Alnylam Pharmaceuticals, Inc. (ALNY) Q3 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing-by and welcome to the Alnylam Pharmaceuticals Conference Call Third Quarter Earnings. [Operator Instructions] Please be advised that this call is being taped at the company’s request. I would now like to turn the call over to the company. Please go ahead.

Good morning. I’m Christine Lindenboom, Vice President of Investor Relations and Corporate Communications at Alnylam. With me today on the phone are John Maraganore, Chief Executive Officer; Barry Greene, President; Akshay Vaishnaw, President of R&D; Jeff Poulton, Chief Financial Officer; and Yvonne Greenstreet, Chief Operating Officer. For those of you participating via conference call, the slides that are available via webcast and can also be accessed by going to the Investor page of our website, www.alnylam.com. During today’s call, as outlined in Slide 2, John will provide some introductory remarks and provide general context. Barry will provide an update on our commercial progress, Akshay will review recent clinical and preclinical updates, Jeff will review our financials, and Yvonne will provide a brief summary of upcoming milestones before we open the call for your questions. 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 quarterly 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 obligation to update such statements. With that, I’ll turn the call over to John.

Thanks Christine and thank you everyone for joining the call today. Bear with me as I’m nursing a call. As we head into the final months of 2019, we are entering a very important period in Alnylam’s history, one mark with those strong commercial execution with continuous and steady patient and revenue growth as well as robust productivity on the R&D side, marked by organic pipeline growth and progression, as evidenced by our large number of late-stage programs. Barry will get into the details of our commercial progress and Akshay will review our R&D progress, but let me start by providing a few high level comments. First, having now passed the one year anniversary of ONPATTRO’s approval and launch, we continue to be very pleased with ONPATTRO uptake with over 600 patients on commercial drug at the end of the third quarter. We’re seeing growth continuing in existing markets, even with competition and now also coming from new markets such as our recent commercial launches in Japan and Canada. And we believe this global expansion will continue to be a driver of revenue growth going forward along with improved rates of patient diagnosis, leading to new patient finding in existing markets and additional evidence generation activities, providing further differentiation. We’re also seeing very real growth and awareness of hATTR amyloidosis that we believe bodes well for ONPATTRO, vutrisiran and Alnylam. We are also hard at work at preparing for the upcoming launch of givosiran, assuming positive regulatory reviews, marking the potential entry of the world’s second RNAi therapeutic to the commercial markets. The second point I want to make is on the R&D side here. Here, we’re gearing up for an additional Phase 3 program readout with lumasiran by the end of the year. And with inclisiran, we’ll support the efforts by our partners at the medicines company as they prepare for global regulatory filings to bring that innovative product to patients. In addition, we continued to advance our ongoing Phase 3 development activities for patisiran and vutrisiran into the hereditary and wild-type ATTR amyloidosis cardiomyopathy settings, which we believe have the potential to unlock a very large commercial opportunity, with what we believe is a best-in-class approach with our RNAi TTR silencer mechanism of action. Our robust product pipeline also includes earlier stage clinical programs in areas such as complement-mediated diseases, hypertension, chronic HBV infection, and alpha-1 liver disease. We look forward to sharing initial clinical data from some of these programs as well as additional updates across our portfolio at our upcoming R&D Day on November 22 in New York City. The third point I’d like to make is that based on our commercial and R&D accomplishments and near-term prospects, we believe we have a clear line of sight toward achieving our Alnylam 2020 strategy and goals of becoming a global multi-product biopharma company with a deep clinical pipeline to bolster continued growth and a robust product engine to fuel sustainable innovation, a profile rarely, if ever achieved in biotech. Furthermore, we believe that our modular, reproducible and very importantly organic platform for innovative medicines is hard to match, where, for many reasons we believe our return on investment exceeds industry norms. And now having launched the first RNAi therapeutic and having built a global leverageable commercial capability with the potential to generate continuous revenue growth, we have greater confidence than ever in our ability to deliver on the promise of RNAi therapeutics. At the same time, we recognize that some of our stakeholders are eager to hear about our strategy for balancing revenue growth with our continued investment in our innovative pipeline and how this strategy will support the path towards self-sustainable and attractive financial profile for Alnylam in the coming years. This is something that we as a management team are deeply focused on and Jeff Poulton, our new CFO, is committed to helping us navigate through this transition and grow Alnylam for the future. Finally, I want to make note of last week’s announcement that Alnylam received recognition by science as the industry’s number one top employer. This is a remarkable recognition by over 7,500 respondents who identified Alnylam’s culture as the best in the industry. We continue to be more proud. We couldn’t be more proud of this recognition and are so grateful to all the Alnylam employees who work tirelessly every day to bring potentially game changing innovation to patients. With that, I’ll now turn it over to Barry to review our commercial progress in more detail. Barry?

Thanks, John and good morning, everyone. Before I get into specific details, I’d like to comment on the broader ATTR market dynamic. As we anticipated and as commented on previously, we’re seeing stronger and stronger disease awareness in patient diagnosis across all physician specialties. Thanks in part to our own efforts and the efforts of others in the field. We’re seeing evidence of this market expansion in Alnylam Act samples as well as patient growth and new prescribers. So this growth is important for patients and as John commented, we think this is very important for ONPATTRO, vutrisiran and patients at large with this disease. Now moving onto some specifics, let me begin by reviewing ONPATTRO’s commercial performance. We achieved $46.1 million in global ONPATTRO net product revenues in the third quarter. In terms of the geographic split, we achieved $33.6 million from the U.S., representing 90% U.S. quarter-on-quarter growth and $12.5 million from the rest of the world, representing 24% quarter-on-quarter international growth. Now as of September 30, over 600 patients worldwide were receiving commercial ONPATTRO treatment. When we expand that number to include patients in clinical trials and our global expanded access programs that number increases to approximately 850 patients worldwide were being treated with ONPATTRO. And we continue to believe that we’re on track to achieve approximately 1,000 patients on ONPATTRO across commercial, expanded access and clinical trials by the end of this year, an incredibly exciting milestone in our overall efforts. It’s important to note that for many drugs during the third quarter, it’s not uncommon to see a seasonal slowdown of new patients starts to peak vacation season. We’re actually quite pleased with the overall demand for ONPATTRO that we saw despite this potential seasonality, especially given increasing competition from recent market entrance and the availability of a number of investigational drugs through large expanded access programs and clinical trials. In some we’re very pleased to see continuous and steady patients and revenue growth. Let me get into more specifics with a review of the U.S. market dynamics. On the physician front, we’re seeing continued growth in both the number of new prescribers as well as repeat prescribers. In fact, over 50% of U.S. start forms received in the third quarter came from new prescribers, encouraging statistic that is evidenced that our medical education efforts are working well. We believe this dynamic will continue as ATT disease awareness increases and fueled by multiple players engaged in disease state education. Regarding the mix of prescribers, about 55% of start forms submitted in U.S. in the third quarter were from neurologist, and about 33% coming from cardiologist. And we saw a good mix of other specialties prescribing, like heme/onc. Now while the cardiology percentage was down a bit in July and August from previous quarters, we did see the proportion of start forms from cardiologists returned to the 50% range in September and we’re very encouraged by this continued trend during the initial part of the current quarter. We’re also seeing the emergence of more and more multidisciplinary centers of excellence across the country and these kinds of referrals are a key dynamic in earlier and proper diagnosis. Of note in the third quarter, we saw the beginning evidence in the U.S. of the use of ONPATTRO with concomitant branded TTR stabilizers, with reimbursement of ONPATTRO, which is positive for patients with multiple manifestations of hereditary ATTR amyloidosis. We expect concomitant use to increase over time as ATTs experienced favorable results with reimbursement for ONPATTRO. Now that we have over one year of launch experience, it’s possible to comment for the first time on adherence rates. The good news here is that overall adherence to the therapy remains very strong consistent with the APOLLO Phase 3 data. Specifically, we estimated over 90% adherence rate for commercial ONPATTRO, rate that we believe is outstanding and consistent with a favorable patient experience with ONPATTRO that we hear from our patient hub and that we hear from reports from the field. Regarding U.S. market access as reported by external coverage reports, we’re very pleased that we now have confirmed access to ONPATTRO. It’s prescribed for more than 98% of U.S. lives across commercial, Medicare, Medicaid and other government paying groups, including VA. Even in an increasingly competitive landscape, we continue to effectively partner with U.S. payer and have avoided the payer headwinds often reported with other orphan drug launches. We’re very proud of this result in a very complex U.S. market access environment and believe it reflects constructive collaborative and proactive approach including the use of value based agreements we’ve adapted with the payer community. Now turning to the rest of the world. We’re also pleased with ONPATTRO performance. As I noted earlier, we achieved $12.5 million in international net product revenues in Q3. A major achievement during the quarter was the launch of ONPATTRO in Japan. We built our team and are thrilled to have achieved our first sales in Japan and to be bringing ONPATTRO to a significantly underserved population in Japan and Asia more broadly. As we previously mentioned, we anticipate that Japan is likely to be our second largest country after the U.S. for ONPATTRO revenue and patients on drug exiting 2020. Other notable achievements during the quarter, includes the launch of ONPATTRO in Canada, and achievement of reimbursement in the United Kingdom, Belgium, Germany. Now through direct reimbursement named patients sales or paid access, we now have ONPATTRO being sold in over 10 countries outside the United States. We are seeing the source of our international business coming both from tafamidis switches and first-line treatment highlighting the value that people are seeing with ONPATTRO. Globally, our team also remains committed to addressing the challenge of raising disease awareness and improving diagnosis polyneuropathy in ATTR amyloidosis patients. Improved medical education diagnosis will help patients read the treatment options faster. When patients receive treatment earlier in their disease course, it improves their overall prognosis. Regarding patient diagnosis and as we’ve highlighted previously, our Alnylam Act program is a third-party genetic testing initiative in the United States and Canada aimed at facilitating diagnosis of patients suspected of having ATTR amyloidosis. As of late October, over 18,000 samples have submitted out of which nearly 1,200 of tested positive for pathogenic TTR mutation. Of note, we’re seeing an increase in the number of new tests per quarter from about 2,000 previously to over 3,000 this quarter. We believe the increase in requested tests reflects improvement in disease awareness. As a reminder, Alnylam Act is just one of several methods where patients can be genetically tested. So we see – as we commented earlier, an overall growth in the market for genetic testing. In addition to Alnylam Act, we continue to partner with 23andMe to help customers of their consumer genetics service learn more about the genetic risk of the three most common TTR variant in the United States. In summary, with ONPATTRO achieving approval and access in more and more countries, with steadily improving diagnosis and patient finding and with continued evidence generating efforts, highlighting differentiating features of ONPATTRO, we’re very encouraged by our commercial progress in an incredibly competitive environment. And with the addition of new competitors in the broader ATTR market, we believe overall disease awareness will continue to accelerate diagnosis. And were enthusiastic about the benefits this will confer to patients. Finally, let me turn to givosiran, which is now under review by both U.S. and European regulators. Assuming positive decisions from both agencies, we expect givosiran will launch in these regions in early 2020. In the meantime, we’re leveraging the capabilities built for ONPATTRO launch and following the best practice developed country by country. At this stage, our team is focused on improving the awareness in diagnosis of acute hepatic porphyria or AHP in the HCP and patient communities. As part of these overall efforts, we've launched our AHP physician and patient-facing websites give patients resources and educational materials about their disease and to provide HCPs with content and tools, help them recognize the signs and symptoms of AHP and to help them navigate through the appropriate tests to arrive at an accurate diagnosis. Through Alnylam Act, we sponsor access to third-party genetic testing for individuals in the U.S., or Canada, who may carry gene mutation known to be associated with AHP. While this program for AHP is still in a very early stage, we can report 581 tests submitted and 63 patients positive with AHP mutations as of mid October, accounting for an overall 10% hit rate. We're also very pleased in the third quarter to announce collaboration with Ironwood Pharmaceuticals focused on AHP disease education. And if approved, promotional goes around among U.S. gastroenterologist. GIs are one of the most frequently seen specialty groups during the diagnostic journey of an AHP patient, so leveraging Ironwood’s U.S. expertise and deep relationships with the GI community, represents a significant opportunity to expand medical education and diagnosis for patients with AHP. Turning to the addressable market, the consensus estimated global prevalence of AHP is in the range of two to five per 100,000 for people with systemic or systematic disease. It's been estimated that there are roughly a 1,000 diagnosed patients in U.S. and Europe were severely affected and experience recurrent attacks. Of course, many more estimated to have active disease with more sporadic attacks and additional patients have chronic symptoms and impaired quality of life. AHP is challenging to diagnose, so many patients with active disease remain undiagnosed. Nevertheless, we estimate that there are around 3,000 patients with active disease were currently diagnosed in the U.S. and Europe with debilitating potentially life threatening attack, with about a 1,000 of those patients having more frequent attacks. Assuming positive regulatory reviews, we're very excited with the new treatment option we can bring to patients and the associated commercial opportunity for Givosiran. We look forward to the possibility of delivering this medicine to AHP patients early next year. As we've said in the past, it's our belief that this can be an attractive ultra-orphan disease opportunity with over $500 million in global peak revenue potential. We expect Givosiran to show growth pattern after launch. Similar to that observe with other new treatments in ultra-orphan and underdiagnosed serious genetic diseases. So with that, let me now turn it over to Akshay to review our recent R&D and pipeline progress. Akshay?

Thank you, Barry, and good morning, everyone. In the interest of time, I'm going to limit my prepared remarks on our multiple Phase III clinical programs. Let me start with patisiran, which is the unbranded name for ONPATTRO. One of our key clinical achievements during the third quarter was the initiation of the APOLLO-B Phase 3 study aimed at expanding the ONPATTRO label to include cardiomyopathy in both the inherited and wild-type ATTR amyloidosis patient settings. Enrollment is on the way and if the study is positive, we plan to seek regulatory approval for an expanded label for patisiran in approximately the 2021 to 2022 timeframe. As you know, we're also advancing vutrisiran, which is an investigational RNAi therapeutic, delivered by quarterly subcutaneous injection and also in development for ATTR amyloidosis. We've been enrolling hATTR patients with polyneuropathy in the ongoing HELIOS-A Phase 3 study. And we were pleased to announce that our RNAi Roundtable in September, the design of HELIOS-B. HELIOS-B will be a Phase 3 study of vutrisiran in hereditary and wild-type ATTR amyloidosis patients with cardiomyopathy. The study is designed to include approximately 600 patients with ATTR amyloidosis with cardiomyopathy. Patients will be enrolled with either wild-type or inherited disease and up to 30% of the total study population maybe on tafamidis at the time of randomization. Eligible patients will have a medical history of symptomatic heart failure and New York Heart Association plus or equal to or less than three and meet minimum criteria for six-minute walk distance and NT-proBNP levels at baseline. Patients will be randomized one-to-one to receive either 25 milligrams of vutrisiran or placebo administered subcutaneously once every three months. Primary endpoint of the study is a composite outcome of all-cause mortality in cardiovascular hospitalizations, which will be assessed at month 30. Secondary endpoints will include a comprehensive assessment of cardiac disease burden including six-minute walk test, quality of life, imaging assessment and NT-proBNP. The study design also includes an optional interim analysis providing the opportunity for an earlier readout. We're actively working through startup activities with global study now and we remain on track to initiate the study by the end of the year. If successful, HELIOS-B should allow vutrisiran to enter the very large wild-type ATTR market opportunity with clinical outcomes data. I’ll now turn to recent progress with lumasiran, an investigational RNAi therapeutic in development for the treatment of primary hyperoxaluria type 1 or PH1. As you know, we're now conducting the ILLUMINATE-A Phase 3 study of lumasiran. This is a randomized, double-blind placebo-controlled study in PH1 patients age six or older with mild to moderate renal impairment. The primary endpoint is percent of change from baseline in urinary oxalate excretion average across month three to six. We completed enrollment in this pivotal trial earlier in the year and we remain on track report top line results from ILLUMINATE-A in late 2019, and if positive to submit regulatory filings for lumasiran beginning in early 2020. We're also conducting ILLUMINATE-B, a Phase 3 study of lumasiran in PH1 patients with mild to moderate renal impairment under the age of six and we also plan to soon start the third Phase 3 trial in ILLUMINATE-C in PH1 patients with severe renal impairment of all ages. In addition to the progress we've made with our wholly-owned late-stage assets, our partners at The Medicines Company and at Sanofi have also been advancing our partnered Phase III assets. The Medicines Company now report complete results from the ORION-11 Phase 3 study of inclisiran and top line results from the around nine and 10 Phase 3 studies. All three studies met their primary and all secondary endpoints demonstrating remarkable efficacy for drug administered subcutaneously once every six months. The results also demonstrated an excellent safety profile. So what did these results mean for Alnylam and RNAi therapeutics? First, these results support the safety of our RNAi therapeutics platform provides largest demonstration to date suggesting that there is no systematic evidence for platform specific safety signal. Importantly, the ORION Phase 3 studies were conducted in the generally ill population of ASCVD and heterozygous FH patients, so this is a stringent evaluation of safety and tolerability. Secondly, these results greatly strengthen our conviction for the future of RNAi therapeutics in highly prevalent chronic disorders such as other dyslipidemias, hypertension, NASH and opportunities in highly prevalent infectious diseases like HBV. Moreover, we believe the pharmacology of RNAi therapeutics as an infrequently administered medicine creates a very attractive profile for the treatment of common disease. Finally, assuming timely regulators submissions by The Medicines Company and positive regulatory review in inclisiran will provide just another source of near term revenues for Alnylam due to have significant royalties of up to 20% on global sales of the product. As John mentioned earlier, we very much look forward to seeing you later this month at our R&D Day and we're excited to update you on -- at which time, we'll be excited to update you on the entirety of our pipeline programs. With that, let me now turn the call over to Jeff to review our financials. Jeff?

Thanks, Akshay, and good morning, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the third quarter of 2019. I would like to take this opportunity to provide a brief overview of three key areas, our third quarter 2019 P&L results, summary of our cash balance and our 2019 financial guidance. Let me start with our third quarter 2019 revenue. Total third quarter revenues were $70.1 million. As Barry highlighted earlier, we recorded $46.1 of ONPATTRO net product global revenues during the third quarter of 2019, which represents 20% growth from second quarter net product global revenues of $38.2 million. U.S. product revenues were $33.6 million, representing 19% quarterly growth from second quarter and international product revenues were $12.5 million, representing 24% quarterly growth. The increases were driven primarily by the addition of new patients onto therapy including in the UK and Japan, which both generated revenue for the first time following recent finalization of pricing and reimbursement for ONPATTRO. Our global gross-to-net percentage remains in the mid-20s through the third quarter, in line with our prior guidance. Cost of goods sold was $5.2 million for the third quarter of 2019, which is approximately 11% as a percentage of net product sales. This result is still being favorably impacted by the zero cost ONPATTRO inventory. That was an expense to R&D prior to ONPATTRO regulatory approval. We anticipate ONPATTRO cost of goods sold increasing into the mid high teens after depletion of zero cost inventory, which is expected in the first half of 2020. We recognize $24 million of collaboration revenue during the third quarter of 2019, as compared to $1.6 million during the third quarter prior year. As expected, the increase in collaboration revenue is primarily due to our collaboration agreement with Regeneron, which generated $15.3 million of revenue in the quarter. Moving to our operating costs and expenses. GAAP R&D expenses were $160.8 million for the third quarter of 2019, as compared to $139.9 million in the prior year. Non-GAAP R&D expenses were $138.1 million as compared to $94.2 million for the third quarter of 2018. The increase in non-GAAP R&D expenses was primarily due to increased activity in support of our late-stage pipeline programs. Turning to SG&A. GAAP SG&A expenses were $120.4 million for the third quarter of 2019, as compared to $116.5 million for the prior year. Non-GAAP SG&A expenses were $97.1 million as compared to $74.4 million for the third quarter of 2018. The increase in non-GAAP SG&A expenses was due primarily to an increase in commercial and medical affairs investment in connection with the continued global launch of ONPATTRO. Moving now to a summary of our cash balance in our 2019 financial guidance. Our balance sheet remains strong with $1.74 billion of cash, cash equivalents, marketable debt securities and restricted investments on hand at the end of the third quarter, as compared to $1.13 billion at the end of 2018. This cash balance is expected to support company operations for multiple years based on current operating plans. Now to our 2019 financial guidance. We're reaffirming our 2019 annual non-GAAP R&D expense guidance to be in the range of $550 million to $575 million and our 2019 annual non-GAAP SG&A expense guidance to be in the range of $390 million to $400 million. We do expect our actual results will be toward the lower end of both of our non-GAAP R&D and non-GAAP SG&A guidance ranges, reflecting good cost management discipline within the organization. Finally, I also look forward to our R&D Day later this month, when I will have the opportunity to provide some perspectives on how on the Alnylam aims to transition toward a self-sustainable financial profile for the future. With that, I'll now turn the call over to Yvonne to review our goals for the remainder of the year. Yvonne?

Thanks, Jeff. We've made tremendous progress so far in 2019, but we still have a number of exciting milestones to look forward to in the remainder of the year. For starters, we plan to continue our global commercialization of ONPATTRO and also focus on enrolling patients with ATTR amyloidosis with cardiomyopathy in the APOLLO-B Phase 3 study. With vutrisiran, we plan to continue enrolling the HELIOS-A Phase 3 trial throughout the year and expect to initiate HELIOS-B, an outcome study in late 2019. With cemdisiran, our planning is underway for the potential launch of our second RNAi therapeutic in the coming months, assuming positive regulatory reviews. Turning to lumasiran, we plan to report top line results in the ILLUMINATE-A Phase 3 study in late 2019. We will also continue enrolling pediatric patients in ILLUMINATE-B and plan to start the ILLUMINATE-C study in PH1 patients of all ages with severe renal impairment in late 2019. With inclisiran, we look forward to seeing complete results from the ORION-9 and 10 studies that The Medicines Company plans to present at the American Heart Association meeting being held November 16 to 18 in Philadelphia. They also plan to submit an NDA for inclisiran by the end of the year. And of course, we plan to continue advancing our pipeline of earlier stage clinical efforts as well as our exciting preclinical efforts and plan to highlights these milestones throughout the rest of the year as they occur. In particular, you should expect data readouts for a number of our early and mid-stage clinical program. And finally, as a reminder, we very much look forward to reviewing all of this at our R&D Day in New York city on Friday, November 22. Let me now turn it back to Christine to coordinate our Q&A session. Christine?

Thank you, Yvonne. Operator, we will now open the call for questions. [Operator Instructions]

Thank you. [Operator Instructions] We will now take our first question from David Lebowitz of Morgan Stanley. Please go ahead. Your line is open.

Thank you very much for taking my question. I'm curious clearly the ramp of ONPATTRO has gone pretty well out the gate. When do you think you might gain enough comfort to give some guidance going forward for sales. And what you expect maybe in fourth quarter and perhaps into 2020?

Yes, that's a great question, Dave. Jeff, do you want to handle that?

Yes. It's something that we're talking about and thinking about internally. We're not prepared to provide guidance today for the fourth quarter or for next year. But the plan would be guidance would be on the year end call. And again, this is something that we're thinking about, not ready to give you an answer yet. Understand the question. I would say more to come.

Thank you for that. And one additional one, if I may with the HELIOS-B and the ONPATTRO, APOLLO-B trials are being so similar. How are you going to deal with the dynamic of recruiting patients for both at the same time?

Yes, that's a great question, Dave. Akshay, do you want to handle that?

Yes. I mean, I would say there are two factors. One is that APOLLO-B got up and running and enrolling well in advanced HELIOS-B, which we intend to start by the end of the year. And the second is, remember both of study are – the predominant population is wild-type ATTR cardiomyopathy and that population of courses is remarkably prevalent in most parts of the world, does not have access to therapy today. And so as such, without extensive clinical operations group that have great experiences and relationships with TTR sites, we're working through all of that. And then we're pretty comfortable that we can achieve goals for both studies in terms of speedy enrollment and then get to readouts.

Thanks for taking my questions.

Great. Thank you, Dave.

We'll now move on to our next question from Paul Matteis of Stifel. Please go ahead. Your line is open.

Okay, great. Thanks so much. One financial question and one clinical question, if I may. Just in your commentary surrounding cash and expectation for having cash on operation for multiple years, I guess in a word where expenses are likely to continue to go up. Can you at least be qualitatively about what you're expecting regarding cash flow coming in over the next couple of years? And I was curious on the royalty streams, like inclisiran. There's any internal discussion or thoughts surrounding monetizing that. And then separately on the HELIOS-B study, we noticed that you're allowing patients in the trial, who are on a stabilizer, who are not on a stabilizer. Can you talk about your assumptions there for the mix and how you're contemplating that from powering perspective? In other words, how much benefit are you assuming on top of a stabilizer versus the stabilizer naive patients? Thanks so much.

Two great questions, Paul. Maybe for starters, Jeff, do you want to give some context or an answer to that?

Yes. I mean, let me just sort of restate what we said. We have $1.74 billion in cash at the end of the third quarter, which we feel very good about. We're not providing specific guidance today for next year or the following years. I think the one thing that I can say is that we are very focused on this question of financial sustainability. It's something that we talk a lot about internally. I'll talk more about that at our R&D Day. I think the one thing we're prepared to say in that regard is that we believe that 2019 is going to be our peak net loss year. And so we'll see improvement in that next year and in the following years, which obviously is impacting the question that you asked about sort of the cash runway. That's about all I'm prepared to say on this today.

And you want to comment briefly on the inclisiran question – part of the question?

Yes. I mean, I think it's a fair question. I think we're very excited about the profile of that drug, if approved and we would think about or consider the possibility of looking at a possible monetization there. But to do that, I think the most important thing is that we would get the right value for it. And again, I just comment on the fact that we're very, very excited about the profile of that potential drug.

Yes. Terrific. And Akshay, do you want to handle the clinical question?

Yes. With respect to the tafamidis question, Paul. I think we have to acknowledge that the families have obviously out there in certain settings. It is still ramping up. It's not available to the vast majority of patients. We think around the world with wild-type disease and hATTR. So as such, I think we have an opportunity to really enroll the robust placebo-controlled study. Now having said that, some patients will be onto tafamidis and I think, we have to acknowledge that and allow those patients in the study. The study is designed to enable that and up to 30% of patients may have concomitant into tafamidis in the background. But I can assure everybody that the primary comparisons are placebo-control comparison. And so as such, we're comfortable with the infrastructure of the trial and the way we've powered it. So we can do that very key analysis and demonstrate, hopefully efficacy of vutrisiran over placebo. And of course, this design has been vetted extensively with regulators.

Does that answer your question, Paul?

Yes, absolutely. Thank for taking my questions. I appreciate it.

We will now move on to our next question from Ted Tenthoff of Piper Jaffray. Please go ahead. Your line is open.

Great. Thank you very much. Happy Halloween everybody. And pretty remarkable what you've achieved with the launch in the year. So hats off to that. Getting up to almost a 1,000 patients by enrolling, it's really incredible execution for patients who really need to therapy. I wanted to kind of look towards givosiran if I may, and I'm still this – you have to be patient with me for a minute, because I still don't totally understand how we're going to be treating this disease. So maybe you can kind of walk us through sort of what the first approval might look like sort of how you anticipate getting to patients of women who need givosiran and then maybe longer term sort of how maybe prophylactic could be used. Thanks for answering the question.

Yes. Great question, Ted. Akshay, do you want to answer that?

Yes. Ted, as we've discussed before, and I'm sure many of you are familiar, this is a terrible disease, but generally a disease of women, nine to one, women to men often striking between the years of 15 to 45 in that prime of life. Oh, I'm 57, so maybe I'm past the prime of my life. So striking in the prime of life, and the issue unfortunately for patients is that when they present that first attack is not necessarily the end of the disease for them. They can have many subsequent attacks. It can be one a year. It can be one every five years. It can be 12, 24 a year. And patients very remarkably and the fact that any given attack can be life threatening and in fact, people do die from this disease or leave you with terrible disability from the neuropathic impact and the nervous disorders or peripheral neuropathy. Or of course, in patients end up having laparotomies for the abdominal pain, wrongly, means that there's this constant fear. Once you've had your first attack, when is the next attack coming? How's it going to leave me? And this is with respect to someone that should be out studying or working or enjoying life. And so I think physicians have this terrible dilemma of how to manage these patients. And the study we designed was to take patients who are enriched for multiple attacks a year on average four or more. And to unequivocally I think demonstrate that, we get a remarkable reduction in the annualize attack rate, 90% or so in the median attack rate as design in the ENVISION study. So that shows that the drug has this fundamental property to prevent attacks. And I think we obviously way the label from the FDA and EMA, all of that work is ongoing right now. And physicians will have a very powerful new drug once approved to prevent attacks and they'll have to make the choice because, but I do think we're providing a very new and important treatment options to these patients.

I agree. Awesome. Thanks. I'm looking forward to seeing you in New York in just a couple of weeks.

We will now take our next question from Ritu Baral of Cowen. Please go ahead. Your line is open.

Good morning, everyone. Thanks for taking the question. I want to ask a little bit about what you were seeing in the field competition wise from tafamidis. And what sort of prescribers or what sort of patients were the most impacted, I suppose in Q3. Specifically, was that the reason that you had the dip in the proportion of new prescribing cardiologists? And why do you think you saw the rebound? And what are you seeing in Europe in that physician breakout commercial competitive landscape?

Great question, Ritu. Thanks for that. Barry, do you want to handle it?

Yes. Let me talk about kind of the mix and then we can backup to Europe and specific physician types. So we expect the prescriber base ONPATTRO to evolve over time. There's always ebbs and flows in prescribing. And as we comment on the call, we were very pleased the number of new prescribers accounting for new patients starts and we believe the disease and the proportionate cardiologists, probably in third quarter was in fact associated in the United States with cardiologists, very busy with their hundreds and hundreds of wild-type patients getting them on a drug for the first time where drugs were no longer available. So we see others in cardiology specifically really talking about TTR cardiomyopathy. Now as I commented in the call, once we got through sort of the early summer months into September, October, we did see the prescribing rate in cardiologist return to about 50%. But I will note that we are getting a number of additional prescriber types outside of neuro and cardio. So again, those percentage rates will ebbs and flows. The other dynamic, and Ritu, you've asked about this in previous calls. I don't have specific numbers, but there are more and more centers of excellence popping up around the country, where we're seeing multidisciplinary approaches being utilized. And cardiology being a key center referral pattern for all of TTR amyloidosis. Now in Europe, as you know, tafamidis has previously been approved in polyneuropathy. So there are countries with experience and we think that the primary uptake that we've seen and what we're hearing from the field is in pure cardiomyopathy or the wild-type population, which is very interesting to be getting reimbursed at this time. But that's the dynamic we're seeing outside the United States.

Great. And just a quick follow-up. In the new prescribers, are they in the centers of excellence? Are you starting to see that sort of filter out to the community as well?

More actually in the community, we talked about this dynamic and it's in fact what we're seeing. It's the beginning of launch. Physicians are putting the EAP patients and patients known to site on drug. And then as patients returned back to the community settings, those physicians are getting more and more educated and comfortable in diagnosing and treating. So we’re seeing kind of the pattern stretch outside the centers of excellence, who remain very busy, but really busy in doing clinical studies versus treating as many commercial patients.

Yes. And can I just add two other points? One is the clarification on ONPATTRO and in Europe, just to be very clear. The uptake we're saying is in the polyneuropathy patients with hATTR amyloidosis and it's in the patients that are either naive to treatment or progressing or have progressed on tafamidis. But the other dynamic, I want to come back to Ritu, when we've talked about this offline, which I think is quite interesting in the U.S. is the occurrence of concomitant use now of ONPATTRO and TTR stabilizers. And we think that's a dynamic that will continue to grow in the U.S. market as physicians realize that they're able to continue to get reimbursement for their ONPATTRO in that type of setting.

Great. I'll hop back in the queue with my other questions. Thanks.

Great. Thanks, Ritu.

We move onto our next question from Salveen Richter of Goldman Sachs. Please go ahead.

Good morning. Thanks for taking my question. Could you just provide further details on the patients that you mentioned were switching from tafamidis to ONPATTRO and perhaps, if that's occurring in the opposite direction and then just comment on the concomitant use and where you're seeing this and if there's a specific type of patient subset? And then also for the mixed phenotype patients, what are you hearing from physicians on how they're choosing between a stabilizer versus a silencer at this point?

Yes. Great questions. Just on the switching of course, just to be clear, that's happening predominantly in Europe, where tafamidis has been on the market for many, many years and these are patients that have progressed on the tafamidis with their neuropathy. And so they're switching to ONPATTRO at that point in time. But Barry, you want to answer the full set of question there?

Yes. So I think what you just said is a very important dynamic. Outside of the United States, where there's been significant experience of tafamidis and patients with polyneuropathy – patients have – physicians have experienced patients continuing to progress on their diseases. In fact, Theresa published a paper recently out of our Portugal that about one-third of patients seem to benefit by tafamidis, but two-thirds of patients rapidly progressed. So with that experience, we in patients with polyneuropathy there are rapid switches to ONPATTRO. That's a dynamic. We're also seeing in Japan and Canada. In terms of concomitant use, we've seen concomitant use with the generic non-steroidal anti-inflammatory diflunisal for some amount of time. It's hard to get a specific read on that because it's less specific and it's very easy to be reimbursed. But as John mentioned in the United States, in patients with hereditary TTR amyloidosis with polyneuropathy that may have had significant cardiomyopathy and were started on a branded stabilizer as the patients progress in their polyneuropathy worsens, we're seeing physicians reach for ONPATTRO treat the polyneuropathy part of hereditary TTR amyloidosis of which as you know, we have very strong data. And importantly, and it speaks really to the relationships we’ve had with payers. We are seeing reimbursement of ONPATTRO even in the face of concomitant branded products.

And so Barry mentioned Teresa, without her last name. That's Teresa Coelho, who's the investigator in Portugal. And the paper he's referring to is the Monteiro paper, which I think is worth reading.

Thank you.

We will now move on to our next question from Gena Wang of Barclays. Please go ahead. Your line is open.

Thank you for taking my questions. I think two questions. One is clinical trial question for HELIOS-B. You do allow up to 30% patients along baseline tafamidis and continue on throughout the study. Just wondering, is the powering assumption allowed to detect statistically significant benefit in this particular patient population? So I'm asking mainly in the context of generic tafamidis entry in 2029.

Yes. That's a good question, Gena. Akshay, do you want to hail that?

Yes, Gena, if I understood the question right, the answer is no. The primary comparison is a placebo-controlled comparison between vutrisiran and placebo. So we're not powered to show differences between those combinations success.

So how would you address the future tafamidis generic entry? Any thoughts on active comparitor going forward in terms of trial design?

Yes. I mean, first of all, Gena, I think it's an open question as to what the real generic entry name will be given to VYNDAMAX and the new cell form of tafamidis. We don't expect there necessarily to be a generic version of VYNDAQEL and the time frame that you're talking about actually. So I think there's not a dynamic there that we think commercially we need to navigate through.

Yes. And I would just add to that. As far as TTR learning approaches are concern, whilst you can't compare across studies. If we look at how tafamidis performed in peripheral neuropathy component of hATTR. And as Barry just outlined from the Monteiro paper by the Coelho group, it didn't seem to have a strong result that it missed the primary endpoint. We had a very different result in a much tougher to treat population, that is widely acknowledged. Now again, I'm not formally comparing cross studies, that’s not feasible, but I think people have to draw their own conclusions from that. And we remain very optimistic that TTR silencing approaches are the most potent way to treat this disease. And that primary comparison should be very enlightening as the ability of vutrisiran to help these patients.

Great. And then another quick question regarding the cash burn, because I go to ask a lot by the investors. So the annual burn close to $1 billion, any thoughts on the cost mostly spend on the programs or early-stage, late-stage and then SG&A perspective. How soon should we expect Alnylam become a self-sustaining company?

Yes. Jeff, do you want to handle that?

Yes. We're not prepared to give you a specific date today. I think I mentioned earlier, it's something that we're talking a lot about. It's a focus for us. We think we're starting on that journey. We expect that this is going to be our peak net loss year. As it relates to operating expenses, I anticipate lower operating expense growth going into 2020 than what we generated in 2019. And we also have a lot of things to be optimistic about on the top line in terms of growth for next year, both with ONPATTRO as well as if givosiran is approved. So hopefully that answers your question. Again, this is a big focus for us. I anticipate, again on the SG&A side in particular for next year that we're going to be able to leverage what's been built and invested this year. So you'll see moderating expense growth going forward.

And I would add that obviously the very positive increase around results from the standpoint of our royalties and how that plays out for our profile will also be a very important component of this transition towards self-sustainability. And then we have high confidence, that lumasiran will be a positive results later this year in December. And that obviously will add yet another product to our overall revenue mix. So when you look at the staging of product launches both organic – proprietary that we have in Alnylam, but also the royalties that we get, also promising new guidance from Sanofi in their call about vutrisiran. You put all this together, we've got some very nice revenue growth that we're going to be seeing in the years to come that will assist the companies transition towards self-sustainability.

Thank you very much.

We will now move onto our next question from Alethia Young of Cantor Fitzgerald. Please go ahead. Your line is open.

Hey guys, thanks for taking my question. I got like 10, no, I'm just joking, maybe got one or two. I guess, could you talk a little bit more about the clip of patients that you're seeing in the U.S. and Europe? I mean, I feel there's a steady clip of adding patients. Should we think about as we go into the next maybe six, seven quarters, the same clip, since you basically are finding people as well as. So I just want you to kind of reflect on that. And then, I guess, wanted to get like your temperature on potentially – givosiran label that might be potentially broad and how you're thinking about that? And how that ties into the world of pricing things?

Right. All right, Barry, do you want to start with the first one and then…

Yes. Thanks, Alethia. Thanks for the two questions. That's not the 10. As we commented previously, we continue to see continuous and steady both patient and revenue growth in the quarters to come. As we've commented, that growth comes from really three areas. It's opening new markets, as we saw this quarter in Japan and Canada for example. It's continued evidence generation, allowing physicians to be more and more comfortable with ONPATTRO prescribing. And then it's de novo patients finding in markets where we've already launched. And those efforts are going well. As we commented with our disease education awareness efforts and those of others, as we've talked about previously, we do see the market continuing to grow and the number of hereditary patients with polyneuropathy being identified. So that's how we see the growth continuing quarter-on-quarter in a continuous and steady fashion.

Now regarding your givosiran question, Alethia let me just start by saying, we learned from our last experience that we should not be label soothsayers. So I don't want to get ahead of our seize on that issue. But we're in regulatory review now and our PDUFA date is February 4, and I think that's where we should move at this point.

Sounds good.

We’ll now move onto our next question from Maurice Raycroft of Jefferies. Please go ahead. Your line is now open.

Hi, everyone. Congrats on the progress and thanks for taking my question. Just going to ask about the optional interim analysis in HELIOS-B. Can just remind how you decide to do the interim? What could happen there? And when that could happen? And what you're going to be looking for with that?

Great. Terrific, Maurice. Thanks for your congratulations in the beginning. Akshay, do you want to handle the question?

Yes. I mean, I think it's a little premature to get into those details now that some stuff we want to work through first before we share. The issue of interim depends so much on how things are going with the study and how quickly it enrolls. For example, we learned from the ENVISION study the enrollment occurred at such a pace that the interim almost became futile because the full data set was going to be available in a very timely fashion after the interim. So there's a lot to work through here. I think in due course we'll come back and visit at that point.

Got it. Okay. Thanks for taking my question.

Thanks, Maurice.

We'll now move onto our next question from Whitney Ijem of Guggenheim. Please go ahead. Your line is open

Good morning, guys. A couple of follow-ups on givosiran. So first in terms of the patient numbers you gave, I think you said 3,000 diagnosed in the U.S. and Europe. Just wanted to double check, I recall a 5,000 number at some point. So this one, maybe I misheard, but kind of rectify those two numbers. And then in terms of the breakout of the 1,000 patients who have more frequent attacks, I guess, can you compare and contrast the frequency in those patients versus kind of the broader 3,000 number?

Yes. Let me start and then Barry, you might want to add some more. As you can imagine Whitney, as we get closer to the approval, we've been sharpening our pencils to really nail down the prevalence rates and the diagnosed patients versus the undiagnosed patients. There's no change in the overall estimate of the 1,000 recurrent patients and the 5,000 sporadic patients that we've had out there. We believe those are still the right numbers. But as we get really granular on the patients that have active disease and are diagnosed, there are a total – we believe there are a total of 3,000 in the U.S. and Europe, obviously a larger number in the rest of world. But 3,000 in the U.S. and Europe, of which 1,000 of those 3,000 are those recurrent attack patients that have four attacks or more and then 2,000 of those 3,000 are the less recurrent patients. So the sporadic attack patients. Now the 5,000 number is still the real number. And we believe that that's where it goes. But when we talk about actual diagnosed patients, we've always said it's than that 5,000 number. Barry, anything else to add to that?

No. I think you've covered it well, John.

Okay. And then just one quick follow-up, have you commented on how many patients are ongoing in the OLE, the early access protocol? Thanks.

We haven't yet. And it's a protocol that was only opened up relatively recently as well. But, we'll provide more color as we get closer to approval for the product.

Thanks.

All right. Thank you, Whitney.

We will now move onto our final question from Navin Jacob of UBS. Please proceed. Your line is open.

Hi, everyone. Thanks for taking my questions. This is actually Sriker Nadipuram on for Navin Jacob. First on ONPATTRO, just can you give us an initial sense of the number of patients in Japan? How the average dose in Japan compared to the average dose in the U.S.? And then maybe I missed this, on the COGS assumption. When do you expect to run through the R&D expense product? And then I have just a longer-term question. I saw the Regeneron collaboration that a CNS asset was included, ALN-APP, that could possibly have applications to Alzheimer's disease. With the news – the recent news, you guys have any updated thoughts on the priority of this program versus the others? Thanks very much.

Great. Those are three great questions. So let's start with Barry and then go to Jeff and then Akshay and I can do the last one.

Yes. Thanks for the question. So we're not providing any breakout other than the international breakout. I can tell you from a – just to give you some color that, the Japan launch is going very well. The KOLs are very well aware, as we mentioned, tafamidis in patients were very known in Japan. So we're seeing both de novo starts and significant numbers of patients. Which is now yes, about dosing, it's wastage dose, so Japan patients tend to be a little bit lighter, but that's about all we can say right now.

Yes. The price per vial is very strong in Japan as well, some additional color we can provide. Jeff do you want to…

Yes. On COGS today, we're at about 11% of sales, but that's benefiting from the zero cost COGS that have previously been expensed to R&D. we expect the transition to be first half of 2020 when we'll see fully cost of goods sold for ONPATTRO. And when that occurs we expect to see that COGS percentage as a percentage of revenue step up into the mid to high teens.

And then, thanks for asking the question of Regeneron and APP. We are obviously excited about amyloid precursor protein as we've characterized before. It is our lead CNS program. Akshay, do you want to comment further on?

I think it will be our first time being in the CNS space and we continue to believe that the work is going well. Our primary target is in cerebral amyloid angiopathy, which we've discussed before where it's a genetically validated target for the inherited form of the disease. And many believe it's very heavily implicated in the wild-type or more sporadic form of the disease, which affects hundreds of thousands, if not millions around the world. And with respect to the broader question, I think, APP A-beta and Alzheimer's as we've had recently from Pfizer continues to be an ongoing discussion and debate. And it'll be very interesting to see how the various experts at regulatory agencies and elsewhere, evaluate the aducanumab data set. I think it could be very important in further fueling the need to have A-beta suppressing agents. And what better than to turn the tap off or substantially turn the top off and reduce the production of the protein as we've done with TTR. And we would be optimistic that would have a profound impact on the nature of disease, but as you know, much more to be learned in that.

Yes. And obviously, we were pleased to see that there might be some light at the end of the tunnel for aducanumab and approaches targeting the amyloid hypothesis and Alzheimer's. And that's obviously good for medicine and patients. And that could also be instructive for our program as well, which is good.

Thank you very much.

Thank you. So, I think that was our last question. So I do want to thank everybody for joining us on the call. We're obviously very pleased with the R&D and commercial progress that we've been making at Alnylam. And, we believe that we're really doing our best to build a remarkable company focused on improving lives of patients and capable of creating significant shareholder value. So with that, we look forward to updating you next at our R&D Day in the coming weeks and then again, towards the beginning of next year. Thank you very much.

Ladies and gentlemen, this concludes today's conference.