okay. Anything you want to say John, I know you were – you guys were excited going into the ISA regarding the EPI-data was going to be presented there on FAP. And just perhaps for the record comment about how it makes you feel like you powered APOLLO for success?

John Maraganore

Yes, I mean, Akshay, you should comment on that. I mean, that’s a very important data point for us.

Akshay Vaishnaw

Yes. We had looked available datasets at the time of designing the Phase III study. And I think the full presentation we gave and Professor Adam did a superb presentation summarizing all the natural history data we have and comparing it to what was tafamidis and oligonucleotide experiences. And it all points to the same thing, which is about 15 to 20 point increase in the mNIS+7 per annum. And that’s exactly how we had powered our Phase III study.

So, I think we feel dedicating the approach, we’re confident that we’ve got a very, very plus statistical design and approach the Phase III study. So, lots of data there and beyond that lots of understanding of how changes in this related to the severity of the phase of disease and things like that. So, but all-in-all, our Phase III design is spot on.

Barry Greene

Yes, and just as a reminder Mike, we have it conservative in our tax size, sort of floor in the study which I think is appropriate and so we’re powered to show as little as 37.5% difference. But obviously we expect more than that from a performance standpoint but we’ll have to see how the data speak at the end of the day.

We’ve been conservative in how we’ve designed the study, we want to be robust and equivocal we think that’s important.

Mike King – JMP Securities

Can you talk about the – how the 17 point in deterioration is impacted by the late versus the early onset? And how that breaks down proportionately and if you’ve kind of – I know you stratify but I just wonder if in your enrollment criteria if you expect mirror, what the distribution is on the patient population?

John Maraganore

Yes, it’s a great question. Akshay, you want to handle it?

Akshay Vaishnaw

I’m trying to get my head around your question. We have stratified.

Mike King – JMP Securities

I thought the late onsets deteriorate faster in their mNIS+7, so I’m just wondering what the balance might look like and the population at large versus what you’re going to roll in APOLLO and how you adjust for that?

Akshay Vaishnaw

Yes, I mean, I think the APOLLO input population would reflect what’s going on out there. We’re not sort of capping off the early onset versus late onset (inaudible) at any particular level. But what we are doing importantly is making sure the early versus late up balance across the two arms. So the ratio is they end up, it would be very likely there the disease out there in the real world.

In addition, the other very important real world aspect of that I think is the range of mNIS+7 scores that allow you to be in the study which are in the 5 to 100 range. And they really kind of reflect what’s 10 to 100 rate, they really reflect what’s going on out there in terms of what the clinicians see and what the patients are suffering with. Very different from the very early to founders population that was barely symptomatic and have scores below 10 right on average.

So, I think if couldn’t be a well-balanced study between the arms, then it’s going to be a very real world study and comes in the full spectrum of mutations with active disease and getting back to the natural history study of Professor Adam, the rate of change is going to be brisk during the course of the study, which is important for an intervention like patisiran.

Mike King – JMP Securities

Right. Okay. Thanks again for taking my questions. I appreciate it.

John Maraganore

Great. Thanks Mike. Okay. Well, thanks everyone for joining us this afternoon. I think we’re off to a great start in 2014. And we fully expect this to be another exciting year for Alnylam and for advancing RNAi therapeutics to patients. Look forward to talking to you in the coming months. Bye-bye.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a wonderful day.

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