Alnylam Pharmaceuticals Inc (ALNY) 2012 Q2 法說會逐字稿

Good day ladies and gentlemen, and thank you for standing by. Welcome to Alnylam Pharmaceuticals conference cal to discuss the second-quarter 2012 financial results. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the Company's request.

I would now like to turn the call over to the Company. You may proceed.

Good afternoon. I'm Cynthia Clayton, Vice President of Investor Relations and Corporate Communications at Alnylam. With me today are John Maraganore, Chief Executive Officer; Barry Greene, President and Chief Operating Officer; Jared Gollob, Vice President Clinical Research; and Mike Mason, Vice President of Finance and Treasurer. Akshay Vaishnaw, our Chief Medical Officer, could not be with us today due to travel plans. 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 on slide 2, John will provide some introductory remarks and provide general context.; Jared will summarize the clinical progress with our Alnylam 5x15 programs; Mike will review our financials and guidance; and Barry will provide a brief update on progress with our partner programs, and also provide a summary of our business highlights and goals. We will then open the call for your questions. Before we begin, and as you can see on slide 3, 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 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. This quarter and recent period define an exceptional period of scientific and clinical accomplishment for Alnylam and the field of RNAi therapeutics. Indeed, in recent months our clinical results with RNAi therapeutics have grown significantly. We have now demonstrated positive results in five clinical programs, including ALN-TTR01 and ALN-TTR02 for the treatment of ATTR; ALN-RSV, for RSV infection; ALN-VSP for liver cancer; and ALN-PCS for severe hypercholesterolemia. Notably, we're very pleased with our most recent data with ALN-TTR02, where we achieved rapid dose dependent, durable, as specific knockdown of serum transthyretin, the disease-causing protein in transthyretin-mediated amyloidosis, after just a single dose.

Specifically, we showed TTR knockdown of up to 94%, with a nearly 80% level of suppression sustained at one month. We believe these data documents and unprecedented level of clinical activity for RNAi therapeutics, and serve as an important industry milestone in the advancement of this new class of medicines to patients. We also reported encouraging clinical data from our Phase I ALMPS trial, showing statistically significant and durable knockdown of plasma PCSK9 of up to 84%, and lowering of LDL cholesterol of up to 50%. Turning to slide 5, these important accomplishments give us great confidence in the continued execution on our Alnylam 5x15 product strategy, which focuses on advancement of RNAi therapeutics toward genetically defined targets for diseases where there are limited treatment options for patients and caregivers.

We also believe that Alnylam 5x15 creates an important and compelling path forward for value creation for our shareholders. As we stated earlier this year, we plan on executing on this strategy with a near term focus on ALN-TTR02 and ALN-TTR subQ for TTR amyloidosis, and on ALNAT3 for hemophilia, and that advancement of other 5x15 programs will be accomplished with partnerships that we aim to form in the future. We have also made important progress on our delivery efforts. To date, our clinical experience has employed three distinct delivery approaches, including inhalation of SRNA in a simple formulation, first generation LMP technology, or sNLP, and Alnylam's proprietary second generation LMP formulation.

And, as we highlighted in an important announcement of data this morning, we are on the eve of adding a fourth delivery technology to our clinical pipeline efforts with our GalNAc SRNA conjugate approach that enables subcutaneous dose administration. We are employing this approach in a number of our Alnylam 5x15 programs, and fully expect to employ it increasingly in the future. Jared will talk about that in just a moment. So without a doubt, our recent clinical activity and delivery progress is a major step forward for RNAi therapeutics, and these results have bolded us further in our efforts. Of course, there is much more to do in our efforts to bring RNAi therapeutics to patients in need, and everyone here at Alnylam is focused and passionate on making that happen.

I'll now turn the call over to Jared for a more detailed review of our clinical activities, our pipeline, and our scientific progress, but before I'll do that I'll have to start by congratulating Jared on his recent promotion. Congrats, Jared.

Thank you John, and hello, everyone. As John mentioned, we have had an extremely rewarding and a productive quarter and recent period on the clinical front. I am going to focus on the recent progress with our Alnylam 5x15 programs, and will start with a recap of the data we presented just a few weeks ago from our ALN-TTR02 program. As all of you are aware, ALN-TTR02 is the flagship program in our 5x15 product strategy, and is aimed at the treatment of TTR-mediated amyloidosis, or ATTR. ATTR is a devastating hereditary, and often fatal disease caused by mutations in the TTR gene. As an orphan disease, ATTR afflicts approximately 50,000 people worldwide, and is associated with significant morbidity, and a mean life expectancy of just 5 to 15 years from symptom onset.

It is clear that new therapies are needed for the treatment of ATTR, and we believe that our mechanism of action, namely silencing of the disease-causing TTR gene leading to knockdown of the circulating TTR protein, has the potential to generate a profound therapeutic impact. As you can see on slide 9, the Phase I trial for ALN-TTR02 we reported on in July was a randomized, single-blind, placebo-controlled single ascending dose study, enrolling 17 healthy volunteer subjects. The primary objective of the study was to evaluate the safety and tolerability of a single dose of ALN-TTR02, with subjects being enrolled into five sequential cohorts of increasing doses ranging from 0.01 to 0.50 milligrams per kilogram.

In addition, pharmacodynamic and clinical activities for ALN-TTR02 were measured based on circulating serum TTR protein levels through at least Day 56 following a single dose. As you can see on slide 10, results from this study showed that a single dose of ALN-TTR02 resulted in rapid, dose-dependent, durable, and specific knockdown of serum TTR levels. The overall results were highly statistically significant, with a P-value of less than 0.00001. Even at doses as low as 0.15 milligrams per kilogram, substantial serum TTR suppression was achieved, where a mean 82% reduction was observed at nadir. This was extended at the next dose cohort of 0.3 milligrams per kilogram where we showed an 87% mean TTR knockdown, and then at 0.5 million milligrams per kilogram, where we showed 94% TTR knockdown.

Turning to slide 11, the data show that ALN-TTR02 exhibited a rapid onset of action and a very durable response. In fact, over 50% knockdown of TTR was achieved by Day 3 in all of the 0.15, 0.3, and 0.5 milligram per kilogram subjects, and nadir levels were achieved between day 10 and 14. In terms of durability, ALN-TTR02 sustained a 67% TTR knockdown at 28 days at the 0.3 milligram per kilogram dose, and a nearly 80% TTR knockdown at 28 days at 0.5 milligrams per kilogram, all this after just one single dose of drug. We believe that this pharmacodynamic profile supports at least Q4 weekly, and possibly even Q6 or Q8 weekly dosing going forward, a very compelling profile for a breakthrough therapy in this clinical setting.

In addition, ALN-TTR02 was found to be generally safe and well tolerated in this study, consistent with our broader clinical experience of RNAi therapeutics using LNP formulations, where we have now treated over 100 patients or subjects with over 325 doses of drug, and for a duration of over two years. All told, our ALN-TTR02 results provide key human proof of concept with associated clinical relevance, as we advance this medicine to patients for the treatment of ATTR, a debilitating orphan genetic disease. Moving forward, we recently initiated a Phase II multi ascending dose study of ALN-TTR02 in ATTR patients. The Phase II study is aimed at enrolling approximately 20 patients with ATTR, and will look at the safety and tolerability of multiple doses of ALN-TTR02, as well as serum TTR knockdown that occurs with two doses of drug.

In addition, we were pleased to have recently been notified that the FDA has granted orphan drug designation to ALN-TTR02. We look forward to continuing to share clinical data from our ALN-TTR02 program, and assuming positive results in the Phase II study, our goal is to advance to a pivotal trial in 2013. Another exciting development in our advancement with our ALN-TTR program is data presented earlier today with ALN-TTRsc, that uses a GalNAc conjugate SRNA delivery approach enabling subcutaneous delivery. Specifically, as you can see on slide 13, we reported new data today showing potent dose-dependent and durable knockdown of serum TTR in nonhuman primates in our ALN-TTRsc preclinical program.

Given recent data showing the predictability of nonhuman primate data, for human data with RNAi therapeutics, we view these result as highly promising. We are aiming to file our IND for ALN-TTRsc by the end of this year, and this RNAi therapeutic offers some compelling product expansion opportunities in our overall TTR efforts at Alnylam, including patients with familial amyloidotic cardiomyopathy and senile systemic amyloidosis. Our second major development's focus at Alnylam is on our hemophilia efforts, where we are advancing ALN-AT3, an RNAi therapeutic targeting antithrombin, or AT. At the recent World Federation of Hemophilia meeting in July, we showed key data from our hemophilia program.

Specifically, preclinical results as seen on slide 15 showed our ability to target AT with a GalNAc siRNA conjugate that enable subcutaneous dose administration; a highly preferred mode of administration in the setting of hemophilia. We showed the ability to potentially knock down plasma levels AT in a robust, dose-dependent, and durable manner, with administration of just a single dose of ALN-AT3 in rodents and nonhuman primates. We also showed that administration of ALN-AT3 in animal models of hemophilia result in normalization of thrombin generation, thus generating important preclinical POC data in this program. In aggregate, our data showed an exciting potential for ALN-AT3 as a transformative therapy for the treatment of hemophilia, an inherited orphan bleeding disorder.

Also today, we presented new data with ALN-AT3 demonstrating the potency of this therapeutic strategy. Turning to slide 16, we showed new data with ALN-AT3, demonstrating that weekly subcutaneous injections at doses as low as 0.75 milligram per kilogram, provided sustained AT knockdown of approximately 80%. In addition, studies in nonhuman primates showed a very durable response for ALN-AT3 where a single subcutaneous dose, achieved nadir knockdown of AT plasma levels at about Day 15, with effects lasting over 22 days. ALN-AT3 was found to be generally safe and well tolerated in all of these preclinical studies. In aggregate, we are very excited about the potential for ALN-AT3 in hemophilia, and believe that these new data support a once a week or twice a month subcutaneous dosing paradigm for this subcutaneously administered RNAi therapeutic, which could become a game changer for the management of hemophilia patients.

In terms of our development progress, we remain on track to advance ALN-AT3 in an IND filing in 2013. I will now turn to our ALN-PCS program, where we also had some important clinical data this quarter. ALN-PCS targets PCSK9 for the treatment of severe hypercholesterolemia. PCSK9 is perhaps one of the most exciting targets in molecular medicine today, based on human genetic data showing a critical role for this protein in regulation of LDL receptor and levels of LDL cholesterol, or LDL-C. Our Phase I study was conducted as a randomized, placebo-controlled, single ascending dose study in healthy volunteers with elevated baseline LDL-C. The primary objective of the study was to evaluate the safety and tolerability of ALN-PCS.

Secondary objectives included assessment of pharmacodynamic effects of the drug on plasma, PCSK9 protein levels, and evaluation of clinical efficacy as measures by LDL-C levels. A total of 32 subjects were enrolled at the six dose cohorts, ranging from 0.015 to 0.4 milligrams per kilogram. In this study, as you can see on slide 18, a single dose of ALN-PCS resulted in rapid, dose-dependent, and durable knockdown of PCSK9 protein levels in plasma of up to 84%, relative to baseline and placebo, with a statistically significant mean reduction of 68% in the highest dose group. In addition, ALN-PCS administration resulted in reductions in LDL-C of up to 50%, relative to baseline and placebo, with a statistically significant mean reduction of 41% at the highest dosage.

ALN-PCS was shown to be generally safe and well tolerated in this study, and there were no serious adverse events related to study drug. ALN-PCS has a unique mechanism of action as it inhibits the synthesis of PCSK9 in liver cells, thereby reducing both the intracellular and extracellular functions, and thus provides a differentiated strategy for PCSK9 antagonisms in comparison to monoclonal antibodies under development for this target. In essence, we are phenocopying human genetics with RNAi. Specifically, this mechanism of action results in potent and durable LDL-C reductions that we believe will enable once monthly dosing and potential enhanced synergistic effects with statins. Further, our RNAi therapeutics approach results in knockdown of PCSK9 and reduction in LDL-C in a manner that is independent of baseline PCSK9 levels, which can vary four- to five-fold amongst patients.

We believe these differentiating factors could be very important in the development of PCSK9 agents, and will be important to the partnership we aim to form prior to initiating a Phase II study. So clearly we have made tremendous progress with our Alnylam 5x15 clinical programs, and we look forward to continuing to share updates from these programs with you in the coming months. As you can see in our development pipeline, we are now executing on an exciting pipeline of product opportunities with established human POC.

So with that, I'd like to now turn the call over to Mike for a review of our financials. Mike?

Thanks Jared, and good afternoon everyone. I will be referring to slide 21 for an overview of our second-quarter financials. We continue to maintain a strong financial profile, ending the second quarter of 2012 with $292.8 million in cash, cash equivalents, and marketable securities. Our GAAP revenues for the second quarter of 2012 were $20.9 million, as compared to $20.6 million in the second quarter of 2011. Q2 revenues included $14 million of collaboration revenues related to our alliance with Roche, which assigned its rights and obligations to Arrowhead Research Corporation during 2011, and $5.5 million of revenues related to our alliance with Takeda. Looking ahead, we will recognize the remaining deferred revenue balance related to the Roche/Arrowhead alliance of $9.3 million during the third quarter of 2012.

Moving to expenses, R&D expenses were $21.7 million in the second quarter of 2012, as compared to $25.3 million in the prior year period. The decrease is due primarily to lower clinical trial and manufacturing expenses related to our ALN-RSV and ALN-VSP programs, partially offset by additional expenses related to the advancement of our ALN-TTR program. In addition, external services expenses decreased, due primarily to lower preclinical expenses for our ALN-TTR and ALN-PCS programs, which we advanced further in the clinic. We expect that R&D expenses will remain consistent with this quarter for the remainder of 2012.

G&A expenses were $11.2 million in the second quarter of 2012, as compared to $8.4 million in the prior year period. The increase was due primarily to an increase in consulting and professional services expenses related to business and legal activities. We expect that G&A expenses will remain consistent with this quarter for the remainder of 2012. We believe we will end 2012 with greater than $250 million in cash, which will continue to provide us with a strong balance sheet as we advance our RNAi therapeutics through clinical trials and toward the market.

This concludes the financial highlights, and I'll now turn the call over to Barry. Barry?

Thanks, Mike. As you've heard this afternoon, we are demonstrating with human clinical data that the RNAi pathway can be harnessed to create high impact, innovative medicines. We continue to focus on our Alnylam 5x15 efforts, with what we believe to be our highest value opportunities, driving key programs toward pivotal trials with plans to commercialize in important markets. In this quarter, we also made some important progress with our partnered programs, specifically with ALN-VSP and ALN-RSV, as noted on slide 23. In June, we presented data from our ALN-VSP program at the ASCO 2012 annual meeting.

The results, in addition of course to demonstrating safety and tolerability with long-term dosing of LNP formulated RNAi therapeutics, demonstrated disease control lasting more than six months in the majority of patients treated on the extension study protocol, including a complete response in endometrial cancer patient who had multiple liver metastases prior to treatment. I'm pleased to share with you that the endometrial cancer patient in the extension study has maintained her complete response, completed dosing now, after 50 doses and 26 months of therapy. We're so happy to see such a difference in this patient's life, and we wish her the best going forward. Additionally, one additional patient with stable disease remains on the extension study, with 17 months of therapy received to date.

Recently, we also formed a partnership with Ascletis, a privately-held US/China joint venture pharmaceutical company, to further advance this promising liver cancer program. This collaboration is focused on continuing the development of ALN-VSP for the treatment of liver cancers and precluding hepatocellular carcinoma. This agreement provides Ascletis with the exclusive rights to develop and commercialize ALN-VSP in China. Alnylam retains all rights in the rest of the world, and is eligible to receive milestones and royalties based on product sales. We are thrilled to form his new partnership with Ascletis, and have great confidence that they will be an excellent partner for the continued development of ALN-VSP in the Chinese market.

With this collaboration, we're able to develop ALN-VSP globally through the product's advancement in a region where HCC is a particular challenge. And as we retain all rights in the rest of the world, this partnering strategy provides future opportunities for Alnylam to advance its novel therapeutic in other markets. We're also pleased to report data from our Phase IIb trial with ALN-RSV01 in lung transplant patients, which we did in May. As all of you know, ALN-RSV01 is Alnylam's first RNAi therapeutic to have entered clinical trials, and is our latest stage program. It's also a program that is partnered with Kyowa Kirin for Asia, and with Cubist for rest of the world. We believe the recent data provided important evidence that treatment of RC-infected lung transplant patients with ALN-RSV01 reduces the incidence of new or progressive bronchiolitis obliterans syndrome, or BOS, replicating findings from our earlier conducted Phase IIa study of ALN-RSV01 in the same clinical setting.

Although the study narrowly missed the primary endpoint of reduced BOS in an intent-to-treat analysis of confirmed RSV-infected patients, the data demonstrated statistically significant reduction in perspectively defined analysis of patients with their last observed carry-forward, and of patients treated per protocol. Importantly in all analyses, ALN-RSV01 treatment was associated with a clinically meaningful treatment effect, with a reduction of over 50% in the incidence of BOS at Day 180 as compared to placebo. BOS, as you're aware, is an irreversible life-threatening complication of RSV infection in lung transplant recipients. So this large treatment effect of ALN-RSV is very meaningful as we think about this product going forward.

This is the first multicenter randomized trial in this patient population to demonstrate an impact on BOS. As reported, ALN-RSV01 was shown to be safe and well tolerated in this setting. With these results in hand, as we've guided previously, we are planning to meet with US and European regulatory authorities later this year to determine next steps for this program. Pending the outcome of those discussions, we will determine the appropriate path forward for this program, and we'll communicate them to you in the second half of this year. We also look forward to presenting the full data from the study early next month at the European Respiratory Society meeting in Vienna. In closing, as Mike mentioned, we continue to maintain a solid balance sheet and remain poised to execute on our goals, which include the following as detailed on slide 24.

We're going to advance ALN-TTR02 through the current Phase II trial and start our pivotal study in 2013. We're going to file an IND for ALN-TTR subQ by of the end of 2012, and for ALN-AT3 in 2013. We aim to partner our PCS program prior to the start of Phase II, and advance other 5x15 programs toward Phase I partnerships we aim to form, forming additional partnerships on programs in technology, and importantly ending the year with over $250 million in cash. Clearly, this has been an exciting and extremely productive quarter. We're looking forward to sharing our continued progress, including clinical data, over the coming months. We are clearly poised to drive important innovative RNAi therapeutics to patients in need of better medicines.

With that, I'd like to turn the call back over to the operator for your questions. Derek, questions please.

(Operator Instructions)

Charles Duncan, JMP Securities.

Congratulations on the progress in the quarter, and thanks for taking my question. My first one is on the TTR program. There's been some news lately with Pfizer's Vyndaqel and some emerging progress out of a mind share competitor. I'm wondering if you would share with us what the recent regulatory news does in terms of your strategy and the way that you're thinking about the clinical program and the market opportunity, and then perhaps if you could also address what you think are the key features that your technology that could offer you some competitive advantage in the market?

Yes. Let me make some comments and then maybe Jared and Barry can chime in as well. The decision by the FDA on tafamidis was one that is distinct from what the European authorities decided on tafamidis, and is a decision that we view was largely based on the fact that the study was somewhat underpowered. What was important about the advisory panel was the validation by the FDA of the importance of the initial endpoint as a valid endpoint for measuring disease progression in patients with FAP, as well as, I think, the recognition of the significance of the disease and the importance of advancing new therapies that are proven to work in that clinical setting. So we fully expect Pfizer to continue to commit to tafamidis, and to continue to talk and discuss with the FDA ways to get their drug approved in the US, as they continue, in parallel their efforts at commercializing the product in Europe. I think all signals point to that.

As it relates to other approaches out there, clearly there's also an approach that's related to tafamidis using difunisal, which is an agent that also stabilizes the TTR tetramer. That is a generic drug that's being developed through a academic network led by BU, and those type of data will be out, sometime next year is the expectation. It's looking at a slightly broader patient group than was examined in the tafamidis Phase III trial. Then the other approach that's out there is the approach of Isis and GSK, which like Alnylam's approach, is focusing on TTR knockdown as the primary strategy, and I think we believe strongly that TTR knockdown is the preferred therapeutic strategy for the treatment of ATTR, and that's why we're quite excited about it, and obviously, Isis and GSK are as well. I think clearly we understand the Isis and GSK technologies very well.

We have an approach that we think will be the best-in-class approach, based on the strong level of knockdown that we see, the rapid effects that we see, the fact that we see a very durable effect after just a single dose, and obviously that's what's going to have to be shown in Phase III trials with our drug, as much as they have to demonstrate it for their drug. So we feel extremely excited about our drug. We think it's going to be the winning therapy out there in ATTR, but there are other drugs out there that are being developed, and it's also an indication in a marketplace that is one that will accept multiple players out there at the end of the day. So those are my top level thoughts. Jared, any other thoughts on the advisory panel on Vyndaqel, and Barry on the commercial setting?

John, as you mentioned, the tafamidis Phase III study was very important, because it did provide very important natural history information in this particular population of patients with polyneuropathy, the FAP population, and it showed that this particular neuropathy endpoint was a potentially tractable endpoint for a pivotal Phase III study, although as John mentioned, the tafamidis study was unfortunately underpowered. From the standpoint of lowering TTR, we believe that the precedent set by the tafamidis trial, that this is a tractable neuropathy endpoint, I believe bodes well for a TTR-lowering approach to be able to have a real impact on that particular endpoint. Therefore -- I think it really set the stage for being able to show that a drug such as ours that lowers TTR can have a real impact on the natural history of the disease, and have a clinically meaningful effect on the lives of these patients.

I think that's pretty complete. We're talking about a genetic orphan disease that's fatal, and after clinical onset, patients live with horrific co-morbidities, including not only motor loss, but wasting. So this is a place where not only slowing the disease progression, but stabilizing reduction of disease, is necessary. We're pretty excited that we've demonstrated reduction of TTR, both mutant and wild type, which is what we're aiming to do. That with the TTR01, and then fantastic knockdown, as we reported with TTR02, and I can tell you that the treating physicians and patients are very excited by the data they've seen.

Yes, and there's no data that is as good as our data at this point in time, and we expect that to continue going forward, Charles.

You also mentioned pretty long-term exposure, at least in a few patients. Do you think that safety or longer term exposure is going to be an important potential differentiator?

Well, look. One of the wonderful aspects of the VSP liver cancer program was the fact that we did treat patients for a long duration, as long as they responded to therapy. They also received drug twice a month, as opposed to once a month, which is the minimal expectation for TTR02. So that gives us considerable comfort and confidence as we move forward here with long-term exposure with our drug. The two years plus treatment twice monthly versus once monthly is almost like a four-year exposure experience for the comparable for TTR02. So we feel, knock on wood, we feel that this is obviously emerging important data, but we feel increasingly confident about all that, and we'll see how that continues, but we believe that that's going to be something which clearly is an important element of our profile. Now, other approaches also appear to have some safety behind them, but we don't see any injection site reactions or flu-like symptoms, which had been reported in antisense oligo therapies, and we that that's important in terms of how our drug will be tolerated in the patient population.

Makes sense. Last question for either you, John, or Barry, regarding partnering for PCS. I'm wondering if you have any internal goals in terms of timeline. You've been pretty good at partnering for your platform, but I'm wondering when we could see a deal emerge there?

Well, Charles, we do have internal goals on that, and the external goal is that we'll form additional partnerships this year. We've got great discussions that are going on. I think that the TTR02 data, the PCSK9 data that we showed earlier this year, are really widening the eyes of a lot of interested parties, and I'm confident, or I think that we'll see things materialize, and in a way that's consistent with our external goals. Stay tuned on that. That's what we have to say at this point in time. It's not done until it's done, but I think very importantly, we're not in a position where we have to do partnerships to raise capital or to advance these programs. We have a very strong balance sheet. We're able to advance these programs without partnerships. We're not going to just do partnerships to do partnerships. We're going to do ones that make sense for the Company, and work with people that we believe can build value in the programs that we are aiming to advance. Again, the data, the clinical data, have really widened the eyes of a number of people that we've been talking to, and I think that's important.

Geoff Meacham, JPMorgan.

I've got one for you on dose. So, for TTR02, looked like the data from the data a few weeks ago, the 0.5 milligram per kilogram looks really robust, and still a good effect at 0.3, and when you look to the AT3, though, obviously it's Alnylan data, but you're going to go -- it looks like you have a lot higher dose there. So I guess the bigger question is, do you feel like you're pretty comfortable with maybe the bookend, the high and worst, the high and low, and sort of best and worst case with the AT3 when it comes to dosing, and then maybe the bigger picture is, as you guys move from animal models to Phase I POC and more programs, what are you guys seeing or learning in terms of a realistic therapeutic dose?

Yes, Jeff, those are great questions. The first one on AT3 and doses versus TTR02, keep in mind that TTR02 uses a lipid and particle delivery modality whereas AT3 uses our GalNAc conjugate technology and subcutaneous dosing. So they're basically two different technologies, and the key thing there is that the dose requirements for our subQ platform are on milligram per kilogram basis, a little bit higher than the LNP technology, but we do get good bioavailability with subQ dosing, and so the real opportunity for the AT3 program in hemophilia, where there are no drugs that are given for intravenous infusion, is to have a subQ drug in that setting, which is really enormously important in that context. Then obviously with TTR02, we're planning on giving once monthly, or once six-weekly, or eight-weekly intravenous infusions to patients. So it's a bit of an apples and oranges type comparison.

Therefore, you have to look at each one, on its own right, but I think a very important question around what are we learning on animal translation into humans is really key. You may recall some data we presented in our conference call around our TTR02 clinical data, which was a direct comparison of our human pharmacology at 0.3 milligram per kilogram, with nonhuman primate pharmacology at 0.3 milligram per kilogram, and they were literally superimposable. I've have never seen -- let alone on our human data, biological data that are so superimosable between two species. That's just huge for us, because it's given us a large level of confidence now that what we are seeing in nonhuman primates, at the very least is very translatable into humans. Jared, do you want to comment any further on that?

No. I think that the point that you're making is a very important one. The translatability that we've seen, really across multiple programs now, both in the TTR01 program and the TTR02, are showing that the nonhuman primate really is a very good predictor of the pharmacology that we're seeing in man, and so we have even more confidence now that the pharmacology we're seeing with the GalNAc conjugate in the nonhuman primate also has a excellent chance of also predicting what we expect to see in humans.

Yes. That answer your question, Geoff?

It does, yes. I guess that also begs the question, John, when you mentioned the TTR02, the next steps here for Phase II. I know you guys have the details on slide 12, but is there anything you think that you can still add to that, to the Phase II steady ongoing, with respect to number of patients, or duration therapy, or schedule, et cetera, that you feel like just when you have the final data, you don't find yourself wishing, I wish I had something.

Yes. Well, look. There's are a couple of things there, Geoff, which is this is going to be a two-dose study, as planned, and the goal is to enroll it quickly, and obviously move quickly into our pivotals, because that's where we think the real test of the hypothesis will take place. You can rest assured that we're going to open up an extension study on this protocol that will enroll patients that were initially enrolled into the protocol to continue to get dosing thereafter. In that extension study, which will be an open label study, while we're rolling in our Phase III, there'll be a lot of data that's coming out of that open label study going forward, that we think will be very important and relevant and also create some ongoing news flow on this approach in this modality, which we think will be important. So the long and short of it is, I think we'll give you better guidance on the timing probably in another quarter or so. We just started this study back in June. There's is a lot of excitement in the field around this drug, and we do believe that it'll enroll in the timeframe that is very much on track with our expectations internally. We'll give you some more guidance on that, but I think importantly, we will open up an extension study off of this study that will look at longer term dosing in these patients.

Got you. Okay. That's helpful. Thanks.

Good.

Marko Kozul, Leerinks Swann.

Thanks for taking the question, and congrats on your good progress. and the GalNAc data today. My question is, Michael Merson is heading in front of an FDA advisory panel mid-October.

Yes.

I was wondering what your potential partner might be looking for, in that Adcom panel related to ALN-PCS?

I mean, that's an interesting question. Well, first of all, we wish our friends at Isis well, and as well as our friends at Agerion. I mean, it'll be interesting panel discussions. I think both of those panel discussions will be of interest to our partner, potential partner for PCSK9, because independent of the modality, there's going to be a discussion around endpoints in relationship to, at least homozygous FH. I think the hope and expectation out of those panel discussions is that both drugs are recommended, based on the LDL reductions that are observed in those studies. I think there's reason to believe that that will play out that way.

Of course, one doesn't know from the outside where the FDA's review might go, but certainly we'd like to see reaffirmation, or let's call that affirmation, around LDL as the endpoint in those studies, and we believe that that will happen independent of what decisions are made on the drugs themselves. That's going to be important because as we think about PCSK9 and think about segments of the severe hypercholesterolemia setting that would be amenable to our drug, it includes patients that have severe hypercholesterolemia, likely heterozygous FH, and patients, for example, that might be otherwise apheresis eligible, and those are the types of target populations that we've been thinking through. Jared any other comments on that?

No. I think I really echo the views that you just expressed, John.

So we'll see. Those will be important meetings for everybody in this field. And we look forward to seeing how those go.

Maybe just a quick follow-up. Can you give us a little more color in terms of what you might be looking for in a partnership, or an ideal partnership structure? Thanks.

Well, I think we want a partner that's going to move aggressively and quickly in this setting, and really one that's going to be committed to the product and its differentiation from the monoclonal antibodies that are out there. I mean, it's a very, very big space. There's going to be multiple drugs out there ultimately. We have a very differentiated mechanism of action. We'd like to see a partner who's committed to elaborating that difference in clinical studies, and then there're just the usual bells and whistles, Marko, that we expect to see of upfront payments, and milestones, and royalties. I think importantly, the nature of that partner's going to be key to us. Who is the partner? What do they bring to the table? We believe in this product, and frankly would like to see a lot of upside in our participation on the downstream value of this product, versus just trying to load up the upside on the upfront. Not to say that the upfront isn't important, but this is a very well established mechanism, and we're going to want to see value opportunities for Alnylan backend, which are significant, given the de-risking that's taken place, but those are, in general terms, the key elements that we think of.

So thanks for taking the questions.

All right. Thanks, Marko.

Alan Carr, Needham.

Congratulations on the GalNAc data. I wonder if you could comment a bit more on that one, what's the IP around GalNAc, and then also, when you're moving to subcutaneous injection, you're getting into more drug being administered there, maybe up into the antisense range, and wondering what you can tell us about accumulation in the liver and that sort of thing? Are there certain risks that you might run into that might also -- that antisense may have run into also?

Yes. So those are great questions, Alan. First of all, in terms of IP, this is really an Alnylam homegrown discovery. There is some background IP that comes out of our broad relationship with Isis that broadly covers the use of conjugates on oligonucleotides that we have an exclusive license to for the RNAi field, but beyond those sort of early foundational IP elements from our friends at Isis, this is really a very homegrown Alnylam discovery and development, and one with a lot of IP coverage that are Alnylan-owned intellectual property elements. So that's clearly stuff from an IP standpoint, it's really exclusively ours, without question.

Then, as it relates to your question on tissue levels, that's an incredibly interesting question, and I'm glad you asked it, because we know that in the advancement of antisense oligos, that relatively high tissue levels need to be achieved in let's say, target organs in general. So if you take data in the liver, based on the Michael Merson experience, it was important to achieve target levels of drug in excess of 200, 300 microgram per gram of liver to get a 50% knockdown effect of ApoB, and what's encouraging about the GalNAc approach, in part because we're using the A cell of lipoprotein receptor as an uptake mechanism, is we're achieving ED50 knockdown levels at single-digit microgram per gram of tissue.

In other words, 100-fold lower dose levels in the tissue of our drug, and we think that's important as it relates to long-term tolerability of this approach. Obviously, that's something that will bear out over time, but we were encouraged by the safety profile so far. I mean, we've gone up to 300 milligrams per kilogram as we announced today in this program, and have not seen any significant toxicity, even in multidose studies. So our NOAEL is in excess of that amount, our therapeutic index is greater than 100-fold. So it's a very promising approach, and it's a rational approach with the receptor mediated uptake mechanism.

All right, and you have a pretty wide window for 2013 for the AT3 program. Would data be available next year, or is that something that might take into 2014?

Well, Alan, we haven't given guidance on it. We're going to be dosing, going into a Phase I study in hemophilia patients. This is an approach that we will want to do in the background of hemophilia, not in the background of a normal individual. The types of data we'll generating in that study will not only relate to knockdown of antithrombin levels in patients, but also increases in thrombin-generation levels in patients. So we'll have both a primary Phase I readout, which is the target itself, antithrombin, which can be measured in plasma, both by immuno assay, but also by activity assay, and then we'll also have a readout on increasing trauma generation, just like we've done in the hemophilia knockout models that we've reported back to the World Federation of Hemophilia.

I think it's too early to tell you when those data would come out, we haven't given that guidance yet, but you can gather from the types of endpoints that we're going to be measuring that we'll be able to get data relatively quickly in the study. It's not going to take a long time to get those type of data, and so stay tuned. We'll give guidance later in the year, early next year on that. It is the type of endpoint in our Phase I that is tractable early in clinical development, not something that takes a long time to generate.

Okay, great. Thanks very much.

Yes.

Ted Tenthoff, Piper Jaffray.

Maybe picking up on Alan's question there, how do you see this drug fitting into the current treatment paradigm for hemophilia? Where do you think it'll play in, and I know that's kind of a tricky question to ask without clinical data yet, but how do you see that? I know this is an area, John, you have a lot of experience in, but how do you see that ultimately playing out, and where are you hoping to target that compound?

Yes, let me give you three areas of great interest to us, okay? One is clearly in the inhibitor patient population, where these patients have no routine prophylaxis. These are patients that have autoantibodies against their factor 8 or their factor 9, they bleed frequently, they really have no prophylactic opportunity for managing or minimizing the occurrence of bleeding. When they begin to have a bleed, they start administering recombinant factor 7A by IV infusion, and recombinant factor 7A has a very short half-life, and they often give themselves large amounts of recombinant factor 7A, before they can establish hemostasis.

So imagine now, an inhibitor patient who instead of having this stochastic course of a year with no hemostasis, treating themselves with recombinant factor 7A when they're starting to bleed, having five, six bleeds a year, getting a set of weekly subcutaneous injection, or a twice-monthly subQ injection of our drug, and having a significantly reduced incidences of bleeding. That's a very compelling profile. The next profile that I'll comment on is, even patients that are receiving routine factor 8 or factor 9, but are doing it so-called on-demand, as opposed to three time weekly type dosing, many patients, about half the patients in the US only give their replacement factor when they begin to feel a bleed coming on. So now you have an opportunity in the severe so-called on-demand hemophilia patients to receive a once weekly or once every two weekly subQ injection, small volume injection, and minimize their need for the recombinant factor 8 or recombinant factor 9 in the management of their disease. So that's a second setting that we're quite interested in. The third is the ultra orphans. There are a number of other congenital deficiencies in the blood coagulation cascade, including facror 10 deficiency, factor 7 deficiency, factor 11 deficiency, where these patients have no prophylaxis. They have no ability to manage their bleeds, other than using plasma concentrates. It's an ultra orphan indication with nothing available for these patients. Using a drug like AT3 that basically resets the clotting cascade by taking the break-off, the endogenous anticoagulant system, can make a significant difference in those patients. So those are three that we're quite excited about, and three that we'll develop over time.

That's incredibly helpful, John. I appreciate that. One quick housekeeping question, too, if I may. With the transfer of the Roche RNAi assets to Arrowhead, when does that amortization end, or how should we be thinking? It's a bit of an accounting housekeeping question, but how should we expect that $14 million or so per quarter that you've been recognizing, will that continue, or does that end in the third quarter?

I'll let Mike handle that one.

Hey, Ted. That does end in the third quarter. So with the transfer from Roche to Arrowhead, actually no changes to our accounting model. So the $14 million that you've been seeing in there for the last five years, almost, will actually finish in the third quarter. So we'll have $9 million of revenue related the Roche/Arrowhead collaboration in Q3, and then it'll go down to zero in Q4.

That's really helpful. Thanks so much, guys.

Thanks, Ted.

George Zavoico, MLV and Company.

Congratulations on a good quarter, the progress you've made in the first half has been impressive. the Quick question about the GalNAc conjugate. This delivery vehicle is very interesting. I'm very interested to ask, to find out how widely applicable is it, and whether with the vast IP that you've developed, whether it's something that you are considering licensing out, since you may not be able to have the resources to apply it to everything you'd like to apply it to? Perhaps even the drugs that aren't oligos?

Yes, that's interesting. Well, look. Clearly there is, -- first of all, to answer your first question, we've now used this technology for, preclinically for six seven different distinct hepatocyte gene targets, and you'll hear more about that over time. So it is tractable, it's uniformly tractable. It's very specific. It's a receptor-mediated uptake mechanism, and it's pretty effective, and it's got a very wide index. So we're encouraged by that. We're going to see more of that in the future as we think about developing our 5x15 programs. In addition to that, your question on licensing it out is certainly something which we would be open to doing, including in the non-oligos space. There has been, historically, interest in using receptor-based mechanisms for uptake of other modalities. What comes to mind are some of the endocyte work with fully targeting of chemotherapeutic drugs, and obviously this is an approach that could be interesting for other modalities as well. We'll entertain those discussions at they emerge over time, George. In the meantime, our focus is really on sRNAs and elaborating this technology for that platform.

Cool. Next question I have about your Alnylan VSP. The data that you presented at ASCO certainly is very interesting, especially the durability you've seen in some of the patients that have been treated, but having said that, given everything else that's happening in the liver cancer space, the emerging interest in a wide number -- in a number of other drugs in development for liver, and could you describe a little bit about the involvement of your partner there, and whether you might expand to look for rest of world partnerships now to advance that program a little bit faster, perhaps?

Sure. Jared, do you want to comment a little bit on the space first competitively in the oncology space, and then I can comment on the partnering strategy?

Sure. From the hepatocytic carcinoma standpoint, they're really is only one approved systematically administered drug for patients with advanced hepatocellular carcinoma, and that is the Bayers' sorafenib that has modest effectiveness, improved survival by approximately two to three months, and is only tolerated well by about two-thirds of the patients who receive it. So there really is a wide open space, and a huge continued unmet need, for new systematically administered drugs to treat advanced HCC, and because HCC is a malignancy that over expresses vascular endothelial growth factor, one of our targets, and is also a highly proliferative malignancy that also over expresses kinesin spindle protein, which is the second target in VSP.

This remains an ideal target for our particular drug. We've seen robust antitumor activity in our orthotopic liver animal model of human hepatocellular carcinoma. So the very encouraging safety data and efficacy data from our Phase I study, combined with the efficacy data from this orthotopic liver tumor model of HCC, and the continued very high unmet in this space, really all makes this a continued very attractive area for development. Of course, the disease is especially endemic in China and Taiwan, where there are 350,000 new cases of HCC diagnosed every year. So our partnership with Ascletis for development in China and Taiwan is very appropriate, given the endemic nature of the disease there.

In terms of future partnering, George, I think right now our focus is on enabling and working with Ascletis to get the next trials up and going. Frankly, we think that the best opportunity in the future for partnering is going to be on the heels of data that they generate in that setting, and it's probably wisest for us to let them move ahead and generate the key Phase II data, and then with an even more robust package than we have right now, find a rest of world partner for the program.

Yes, having proof of concept Phase II data would certainly help in setting deal terms, that's for sure.

Absolutely.

All right. Thank you very much. Look forward to continuing progress.

All right. Thanks, George. Okay, that was the last question. Thanks, everyone. Alnylam is really pleased with our last quarter and recent periods of accomplishments, and we look forward to sharing with you more of our data in the second half of this year. Thank you very much.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.