There are two criticisms you’ll never read about Alnylam (ALNY) – that management is insufficiently promotional of the company, and that it doesn’t have enough pipeline candidates/ideas. Always a company with many irons in the fire, Alnylam hosted an R&D day Thursday that was a little like drinking from a fire hose in terms of the sheer number of early-stage projects and potential clinical compounds.
In terms of valuation-driving news, though, there wasn’t too much to come out of this event. I am not generally fond of assigning values to compounds before Ph I results are in hand, and I tend to think that assigning values for “platforms” or pre-clinical pipelines is most often used as a way to goose price targets beyond what the actual pipeline would otherwise support. Be that all as it may, I continue to believe that Alnylam shares are meaningfully undervalued, but the company really needs to issue a positive update on Onpattro sales in January to drive better sentiment for the shares.
Building A Platform In Amyloidosis
It’s hard to know where to begin with Alnylam’s R&D day given the sheer amount of information, but I’m choosing to start with amyloidosis. Between Onpattro and vutrisiran (formally known as ALN-TTRsc02), Alnylam has long made it clear that ATTR-mediated amyloidosis is a major R&D priority, and the company looks to be building out a larger platform in amyloidosis in general.
Management is actively working to improve the commercial ramp of Onpattro, including working on reducing the patient start-up time (the time between the start form and the first infusion) from two to four months today to under 8 weeks. The company also continues to leverage its Alnylam Act genetic testing program to try to identify more potential patients with hATTR amyloidosis, primary hyperoxaluria, and porphyria. Thus far, 9,300 potential hATTR samples have been presented through Alnylam Act, and the company has seen a steady 7% “hit rate” for ATTR mutations.
Management is also working on expanding the label for Onpattro. The company is working with the FDA to attempt to create a protocol/trial design that will evaluate functional benefits of Onpattro on cardiac endpoints in the attempt to gain expanded labeling for hATTR patients with cardiomyopathy (a larger potential market.
Alnylam discussed/reiterated its development plans for vutrisiran, including the recently-initiated Ph III HELIOS-A study. Management is looking to start the HELIOS-B study before the end of 2019 and will position this as a cardio outcomes study, but hasn’t decided on the format of the study (randomized placebo-controlled, head-to-head against Pfizer’s (PFE) tafamidis, or as an add-on to tafamidis). I was surprised to hear about the possibility of a study of vutrisiran as an add-on, and would expect a head-to-head with tafamidis as the most likely outcome (though possibly with an add-on arm).
Alnylam also unveiled an early-stage compound (possible IND in 2020) called ALN-AAP that will be its first CNS candidate, and will target amyloid precursor protein for cerebral amyloid angiopathy (a condition associated with intracerebral hemorrhages). Alnylam also unveiled ALN-LEC, a potential treatment for LECT2-associated amyloidosis (or ALECT2), the third most-common cause of amyloidosis and one that seems to disproportionately affect certain ethnicities (particularly those of Mexican/Latin American, Native American, and Egyptian descent). Last and not least, the company indicated that it was looking at possible treatments for amyloid-related diseases that affect the eyes.
Givosiran and Lumasiran On Track
Givosiran is likely to be Alnylam’s next approved drug, assuming that the data from the Phase III ENVISION study are positive. Top-line data should be available in the first quarter of 2019, with full data around midyear. Alnylam expects to finish its rolling NDA submission around midyear, creating the possibility of a late 2019 approval in the U.S. In terms of clinical data, the drug’s ability to reduce annualized attack rates will be the primary efficacy metric, but the real issue is what the safety data look like, as an earlier interim look at the numbers saw high serious adverse events (double the placebo rate) and a discontinuation due to elevated liver enzymes. As mentioned above, Alnylam is using its Alnylam Act program to identify potential patients, with 28 AHP+ mutations id’ed from 224 samples submitted so far from 164 participating doctors.
For lumasiran, the pivotal Phase III ILLUMINATE-A study results should be available in late 2019 or early 2020, and if positive the company will file an NDA in 2020. Alnylam will be initiating two other pivotal studies in mid-2019, with the ILLUMINATE-B study targeting patients younger than six years old and ILLUMINATE-C targeting patients who already have impaired renal function. Efficacy and safety in these two subgroups would be an important market-expanding development given the typical course of the disease.
…And A Cast Of Thousands
Alnylam has a host of other potential candidates lined up behind its lead programs. In addition to the aforementioned early-stage amyloidosis candidates, the company will have data in 2019 from a Phase I single ascending dose study of ALN-AAT02 for alpha-1 antritrypsin deficit. Alnylam has been working on its AAT program for some time, with the first candidate failing due to some safety issues, and this is the first compound going into the clinic with Alnylam’s newest ESC+ molecule technology (which is meant, in part, to have fewer off-target side effects).
Alnylam expects to have top-line Ph I/II data on ALN-HBV02, its Hep B drug partnered with Vir, in 2019, and also expects to put ALN-AGT into the clinic for hypertension in 2019. While there are many drugs available for hypertension, there is still a significant unmet need here given issues with compliance and efficacy for current drugs. Alnylam also discussed ALN-F12, an IND-ready drug for thromboprophylaxis (preventing blood clots), but it is unclear where this sits in management’s list of priorities and ALN-F12 has been kicking around for a long, long time (though this may be a different version/chemistry than the prior ALN-F12).
Looking at its partnered programs, Alnylam expects its partner Sanofi (SNY) to report top-line results from the Phase III ATLAS study in 2019; while Roche (OTCQX:RHHBY) has made a big splash with Hemlibra, there are still worthwhile opportunities in the hemophilia space and Alnylam is entitled to a respectable royalty on Sanofi’s sales.
Investors should also see results from The Medicines Co’s (MDCO) pivotal ORION studies of inclisiran in the second half of the year. Inclisiran has shown impressive efficacy, safety, and convenience compared to the PCSK9 drugs from Sanofi/Regeneron’s (REGN) (Praluent) and Amgen’s (AMGN) Repatha, enough that Alnylam management has said that they regret partnering out the drug. Still, the recent success of Amarin’s (AMRN) Vascepa in the REDUCE-IT study has created some uncertainty regarding future prescribing preferences.
Last is the company’s collaboration with Regeneron in NASH, with Alnylam still in the process of selecting development candidates. An IND is possible in 2020, but it could take longer and it’s certainly possible that nothing will come of it at all.
Not Short On Ambition
At several points in R&D day, Alnylam management talked up its capabilities and potential. Alnylam management has never been shy about what it sees as the potential of its technology and pipeline (much to some investors’ aggravation), and the company made some very direct comparisons between itself and Biogen (BIIB), Gilead (GILD), and Regeneron in talking up the market cap potential of successfully commercializing its core RNAi technology.
I don’t really care about the hype, but I do think there are some legitimately interesting things on tap for the next three to five years. Although Alnylam is starting with a somewhat modest first target for its CNS platform, there is a long list of potential disease targets with blockbuster potential. Likewise, while I may be reading more into what Alnylam was trying to say than I should, I believe the company is actively working on advanced molecule and delivery designs to further expand the diseases its RNAi technology can treat – general systemic administration may never be possible, but there may be more opportunities beyond the liver, CNS, and eyes.
The Bottom Line
Programs like ALN-AAT02, ALN-AGT, ALN-LEC, and ALN-AAP could all possibly become significant contributors to Alnylam, but I’m not including them in my valuation model yet. With that, my fair value remains unchanged at around $140, with the bulk of the value in the amyloidosis program. While biotech has been hit hard lately, and Alnylam has had some more company-specific challenges including a disappointing initial launch of Onpattro, I continue to believe this is an undervalued biotech worth considering.
Disclosure: I am/we are long ALNY, RHHBY. 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.