Alnylam Pharmaceuticals Inc (ALNY) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Alnylam Pharmaceuticals conference call to discuss the second quarter 2011 activities and financial results. There will be a question and answer session to follow. Please be advised this call is being taped at the Company's request. I would now like to turn the call over to Alnylam.

Good afternoon. I'm Cynthia Clayton, Senior Director of Investor Relations and Corporate Communications at Alnylam. With me today are John Maraganore, our Chief Executive Officer; Barry Greene, our President and Chief Operating Officer; Akshay Vaishnaw, our Chief Medical Officer; and Mike Mason, Vice President of Finance and Treasurer. 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, www.alnylam.com.

During today's call, as outlined in slide two, John will provide some introductory remarks and general context. Akshay will summarize our clinical and pre-clinical R&D activities, Mike will review our financials and guidance and Barry will summarize our business highlights and goals. We will then open the call for your questions.

Before we begin, and as you can see on slide three, 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 provisions 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 obligations to update such statements.

I will now turn the call over to John.

Thanks, Cynthia. Welcome everyone and thanks for joining us this afternoon. I will be referring to slide four during my brief introductory comments.

The first half of 2011 was an important period for Alnylam as we made significant progress in the continued advancement of our clinical pipeline and the transformation of our business from platform company to product company. As you know, we launched our Alnylam 5x15 product strategy earlier this year with a keen focus on clinical advancement of RNAi therapeutics for genetically defined targets and diseases. We are very excited about this approach because it leverages the progress that we have made in delivery and human translation. And has focused on the rapid advancement of RNAi therapeutic medicines that really matter. We also view this as an exciting value creation strategy for our shareholders.

Turning to the second quarter and recent period, we achieved key milestones with both our Alnylam 5x15 programs as well as our partner base programs. Akshay will go into this in more detail shortly but I'm quite pleased with the progress in our ALN-TTR program and with having submitted our CTA filing for ALN-PCS, which now advances our second generation LNP platform into the clinic.

Regarding our partner based programs and specifically ALN-VSP, we are excited by the reports reported at ASCO in June, and the updated news this morning. In short, I think it is clear we have a well tolerated drug and regimen that demonstrates anti=tumor activity and an RNAi mechanism of action.

All told, our focus at Alnylam remains committed to the advancement of RNAi therapeutics as a whole new class of innovative medicines, and we are looking forward to reporting on our progress in the second half of the year where we expect to report key clinical data from our ALN-TTR01 Phase I study, follow our ALN-TTR02 regulatory documents and report clinical activity data from the ALN-PCS Phase I study.

We fully understand that clinical progress and clinical data are the most important elements for Alnylam and the entire RNAi field at this time and we are fully committed to achieving those objectives.

On the business front we also had a very active second quarter which Barry will detail for you shortly, but I'm particularly pleased with the progress in several business discussions including our efforts and activities on Alnylam biotherapeutics.

On the people side I do want to highlight the appointment of Akshay Vaishnaw to the new position of Chief Medical Officer . Akshay has led the advancement of Alnylam's pipeline progress, and has aptly earned his promotion and new recognition. We are simply delighted to have is him in this new role and look forward to his continued leadership and commitment.

With that I will turn the call over to the aforementioned Akshay himself, to review our clinical activities, our pipeline and our scientific progress.

Well thank you, John, and hello everyone.

As John mentioned during the past few months we have achieved important milestones in the advancement of our clinical pipeline. First, regarding our lead Alnylam 5x15 program, that is ALN-TTR for the treatment of transthyretin-mediated amyloidosis, we continue to make strong progress and so ALN-TTR01 continues to enroll patients in a blinded randomized placebo controlled single dose escalation Phase I clinical trial. To accommodate for patient enrollment at our European sites over the summer months we are now updating our guidance to report on Phase I data from the study in the fourth quarter of 2011.

Specifically we expect to present data from this trial at the International Symposium on Familial Amyloidotic Polyneuropathy, being held November 20 to 22, 2011, in Kumamoto, Japan. We think this is the best venue for us to present what we expect to be important data and results.

Separately we presented new data from our ALN-TTR program at the Peripheral Nerve Society meeting in June. These data were from a natural history study performed at the Boston Medical Center, designed to measure blood levels of wild type and mutant TTR over time in both ATTR patients and gene carriers. Results from the study showed that TTR levels were stable as a function of time in both patient groups.

Additionally we are on track to file an IND or IND equivalent with ALN-TTR02 -- with the ALN-TTR02 program that utilizes our second generation LNP technology later this year. Specifically during this quarter we completed a large number of GLP studies related to this expected regulatory filing.

We have also continued to advance our second most advanced Alnylam 5x15 program ALN-PCS for the treatment of severe hypercholesterolemia, with the filing of our CTA with the Medicines and Healthcare Products regulatory agency in the UK. As John discussed earlier, this is an important achievement for Alnylam as it is the first program to enter clinical trials using our second generation LNP technology specifically using the proprietary MC3 lipid.

Upon receiving clearance of this CTA, we expect to initiate a randomized single blind placebo controlled single ascending dose Phase I study. This study will enroll approximately 32 healthy volunteer subjects with elevated baseline LDL cholesterol. The primary objective is to evaluate the safety and tolerability of single doses of ALN-PCS, with patients being enrolled into five sequential cohorts, ranging from 0.015mg/kg to 0.25 mg/kg. Secondary objectives include assessment of pharmacodynamic activity for ALN-PCS, as measured by effects on plasma PCSK9 protein, and LDL cholesterol levels from serum blood samples prior to and following dosing.

Now turning to the rest of the pipeline we continue to advance additional Alnylam 5x15 programs including ALN-HPN for the treatment of refractory anemia. In this program we have demonstrated that SRNAi's targeting the hepcidin pathway can increase serum iron levels in animal models. We expect to present additional preclinical data from this program in the second half of this year.

We also are working on a broad range of additional RNAi therapeutics focused on other genetically defined targets and/or diseases, and we are on track to designate two of these as programs four and five to round out the Alnylam 5x15 strategy in the third and fourth quarters respectively.

In addition to the 5x15 programs we continue to advance our partner based programs as noted on slide seven. Beginning with VSP we presented the complete results from our Phase I clinical trial this past June at the 2011 ASCO meeting. At the meeting we reported that ALN-VSP was generally well tolerated, demonstrated evidence for anti-tumor activity and was found to mediate RNAi activity in both hepatic and extrahepatic tumors. Specifically, disease control, that is stable disease or better, was achieved in one of 13 patients so that is 8%, treated at doses less than or equal to 0.4 mg/kgversus 12 of 24, that's 50% of patients, treated at doses greater than or equal to 0.7 mg/kg, including seven of 11, or 64%, treated at the proposed Phase II dose of 1 mg/kg.

One patient with endometrial cancer who has received drug for over one full year, experienced a partial response with greater than 70% tumor regression. From the study, a dose of 1 mg/kg of ALN-VSP administered every two weeks was identified as a recommended dose regiment for further Phase II studies.

Earlier today we reported that we have completed treatment of patients in the Phase I study protocol with patients continuing treatment in the extension study. Specifically a total of five patients with disease control including the one patient with the partial response are continuing to receive ALN-VSP under the extension protocol. The five include one patient with endometrial cancer, two with renal cancer and two with pancreatic neuroendocrine carcinoma.

Finally, we made good progress with our additional partner based programs. ALN-RSV01 continues to enroll patients in its Phase IIb study in RSV infected lung transplant patients, and we remain on track to report data from the study in 2012. ALN-HDT is also advancing towards clinical studies in collaboration with Medtronic and CHDI.

I'm pleased with the clinical progress we are making with four RNAi therapeutics in clinical development, and excited with our continued clinical translation of RNAi therapeutics, as we build an entirely new class of medicines.

And with that I would like to now turn the call over to Mike for a review of our financials. Mike?

Thanks, Akshay. And good afternoon, everyone.

Please refer to slide ten in our presentation. I'm happy to report that our financial profile remained very strong. At the end of the second quarter Alnylam had cash, cash equivalents and marketable securities of approximately $316 million.

With respect to guidance for 2011, we will continue to prudently invest in the advancement of our clinical pipeline including our Alnylam 5x15 programs, as well as our partner-based programs, over the remainder of the year.

We now expect that we will finish the year with greater than $250 million in cash. This financial profile provides us with the ability to continue to advance our robust clinical pipeline of novel RNAi therapeutics.

Our GAAP revenues for the second quarter of 2011 were $20.6 million. Consistent with prior quarters we continue to recognize revenue from the amortization of up front payments from the strategic alliances we have formed, which account for a significant and recurring portion of our quarterly GAAP revenues.

Moving to expenses. R&D expenses were $25.3 million in the second quarter of 2011 as compared to $28.1 million from the prior year period.

The decrease in R&D expenses during the quarter was due primarily to lower external service expenses including preclinical costs associated with our ALN-TTR and ALN-VSP programs.

G&A expenses were $8.4 million in the second quarter of 2011 as compared to $10.1 million in the prior year period. The decrease in G&A expenses for the second quarter of 2011 was due primarily to lower consulting and professional services expenses related to business activities, primarily legal activities.

This concludes the financial highlights and I will now turn the call over to Barry. Barry?

Thanks, Mike. And good afternoon, everyone.

We continue to be active on the business front as we summarize on slide 12. We made significant progress with our delivery partnerships during the second quarter, including the extension of our research collaboration with AlCana Technologies, and the University of British Columbia, which goes through July of 2012. This collaboration is focused on the discovery of novel cationic lipids for systemic delivery of RNAi therapeutics. In fact, this research has led to the discovery of our second generation LNPs such as the MC3 lipid that demonstrate remarkable improvements in potency, a wider therapeutic index and potential for delivery beyond the liver.

In addition, we also formed an exclusive collaboration with Precision Nanosystems on the discovery and development of novel lipid nanoparticles that we refer to as small liposomal nanoparticles, or SLNPs, using innovative microfluidics technology. Based on their small particle size of approximately 20nm, SLMPs have the potential for broad distribution and present opportunities outside the liver.

As John remarked on earlier, we are also pleased with additional ongoing discussions including those related to Alnylam biotherapeutics and the applications of RNAi technologies for biologics manufacture.

Regulus has also made important progress over the past few months in the advance microRNAi therapeutics. Specifically in July, Regulus designated a third microRNAi target as part of its microRNAi alliance with GSK, triggering a pre-clinical milestone payment from GSK. This represents another significant milestone for Regulus in its alliance with GSK, which is focused on the discovery and development of compounds targeting four different microRNAs in inflammation in HCV infection.

So, reviewing our goals over the next 12 to 18 months, which you can see on slide 13, we expect to report human proof of concept data from the Phase I study for ALN-TTR01 in the fourth quarter of this year. Upon clearance of our CTA for ALN-PCS, as Akshay discussed, we plan to initiate a Phase I clinical trial and report initial human proof of concept data by the end of this year.

We also plan on advancing our second generation ALN-TTR02 program towards the clinic with the goal of filing an IND or IND equivalent in the second half of 2011. In addition, we will continue advancing ALN-HPN toward the clinic as guided.

We will round out our Alnylam 5x15 strategy with a designation of two additional programs. Of course, we continue to advance our partner-based programs including ALN-RSV01, ALN-VSP and ALN-HTT through existing and future partnerships.

On the business front we aim to form additional partnerships. In addition we will continue to explore new alliances related to RNAi technologies such as our efforts in microRNA therapeutics with Regulus and biologics manufacturing with Alnylam biotherapeutics and lastly as Mike commented on earlier we will maintain a strong financial performance now expecting to end 2011 with greater than $250 million in cash.

With that, I would like to turn the call back over to the operator for your questions. Jeremy, please turn the call over for questions.

(Operator Instructions). Our first question comes from the line of Marco Kozul with ThinkEquity. Please proceed with your question.

So hi, good afternoon, thanks for taking the question and congratulations on your progress.

Thank you.

First question related to ALN-TTR. Can you qualitatively review the kind of data that you expect to present at the Kumamoto meeting?

Yes. Let me turn that over to Akshay to comment on that.

Hi, Marco. The data set will comprise pretty much the following. Obviously this is a Phase I study, so safety and tolerability data are key and paramount and there will be a full accounting of the safety of the study. There will be pharmacokinetic data. And then amongst the secondary objectives, obviously we have been measuring TTR levels very carefully, both mutant and wild type, across the patients that have been dosed and so we will have TTR data across the study and really that outlines the safety, tolerability, PK, and pharmacodynamics that we will cover at the meeting in Japan in November.

Akshay, thank thanks. What do you think we should be most focused on? And second, is the study powered to show statistical significance in potential decreases in plasma TTR levels compared to baseline?

Akshay, you should answer.

I think again safety always is paramount so we should look at the safety. We are obviously encouraged by the safety profile so far, particularly in the sense that we are using common technology in terms of the LNP that we have used in the prior liver cancer program and as you know the safety experience there was gratifying and encouraging. Safety is going to be important but we are gently encouraged so far.

And I think the other important thing, as you know, where everyone is waiting to look at the TTR data and we are excited to share that with you in November. As for statistical powering, remember it is a Phase I study so you wouldn't really power Phase I studies when they are oriented around safety.

But one of the interesting things is that in June we presented at the Peripheral Nerve Society meeting data from a series of patients and mutant gene carriers that we have been following at Boston Medical Center with TTR amyloidosis, and we looked at the intrinsic variability of TTR over time in patients and gene carriers and found that really TTR levels are very tightly controlled and the variability was about 20% to 30%. So I think if we see significant knockdown, which is what we hope to see and report, then it should be pretty evident.

And maybe also a quick question on potential path for development going forward. Is it too early to tell or do you have any thoughts on whether you might look at subsequent studies that either enroll all comers or more on the cardiomyopathy side polyneuropathy side?

Yes, again, I think Akshay do you want to --

Yes. It is a little early, Marco. We do want to get these data out there. I think the important next steps are, let's get the TTRO2 filing done, get that going by the end of the year. And the main goal is that having done that and completed the initial studies around TTR02, then by the end of 2012, advance the best product we can in the program into advanced development and obviously more details to follow on those interestingly important questions you ask about the exact patient population.

Perfect.

I will just add here we are obviously very much benefited here by extensive key opinion leaders that we are working with worldwide and they are helping us think and shape and frame the best path forward as will and as are discussions with regulatory agencies as well. But as soon as we have more that we are comfortable sharing on that we will certainly share it.

Perfect. And just one more before I jump back in queue and that is can you remind us of the potential advantages of TTR02 versus 01 at this point?

Yes, I can comment on that. Obviously TTR02 comes out of our second generation LNP platform where we see well over ten fold improvements in potency and broader therapeutic index as a result of that. There are quite a few advantages and I think the important thing as we advance these two programs is that we will be picking one as a go-forward program. And they are really quite -- closer together in terms of their timeline development than one might think. So the overall goal is to be advancing one of these programs into Phase II in 2012.

Thanks for taking the questions. I'll jump back in queue.

Yes, thanks, Marco.

And our next question from the line of Ted Tenthoff with Piper Jaffray. Please proceed.

Great.

Hello.

Yes, hi there, how are you, John? Can you hear me okay?

Good. I can hear you. How are you Ted?

I'm doing very, very well, thank you. Thanks for taking the call. I appreciate it and congrats on all of the progress in the quarter, looking for a busy fourth quarter.

Us, too.

I had one question I just want to touch base on a little bit. With TTR, especially since we are ultimately going to hopefully move the drug into younger children and prevent accumulation over time, what kind of incremental safety stuff do you think you will have to do in terms of preparing for a potential pivotal study? How big of a safety hurdle do you think you guys are going to have?

You know, Ted, I'm not sure that the younger population is, in fact, where we are going with the program. Because it's not diagnosed typically until middle of life. And so maybe you are confused there in terms of the indication. But clearly these are patients that don't develop symptoms of disease until later and the goal would be to treat patients that are symptomatic with the drug, and delay either the progression of continued amyloid deposit and disease disability with various different measures that can be performed, or potentially show evidence of regression, which we have been able to show in animal models of the disease. Akshay, do you want to comment any further?

Not really. The median age of presentation is late 40s, early 50s if we look at it, Ted. And clearly as we establish the drug in that patient -- symptomatic patient population in middle age I think there is a wonderful opportunity then as part of a life cycle plan to get into pre-symptomatic patients who would be adults and as you imply, there is a logical action of those individuals who haven't yet manifested polyneuropathy or cardiomyopathy. So I think that's some general direction, but I don't and anticipate any additional safety work to get to those other patient populations.

Yes. No, that's helpful. I wasn't clear on that. And then I guess when it comes to the incremental spend guidance that you guys have for this year where specifically should we be looking for that to come? Is it going to be in the clinical trials or in the R&D line? Or where should we expect that?

I'll let Mike answer that but in general, obviously we are quite excited about where the clinical pipeline is going and obviously, and also frankly the progress on delivery that has enabled all that. So it's largely related to that. But Mike, you want to add some further color?

That's right. The change in guidance certainly reflects the investment in our 5x15 programs. And we do expect -- each quarter is certainly lumpy from both an R&D expense and G&A expense perspective. We expect the second half of the year to approximate what the first half of the year looks like from a spend perspective.

Okay. Great. Awesome. Thanks for the update and looking forward to the data in 4Q.

All right. Thanks, Ted.

Our next question comes from the line of Keay Nakae with Chardan. Please proceed.

Yes, thank you. Just a follow-up on the financial guidance. So on the G&A line, should that look fairly similar to what we just saw in Q2 going forward?

Mike, go ahead.

Sure, I think again as I said the quarters are generally lumpy depending how things go each quarter but I would say the best way to look at it, the G&A line for the second half of 2011 should look pretty similar to the first half of 2011.

Okay. And are you still expecting some modest milestone payments in the second half of the year?

Yes. We as we said earlier, [BDE] or milestones are not a significant part of our cash guidance but there are some potential milestones that could come in for the remainder of 2011.

Okay. A couple of questions for Akshay. With respect to the candidate -- the new candidates you are going to announce in Q3 and Q4, give us a sense of what that means. Are we looking at something that you have done significant pre clinical and you have got a clear idea of when you are going to advance these into human clinical studies or are they going to be more further out like Huntington's for example?

Hi, Keay. Good questions. And I think what we would say to that is that we have been doing a lot of work behind the scenes since before announcement of the 5x15 strategy thinking about exciting genetically validated targets and diseases with aggressive development programs and on a number of those we have got SRNAs, we have done exploratory work in relevant animal systems, and so when we announce the programs, I think what you can expect is clear evidence of the target, the disease, the putative development plan and in short order associated animal model data and an expected filing date.

Yes, Keay I would just add to that I think we are very excited about the additional programs. There -- we have six or so programs that we have advanced in discovery behind the scenes here that fulfill general aspects of that strategy where we have efficacy data and safety data ranging from rodents all the way up to non human primates and also a large number of model data and transgenic models of the diseases. So pretty robust set of data that are being generated to really validate our confidence about those additional programs.

Okay. We'll look forward to that. With respect to TTR01 versus 02, is going forward with 02 dependent on seeing some measure of knockdown in 01?

I mean I think the simple answer, Keay, is that we expect to see knockdown with 01 and it is not gating, however, for 02. We believe that 02 is a different formulation with a lot of improved properties on it. But our expectation is we will see a good knockdown with 01 and then we'll do it again with 02 and see even greater knock down and then we'll be moving along with one of those programs.

Okay. And then finally, PCS, when might you expect to get the green light to go ahead and enroll and how soon could you enroll a first patient?

Akshay, want to comment on that?

Yes, the review times when it comes to the MHRA are on the order of a couple of months or so typically. I think our general practice is to let folks know when the study gets going and we look forward to doing that. But certainly I think the most important thing is not so much when you start, it is when that last subject gets dosed and the data come out. And I do want to clearly reguide on the fact that we anticipate data by the end of the year for ALN-PCS.

Keep in mind, Keay, it's a normal human volunteer study which typically goes more rapidly than in patient studies. And so we do believe that we will be able to achieve those data. I will also comment that we have had excellent discussions around this program with the MRHA and we feel very confident that there will be a speedy review but an appropriately timed review for us to proceed.

And in as far as your ability to find these healthy individuals with elevated levels that shouldn't -- it doesn't sound like it going to be a problem. Is that pretty easy to --

Akshay?

That shouldn't be limiting in any way, Keay, no.

We are also working with a site that has extensive experience with these type of studies so we feel comfortable with their performance and ability to perform in this regard.

Okay. Thanks a lot.

Thanks, Keay.

Our next question comes from the line of Alan Carr with Needham & Company. Please proceed.

Hi, thanks for taking my question.

Hey, Allen.

I want to follow up on TTR a little bit. The data is coming a little later, you are waiting until November. Is this related to enrolling or pushing -- or exploring higher doses? Why the decision to release results a little later?

Well, I'll let Akshay comment on it.

Alan, hi. It's just essentially the issue of enrolling over the summer months particular which with the focus being on European sites. And I think we felt to accommodate that and to get the data out in the appropriate forum the announcement we made today is the best way to approach those matters.

We also, Alan, were able to get clarity on a specific meeting where we have been invited to present in November which is really the best forum to present those type of data. So we feel good about that forum and the ability to present these data which is important for the advancement of this therapy.

So you expect to have a full set of data not too long before November, then, because this of I guess slower enrollment over the summer?

Yes.

Okay. And then regarding the RSV program, my recollection is that some interim data might have been available in the second half but you guys mentioned 2012. Is interim data coming in 2012 or final data coming in --

I'll comment and then Akshay should comment. As you may recall from the last quarterly call we announced that we have increased or allowed the protocol to go to up to 120 patients. It is very actively enrolling. It exceeded expectations for enrollment actually. And the other reason we did that is that we had introduced an interim analysis, which we will be blinded to in terms of any results. And that interim analysis will take place in the second half of the year, and it will -- and we will be advised to either continue enrollment to the current level and not expand or, through a sample size readjustment, be guided to add X number of additional patients to the study. Regardless, based on the accrual that we currently have, the accrual that would even occur by virtue of expansion if that is recommend, we believe and are aiming to have results in 2012 and that has not changed. We won't actually know what the outcome of any interim analysis is as it relates to results. Those data will be available in 2012.

Will there be a futility analysis? Can you remind me of --

Do you want to specifically handle it?

There isn't a formal futility analysis, no. I want to reiterate what John said. What we will be told will be, great, you've got the staple sample size, whatever it is, roll out to the end of the study. Or, carry on enrolling and get to the target figure of 100 and X or whatever it is and that will be the completion of the study. And under either circumstance that will be in 2012.

It's really an interim analysis, Alan, to allow for adaptive sample size design.

Adjustments, yes.

Adjustment without any consequence in terms of penalties on statistics. So it is something which we had discussed with the FDA, received our support to proceed in that way and it really -- it optimizes our chances for the best outcome.

And that is -- did you say in fourth quarter you expect?

It is going be in the second half is what we have guided.

Oh, you haven't narrowed it down.

Yes.

Okay. And then I hate to bring up the burn again but it is a $25 million -- you have adjusted the burn by $25 million. Is there -- where -- can you give us a better sense of where that is going or what changed?

Yes, let me turn it over to Mike but I think in general, Alan, we started the year with our 5x15 program. I think we were -- we had in mind what it would take to get all these programs moving forward as fast as possible. And we have looked at that level of activity and believe that we ought to be investing a little bit more than we had thought before based on the progress that is being made. But I will leave it to Mike to make some additional comments on it. But it is largely in the R&D side.

Yes, that is exactly right. And Alan, as I said earlier, we expect the second half of the year for both R&D expenses and G&A expenses to approximate the first half of the year as far as run rate, but each quarter certainly is lumpy depending on what is going on in the clinical programs as well as pre clinical.

Is this a greater investment in some of these earlier ones that you haven't named yet or are is it -- is this distributed evenly across all of your programs?

Well, Alan, it is very hard to break down specifically on the call but if you just -- if you go through the pipeline as we have mentioned, RSV accrued incredibly well and you asked and Akshay commented on the number of patients there. For our liver cancer program, we had five patients move inside the extension study so we continue to supply drug and keep that moving. We, as you know, earlier in the year expended our TTR01 program. We filed our PCS on time. Our TTR02 program is moving to an IND filing. And as we talked about there is about six different programs pre clinically that we have done a significant amount of work on before we announce the fourth and fifth program. So it is our enthusiasm on the development of the pipeline, the progress we're making with delivery and execution on 5x15 programs which has gone more robustly than we had planned at the beginning of the year leading to a higher spend in R&D.

And actually I will add one dimension to it that Barry didn't quite mention. I recently commented on this at some investor meetings. Some of the progress on conjugate delivery of SNRA's and the work that we're doing there for -- which enables sub-cu delivery, way exceeded our expectations for the year and there is a lot of work that we are doing to effect R to D transitions in those types of programs that could not have been anticipated at the way beginning. So we are making strong progress there which is all good stuff.

That actually is helpful. I appreciate the extra details and if I can get in one more. I figured I would give you a chance to --

Sure.

Get your interpretation of Merck's move in San Francisco in RNAi?

Yes. A, this is literally zero surprise on our side. It -- obviously we know a lot about what goes on in the field well ahead of lots of other people. But, in -- by all accounts it was a shutdown of a site and what they have been very clear on is that they continue to work on RNAi at a number of different sites. Westpoint in particular where they have had on going work that was going on. So I mean here you have got a major pharmaceutical company that announced the desire to eliminate thousands, tens of thousands of jobs and a little site in San Francisco with all of the infrastructure costs associated with it that harbors 50 people in it, is a sore thumb sticking out in the landscape as an easy decision. And so everything we have heard from them in terms of all other interviews and all of the work that they are doing plus the fact that they continue to joyfully oppose our intellectual property, means that they are quite interested in the space and continue to make strong investments in the area.

All right. Thanks very much. Appreciate it.

Our next question comes from the line of Christopher James. Please proceed.

Hi Chris.

Hi, guys. Thanks for taking my question. Just a really quick one. Follow-up to a previous question on PCS. Just given that it is going be in normal healthy patients, the data, is this a safety look and what specifically are you looking for? Is this a look in the liver enzymes or anything specific? And then on the efficacy side are you looking for PCSK9 knockdown or will you also a sense of the effects on the LDL receptor and the LDL levels?

Yes, I'll turn that over to Akshay.

Hi, Chris, thanks for the question. It's a Phase I study so again, safety, tolerability and PK are critical and paramount. But beyond that these individuals will have elevated LDL and we fully anticipate measuring and then reporting reductions in both PCSK9 and LDL cholesterol during the course of the study. The thinking right now is that we should have the study wrapped up by the end of the year.

And we will also look at HDL, Chris, because HDL has been something which has been negatively affected by the PCSK9 antibodies based on pre clinical studies, and we are certainly going to be looking at HDL levels as well and confirming that those aren't affected which we shouldn't expect because we phenocopy the human genetics which is not something that happens with the antibodies.

That is great. That's really helpful, the additional data. Could you potentially have that by American Heart?

It's going to be by year's end, Chris. I don't think we're going to have --A, we are not slated to get there in November, at American Heart. So we are aiming for year's end.

Got it. Thanks, guys, congrats.

All right, thank you, Chris.

Our next question from the line of Stephen Willey with Stifel Nicolaus. Please proceed.

Hi, thanks for taking the question.

Hi Steve.

Hi. I know that you guys talked about some of the progress you are making on the delivery front with a few of these different vehicles and just wondering as you kind of look at the hepcidin program and the two un-named programs what is the likelihood that we maybe see a novel type of vehicle associated with those programs outside of the second generation formulation that you are using right now?

So, I mean we have even made improvements beyond MC3 and those formulations, and so I think it is pretty likely that we are always going to be putting in the best delivery solutions that we have into our pipeline programs going forward. And so -- and we have the luxury of doing that as programs advance. So, I think stay tuned. Obviously there is a lot of value and comfort in using the existing MC3 formulation where we are going to be generating quite a bit of human data but at the same time we have been able to make even further improvements that we are excited about including the conjugate work that I commented on earlier for sub-cu dosing. So we'll give some more guidance on that as we discuss these programs and time goes on. We feel comfortable and confident with our existing delivery approaches but at the same time we are always making improvements and we make a huge investment in delivery to really be able to realize the benefit of what we do.

So is it safe to say then the conjugate program could be IND ready by the end of this year?

It's certainly going to be moving into development based on the progress that we have made. And IND ready as defined by being able to write a molecule structure on the wall and have rodent and non-human primate efficacy and safety data, yes we will have all that stuff, we have a lot of that stuff already.

And then just quickly on the RSV01 front, can you just remind me what the period of time Cubist has to opt-in?

Barry, do you want to --

The color of the relationship is an overall partnership. We continue to work with Cubist and after the results they have got months to opt-in and pay a slight premium over what we have invested to date. And as we have said before we think if the data are positive they will remain a partner.

Okay. And then just lastly --

Can I just say, as obviously we have been clear to people. The Phase IIb study, which we are quite excited about, has accrued very well, is really aimed to confirm what was an exciting finding in a very small study in the Phase IIa. We are going to see what happens in that Phase IIb and we'll see if we can reproduce that finding. If so, it obviously is a very important result. And if not, then we move on from that program.

And the expanded enrollment gets you to 120 patients, I believe you said. What if --

Up to.

Up to 120. If the decision is made not to expand enrollment where will patients be at that point do you know approximately?

We are estimating -- right now we are over 80 and we are estimating that we probably would be in the high 80s and 90s. We are now -- low 90s. We are now in the southern hemisphere season so we're not really accruing anybody in the north. And by virtue of just population densities, the southern hemisphere is not as robust as the north to begin with. And so it is still accruing and we are certainly over 80 patients at this point in time. A lot of enthusiasm by the investigators and the patients out there as well. I mean that is helping quite a bit. Over 30 sites globally at this point in time. So that is all very helpful. We're --

Actually on the expansion of the collaboration with AlCana, and if I guess anything comes out of the Tekmira litigation by the end of the year does that get impacted at all?

Oh, not at all. Those relationships are long standing relationships, since 2009, formed under agreement that included Tekmira.

Okay. Thanks for taking the questions.

All right.

Thank you.

We do have a follow-up from Marco Kozul with ThinkEquity. Please proceed.

Hi. Thanks for taking the follow-up. Wanted to ask you about VSP and if you could comment on any partnership discussions that may have started.

Thanks Marco, thanks for asking that. Yes, we have got some discussions that are on going with that program. Obviously we wanted to really wait until ASCO took place and so we've kicked them off now for six or so or more weeks. We think this is an important program. It has shown clinical activity in an important indication as well as pharmacologic engagement of the mechanism. And at ASCO we were really swamped, the poster was swamped with interest from both pharma as well as physicians. We feel that there's -- they are there with the program in terms of partnering it and moving it along. Certainly the additional clinical data that we are seeing now into the extension protocol in five patients is supporting our efforts in that regard.

Perfect. Thanks for the follow-up.

Yes. Thank you.

And our final question comes from Keay Nakae with Chardan. Please proceed.

Yes, thanks, just a follow-up on RSV. If the interim analysis results in you guys being told that you should enroll more patients is that something that you are going to announce?

We haven't decided but we probably will. I mean we probably will. We want people to be fully aware of where these programs are. So, yes, we would probably say this is what came out of the interim analysis which will be -- we either enroll up to this many more patients or that there is no reason to further enroll. But regardless the data for the trial will -- because of the six month nature of the end point, the data for the trial won't occur until 2012 regardless.

Right. No, I just think it is -- if you are asked to enroll more patients there is a reason why is so I think it is material.

Yes.

Okay, thanks.

Okay, thanks, Keay. Good. So thank you, everyone. Look, we made a lot of very important progress in the second quarter focused very much on clinical advancement with RNAi therapeutics and look forward to what will likely be a very exciting second half of the year. So thanks, everybody, and have a good night. Bye bye.