Alnylam Pharmaceuticals Inc (ALNY) 2013 Q3 法說會逐字稿

Ladies and gentlemen thank you for standing by and welcome to the Alnylam Pharmaceuticals conference call to discuss the third quarter 2013 financial results. Please be advised that this call is being taped at the company's request. I would now like to turn the call over to the Company.

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

For those of you participating via conference call, slides we have made available via webcast can also be accessed by going to the investor's page of our website at www.Alnylam.com during today's call. As outlined on slide two, John will provide some introductory remarks and general context for activities in the quarter and recent periods. Akshay will summarize the clinical progress with our Alnylam 5x15 and partnered program. Mike will review our financial and guidance. And Barry will provide a brief summary of our business highlights and goals before we open the call to 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 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 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 will specifically disclaim any obligations to update such statements. I will now turn the call over to John.

Thank you, Cynthia, and welcome and thanks everyone for joining us this afternoon. This was a quarter of remarkable progress at Alnylam, particularly in the advancement of our Alnylam 5x15 pipeline programs, and the recognition of RNAi therapeutics as a new class of innovative medicines.

A key highlight was achievement of positive data from our Phase I clinical trial with ALN-TTRSc in development for the treatment of familial amyloidotic cardiomyopathy. In this study, we demonstrated knockdown of serum TTR of up to 94%. And show that ALN-TTRSc was generally safe and well-tolerated. Thereby demonstrating human translation of our proprietary GalNAc siRNA conjugate delivery platform. As such, these data are very important not only for our ALN-TTRSc program, but for essentially the entirety of our Alnylam 5x15 pipeline, which employs this now clinically validated delivery approach. To be clear, these human POC data with TTRSc, in addition to the very significant improvements that we've made on our subcutaneously administered GalNAc conjugate siRNAs, support our strong belief that our GalNAc delivery platform is best in class for RNAi therapeutics that target liver express disease genes.

We also had an excellent quarter in recent periods with our ALN-TTRO2 program, and for starters, we are very excited to announce today, that we've obtained INN name for this medicine, and the name is patisiran. Regarding our continued progress on patisiran, we were very pleased to complete enrollment in our Phase II trial, and to initiate enrollment in our Phase II open label extension study, also known as our OLE study. Otherwise, we remain very much on track to start our Phase III pivotal trial for patisiran in TTR polyneuropathy patients by the end of this year, and look forward to updating you on this in the upcoming weeks.

In addition to our TTR amyloidosis programs, we also made important advances in the remainder of our Alnylam 5x15 programs, including a CTA filing for ALN-AT3, which is our RNAi therapeutic targeting antithrombin for the treatment of hemophilia. We also selected development candidates for our ALN-AS1 porphyria program, and our ALN-PCSsc hypercholesterolemia program, which happens to be partnered with the Medicines Company. We also presented key data from our porphyria program at the OTS meeting, and also more recently, data from our ALN-AAT program which is focused on liver disease associated with alpha-1 antitrypsin deficiency.

With all these recent advances, we believe that we are building a compelling opportunity for shareholder value creation with a modular and reproducible approach for the development and ultimately commercialization of innovative medicines for genetically defined diseases. We believe that this approach for genetic medicines, is in fact, unmatched in the entire biopharmaceutical industry and could position Alnylam as a leading company in this space for the future. I'd like to now turn the call over to Akshay, for a more detailed review of our clinical activities, our pipeline, and our scientific progress. Akshay?

Thanks, John and hello everyone. As John mentioned, we've had an extremely productive period on the clinical front with our Alnylam 5x15 programs, and we are very encouraged by the growing clinical activity and safety data from these programs.

I'll start with an update on our ALN-TTRO2 program, or patisiran program. As most of you are aware, patisiran is our main 5x15 program, and is aimed at the treatment of TTR-mediated amyloidosis for patients with familial amyloidotic polyneuropathy or FAP. We've completed enrollment in our Phase II trials with this program and will be presenting results from the study at the ISFAP meeting next week. As a reminder, and as you can see on slide 8, we presented interim data for this program at the PNS meeting a few months ago. Results at that point, demonstrated up to 93% knockdown of TTR. [These are found] to be active rapid dose-dependent and durable with similar levels of TTR knockdown observed toward both wild type and mutant protein. In addition, patisiran was found to be generally safe and well-tolerated in the study.

We've also begun enrolling patients in an open-label extension study with patisiran. This study will evaluate the long-term safety and tolerability of patisiran, while also measuring effects of treatment toward a number of clinical endpoints, including the modified Neuropathy Impairment Score called mNIS+7. Eligible patients treated in the Phase II study can enroll in the OLE study, O-L-E study, or open label extension study, where they will receive a patisiran at a dose of 0.3 mg per kilogram every three weeks for up to two years. We plan to report clinical data from the study about once a year, with initial data in 2014.

In addition, we remain on track to start a Phase III pivotal trial for patisiran in FAP patients by the end of this year. The primary endpoint will be the difference in change from baseline in the mNIS+7 score at 18 months between patients receiving patisiran and those receiving placebo. Importantly, we've obtained protocol assistance for this study from the EMA, and have also completed our end-of-phase to meet the FDA. In closing, on our Phase I ATTR program, we also hit the very exciting industry milestone with this program, with the publication of our complete Phase 1 study results in the New England Journal of Medicine.

As you're likely aware, we're also advancing ALN-TTRSc, a subcutaneously delivered RNAi therapeutic, for the treatment of ATTR patients with familial amyloidotic cardiomyopathy or FAC. In this period, as John mentioned earlier, we're very excited to report that we achieved positive Phase I results. As presented at the HFSA meeting and detailed on slide 10, ALN-TTRsc administration led to robust, consistent, a statistically significant knockdown of serum TTR of up to 94%, with a P value of less than 0.01. In addition, knockdown of TTL was found to be rapid, dose-dependent, and durable. ALN-TTRSc was also found to be generally safe and well-tolerated in the study.

In human study result, the first reported [file nine] was for proprietary GalNAc siRNA conjugate delivery platform, namely subcutaneous dosing of RNAi therapeutics with a wide therapeutic index. Furthermore, these results demonstrate human translation for our GalNAc siRNA conjugate platform, which is also been employed in our programs for hemophilia, porphyria, complement-mediated diseases, hypercholesterolemia, beta-thalassemia, and alpha-1-antitrypsin deficiency, amongst others. We're on track to initiate a pilot Phase II FAC trial with ALN-TTRSc by the end of 2013 with the results expected to be presented in 2014.

In this recent period, we also made significant progress with our ALN-AT3 program for the treatment of hemophilia and rare bleeding disorders. We view this as a very exciting and innovative program, since antithrombin knockdown has the potential to rebalance the coagulation cascade in patients with hemophilia and other rare bleeding disorders, resulting in enhanced thrombin generation and improving haemostasis. As a subcutaneously administered medicine, ALN-AT3 has the potential to provide patients with a new approach to [pivotal] access in a clinical setting, while all the drugs are administered by frequent intravenous infusion typically two to three times per week. And where in the case of hemophilia inhibitor patients, there's simply no prophylactic therapy available and where patients experience very frequent bleeding events every year.

Turning to slide 12, at the International Society of Thrombosis and Haemostasis meeting in July, we presented new pre-clinical data demonstrating that ALN-AT3 normalized thrombin generation and improved haemostasis in hemophilia mice, and fully correct thrombin generation in a non-human primate haemophilia inhibitor model. We believe these results are very important since thrombin regeneration is strongly associated with disease severity in patients with hemophilia. We also presented results of tolerability studies that support a broad therapeutic index for ALN-AT3 in the hemophilia setting.

In the recent period, we filed a clinical trial application in the UK to initiate a Phase I clinical trial with ALN-AT3, and we expect to start the study early in the first quarter of 2014. After the filed CTA the Phase I trial of ALN-AT3 will be conducted in the UK as a single and multi-dose dose escalation study consisting of two parts. Part A, will be a randomized single blind placebo-controlled single-dose dose escalation study enrolling up to 24 healthy volunteer subjects with a primary objective of evaluating safety and tolerability. Secondary objectives include subsequent clinical activity as determined by knockdown of circulating AT levels. Part B of the study will be an open label multi-dose dose escalation study enrolling up to 18 patients with moderate to severe hemophilia A or B. The primary objective of this part of the study is to evaluate the safety and tolerability of multiple doses of ALN-AT3, and with secondary objectives including assessment of clinical activity as determined by knockdown of circulating AT levels and increase in ex vivo thrombin generation. Also in the quarter, ALN-AT3 was granted orphan drug designation as a therapeutic treatment of hemophilia A and B, by the FDA.

We continued to advance our other Alnylam 5x15 programs, as well. With our ALN-AS1 porphyria program, as you can see on slide 13, we presented new pre-clinical data at the OTS meeting showing that subcutaneous administration of a GalNAc-siRNA targeting ALAS-1 led to rapid, dose-dependent, and long-lasting knockdown of the ALAS-1 mRNA and complete inhibition of the toxic intermediates that mediate the symptoms and pathology of acute intermittent porphyria. Based on these findings, including results in non-human primate studies, we selected our ALN-AS1 development candidate and expect to file an IND with this program in 2014.

Also at OTS, we presented new data from a non-human primate study with ALN-PCSsc, a subcutaneously administered RNAi therapeutic targeting PCSK9 for the treatment of hypercholesterolemia. This company is partnered with The Medicines Company and with them we selected a development candidate to move forward and we expect to file an IND for this program in late 2014. We're also very pleased to recently publish our Phase I results with ALN-PCS in the Lancet.

And just earlier this week, at the Liver Meeting, we presented new pre-clinical data with our ALN-AAT, an RNAi therapeutic targeting alpha-1 antitrypsin in development for the treatment of liver disease associated with AAT deficiency. Specifically, our new findings demonstrate that the subcutaneous administration of the GalNAc-siRNA targeting AAT, Or alpha-1 antitrypsin, led to potent, dose-dependent, and durable knockdown of AAT of greater than 90%, as well as a significant reduction in liver fibrosis and the incidence of liver tumors in the transgenic mouse model of Z-AAT protein over-expression. Given that AAT related liver disease currently managed by supporting care or liver transplantation, there's a significant unmet need for more effective therapeutics for this disease. We are very encouraged by these new pre-clinical data, as they highlight the potential for ALN-AAT to become an important therapeutic option for the management of this devastating disease.

Of course, during the period, we also made excellent progress on our ALN-CC5 program in development for complement mediated diseases and our ALN-TMP program in development for beta-thalassemia and iron-overload disorders. We look forward to presenting data from both these programs at the upcoming ASH meeting in December.

In summary, we believe that we've made excellent progress with our Alnylam 5x15 pipeline activities, and we expect that to continue for the remainder of the year and into 2014. And with that, I'd like to now turn the call over to Mike for review of our financials. Mike?

Thanks, Akshay and good afternoon everyone I will be referring to slide 17 for a discussion of our financials this quarter. Alnylam continues to maintain a very solid balance sheet ending this third quarter with $367.1 million in cash, cash equivalents, and marketable securities. Our GAAP revenues for the third quarter of 2013 were $9 million as compared to $16.8 million in the third quarter of 2012. Revenues this quarter included $5.5 million related to our collaboration with Takeda, $1.4 million related to our collaboration with Monsanto, and $2.1 million related to our collaboration with The Medicines Company, research reagent licenses, and other sources. For the remainder of 2013, we expect net revenues from collaborators to remain consistent with the amount recorded in this third quarter.

Moving to expenses, R&D expenses were $34.5 million this quarter, as compared to $22.1 million in the prior year period. The increase was due primarily to higher clinical development costs related to our ALN-TTR02, ALN-TTRSc, and ALN-AT3 programs. In addition, stock-based compensation expense increased during the three months ended September 30, 2013, as compared to the three months ended September 30, 2012, due primarily to an increase in the Black-Scholes value of stock options granted in the third quarter of 2013. Partially offsetting these increases, were license fees due to certain entities related to our delivery and platform technologies, that were expensed in 2012. Looking ahead, we expect R&D expenses to decrease slightly for the fourth quarter of 2013, due to a decrease in stock-based compensation expense.

G&A expenses were $6.8 million in the third quarter of 2013, as compared to $12.8 million in the third quarter of 2012. The decrease in G&A expenses, as compared to the prior year period, was due primarily to a decrease in consulting and professional service expenses related to business and legal activities. Alnylam expects G&A expenses will remain consistent for the fourth quarter of 2013.

With respect to guidance for 2013, we continue to believe we'll finish the year with greater than $320 million in cash, which provides us with a strong balance sheet to execute on our business plan and 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, and good afternoon everyone. As you heard from John and Akshay earlier, we really have had a tremendously productive quarter, in fact, a productive year so far. Importantly, we expect this to continue for the remainder of this year and into 2014. As we do every year, we'll be providing further detailed guidance for 2014 in January. There are still a few key milestones coming before the year ends. With regard to our TTR program, we expect to present data from our Phase II trial with patisiran at the International Symposium on FAP in Rio next week. These data will include full TTR knockdown results for approximately 30 ATTR patients, it will also include important safety and tolerability readouts. For patients enrolled in the Phase II study, we've begun rolling over those patients into our only study that includes clinical endpoint data that we'll begin to read out in 2014. Finally, we remain on track to initiate a Phase III pivotal trial for patisiran, in polyneuropathy patients by the end of the year. This will be an exciting transition for us as we enter the final stage of clinical development with our lead program.

Importantly, as Mike said, we plan to end this year with greater than $320 million in cash. At upcoming scientific and medical meetings, we plan to have updates on several of our Alnylam 5x15 programs, including ALN-PCSsc, at the American Heart Society meeting in mid-November, and ALN-AT3, ALN-CC5, and ALN-TMP at the ASH meeting in December. In summary, I think it's very clear that we're executing on our goal of driving innovative RNAi therapeutics to patients in need. With that, I'd like to turn the call back over to the operator for your questions. Ashley, we'll take questions now.

Thank you.

(Operator Instructions)

Our first question is from Marko Kozul of Leerink Swann. Your line is open.

Hello, everybody, congrats on all your progress. Thanks for --

Thanks, Marco.

First question, at FAP coming up next week, November 10 through the 13, can you give us either a day by day or a date on when you're actually going to present the -- that serum data?

Cynthia, you want to address that?

So if you look on the agenda, which is available online, you'll see that we have Jared Follows has a presentation scheduled for I think it's noonish. I don't have the exact time but it's on Wednesday the 13th. It's real-time.

Alright, terrific, I'm sorry I'll be missing it. But next question, regarding your open-level extension, which has now been open I think for five or six weeks. How's the transition going for patients and are you expecting most of the safety trial patients to enroll?

Marko, that's a great question. Let me have Akshay answer that.

Yes, Marko, there's obviously, a lot of excitement with the patients transition over to the open-level extension, it's going well. And I think we expect the majority to roll over, yes.

Our expectation Marco is that the majority of patients that were treated at Phase II will in fact, roll over and it's one of the benefits of going into the Phase II study, knowing that ultimately they can get access to drugs for the foreseeable future.

Terrific and just one more before I jump back in queue and that is -- what level of incoming interest are you observing from both large and smaller companies interested in exploring or leveraging your GalNAc conjugation delivery technology. I imagine there must be some interest out there after some largest historical transactions in the space, such as the Cerna $1.1 billion acquisition by Merck seven, eight years ago. Thanks.

So, Marko, it's a great question and absolutely the data we presented at HFSA on the knockdown data PTR with our TTRSc data, really, I think, has completely changed the type of dialogue we've had with the potential partners. As you know though, just keep in mind, our strategy is not to partner extensive pipeline, but rather correct -- directly commercialize those programs, but we will look to partner in territories outside North America, Europe and South America, like the type of deal we get with Genzyme last year in Japan and Asia.

So our partnering interest, for the most part, is around regional partnerships, not global partnerships. That said, there certainly are some programs in our pipeline that we would look at as being programs like PCSK9 for example, which would be global partnership programs. I mean, Laurence, anything else to add on that?

No, I think you captured it exactly. I mean, I think there's -- with the (inaudible) -- I think the notion of getting into diseases through a partnership -- a global partnership mechanism, things like some infectious disease and metabolic disease, that we've begun to talk about, you know, become much more engaged conversations, I would say, with pharmaceutical companies, than they were a year ago. As John says, focus is really on the regional rights around the key programs.

Yes, I think it's fair to say, Marko that heads of R&Ds major pharma companies look at the GalNAc conjugate data that we generated and our quite excited about the progress that we've made. And there are many data points, along those lines, that obviously, we don't share openly, but rest assured that there have been many important conversations along those lines that create opportunities for us as a company for the future.

Terrific, thanks for taking my questions.

Great.

Thank you, our next question comes from Alan Carr of Needham. Your line is open.

Hi guys, this is actually Mark on for Alan. I was wondering if you could talk a little about the hemophilia trial that we have coming up. Maybe give us some idea on the kind of patients that you'll be enrolling in the hemophilia portion on -- in the healthy volunteers portion, what kind of secondary endpoints we're going to look at? And just things that we should be paying attention to as the trial gets underway?

Yes, Mark, that's a great question. Akshay, you wanna handle that?

Sure. So for the multi-dose part (inaudible) of that study, we'll be enrolling patients with hemophilia A or B, with moderate to severe renal disease. And the idea is that we can we have a very good safety margin as working with hemophilia animals really get to significant degrees of anatomic knockdown evidence associated with increased levels of open generation and improved haemostasis.

Now in the context of our Phase I study, we hope to reproduce, obviously, the safety that I talked about by chemical changes, which will be very encouraging from a clinical perspective, ultimately, and we'll be monitoring safety throughout the primary objective and as part of that, I will be looking at bleeds, as well, as they occur. But naturally in the context, we're not going to be reporting bleeds or so forth, because of the way the study's designed, the pharmacal safety of these (inaudible) are designed to show that.

But, we'll capture anything -- any information along the way, as possible. The most powerful information deals with safety will be the AAT knockdown and increasing thrombin generation associated with increased haemostasis. I think that will be very key and very exciting

Yes Mark, one of the reasons thrombin generation data are so interesting to us, is there's been some very nice studies done by a number of investigators in the field, most notably Claude Negrier in France. Looking at severe, moderate, and mild hemophilia patients where their designation severe, mild, or moderate, is based on the frequency of bleeds that they have and also their requirement for replacement factor.

And what's known about the differences between a severe hemophilia patient versus a mild hemophilia patient, is that their thrombin generation levels [exvivo], closely correlate with phenotype. So, if we're able to show in our Phase I in the MAD phase of the Phase I in patients, that we are significantly increasing thrombin generation, that gives us some very strong encouragement that we're essentially taking a patient with severe disease and giving them what would otherwise be characterized as a mild or perhaps even more normal overall phenotype.

And that's a very powerful endpoint in the Phase I, that obviously, is going to be very important for us. And if we established a dose and a level of anthrombin knockdown associated with the change in thrombin generation, that's a dose we plan to take forward into a Phase III study in inhibitor patients. So it's a very systematic and direct approach with, again, data readouts that will happen next year, as well. So we're very encouraged by where the this trial can ago.

Great, thanks very much for taking my questions.

Thank you, our next question comes from Geoff Meacham of JPMorgan. Your line is open

Good afternoon guys, thanks for taking my question.

How are you, Jeff?

Good, thanks.

Thanks.

Question for you -- the first one is on patisiran. You guys are obviously close to starting the Phase III. What are your assumptions for enrollment timelines and are you planning on any sort of interim analysis on this study?

Geoff, first of all, I want to congratulate you on being the first person outside of the company that pronounced the name, and done so correctly. But then I'll turn it over to Akshay to comment a little bit on that.

This is a significant and important milestone for us. It's obviously the study is going to be very adequately sized and powered to demonstrate the (inaudible). And we are going to share more details at this upcoming Rio meeting around Phase III design. And given the magnitude of the study, I think we can expect the timeline is going to be something more than just a few weeks or a few months. But more to come at the realtime meeting, Geoff.

Geoff, I would just add that, in general, I think what we estimate is that anywhere from 2.5 to 3.5 years to -- from start of study to date of readout based on obviously the delta there being based on just the accrual time, at the end of the day. So that's something which I think you ought to be thinking about in your models.

Okay, and then just, John, bigger picture question. It looks like you're well on track to beat your 5x15 goals. What do you think is the realistic pipeline goal beyond that for 2015, 2016? Maybe want to wait until a big conference in January to announce something like that. (laughter)

Geoff, that's what we'd like to do that type of announcement, as you know. But look, I think, we clearly are positioning the company -- this is -- we've said this publicly, we're going to be starting our TTRSc Phase III program in cardiomyopathy patients next year. We're very much on track for doing that.

The hemophilia program can very rapidly go from a Phase I study into a Phase III type study -- Phase II, III study like the inhibitor population. The porphyria program also can very rapidly go from Phase I into a pivotal study. And so I think by the end of 2015, we're going to be looking at a very mature pipeline of multiple Phase III programs with readouts of data coming from different sources, as well, including our open-label studies.

So it's going to be a very exciting next couple of years as it relates to clinical advancement and different activities in our pipeline. Certainly multiple Phase IIIs, multiple programs with data readouts, and I think it just makes it a very exciting opportunity for all of us here at Alnylam and hopefully, for people elsewhere to see how we can ultimately rebuild this very modular and reproducible approach for genetic medicines.

And Geoff, I think you can bet, that the future programs over the next few years are going to be consistent with our strategy to develop and commercialize in North and South America and Europe, to build a kind of company we're trying to build, a multi billion-dollar international company. And these programs are very consistent with the criteria we've used for 5x15 going forward genetically-defined targets, big on [need] disease, liver targets, clear development paths, insignificant commercial opportunities, those are all continuing to be part of our selection criteria.

Thanks

Thanks, Geoff.

Thank you, our next question comes from Alethia Young of Deutsche Bank. Your line is open.

Hey guys, thanks for taking my question and congratulations on the year so far.

Thanks, Alethia

No problem. First question is just -- can you go through with us -- I've gotten a lot of questions from people about what exactly will be new and incremental for that meeting on patisiran?

So, you know, obviously Phase II is just next week. But obviously we're going to be doing a complete -- the complete Phase II results will be presented. So that's roughly 30 patients worth of data, compared to the 19 that you heard about at the PNS meeting. And there's some additional analyses that have been done in there, which I think will be quite interesting to people.

And so, I think, people will be interested in the report and the data. And obviously we'll be communicating, as Akshay said, a little bit more on the Phase III design, as well. So I think these are all features that we'll be talking about next week, and I just encourage you, Alethia, to stay tuned until then. But I'm sure people will be eager to see some of the progress that we've been making in this regard.

Yes, definitely. And then, my question would be just on the -- as far as you think about the open-label study, kind of how did you think about reading out endpoints? And when is the right time to show, kind of, the different clinical endpoints in the trial?

Yes, let me first make some comments, and then maybe, Akshay, you can do it. First of all, people have to keep in mind that we're reading -- we're doing the clinical measurements at baseline for these patients, as well as every six months. But the patients, come on in a staggered way, so not everybody comes on day one and then we have a uniform six month point. So we're going to want to make sure that we have everybody's data at six months to report on.

And that means it's not going to be six months from now, given the study has just started, but rather it'll be a little bit later than six months from now. So that, from an overall guidance and color standpoint is important. The other comment I'll make is, we want to make sure when we do the six-month readout, these data will have to be scrubbed. And we want to be thoughtful about not torturing our political organization with frequent scrubbing of the data sets for the outside world. Okay?

So we do want to do it at least once a year because we think it's important for accrual and investigators and patients to see how the study is going, but doing it more frequently than that, would, frankly, be a big tax on our clinical organization when they're trying to be very focused on our Phase III trial. That's really the dynamic around that. I mean, Akshay, can you add on that from a color standpoint?

I think you got it covered, John.

Good. Does that help, Alethia?

Yes. That's helpful, thanks.

Good.

Thank you.

(Operator Instructions)

Our next question comes from Ted Tenthoff of Piper Jaffray. Your line is open

Great. Patisiran, huh? I like it.

You said it right, too. How are you, Ted?

I'm doing really well, how are you guys? Real quick, two really just housekeeping questions, looking forward to the data next week.

But with respect to your guidance, Mike that R&D would be down on a stock comp basis in the fourth-quarter, is the pure R&D up or down, or where should that be going directionally? Because that even had a pretty significant step up obviously with all the clinical progress that you guys are making backing out the stock comp.

So that will be going up, obviously, with the start of Phase III in the fourth quarter. I mean, expenses, obviously, they're -- they vary quarter to quarter depending on timing of CMC, et cetera. But backing up the stock comp, yes you'll see a slight increase in the fourth quarter.

Okay, excellent. And I think that's, actually, just about all I have. So keep up the good work and looking forward to the data next week

Great, Ted. Thank you.

Thank you, our next question comes from Michael King of JMP Securities. Your line is open.

Good afternoon, guys. Thanks for taking the question. Got a couple quick ones, first, was wondering if you guys could talk a little bit more about the exploratory biomarkers in the -- I'm talking about AT3 that was just presented the antifibrosis data and some of the biomarkers. Maybe tell us a little bit more about their -- the genesis there and what you're hoping to prove with those?

You wanna handle this, Akshay?

Yes. If I got you right Mike, you're interested exploratory biomarkers on the ALN-AAT liver fibrosis program, right?

AAT, I'm sorry.

Alpha-1 antitrypsin deficiency is associated with a reduction of that protein entering in the peripheral blood that then accelerates [newtreolast] mediated disease resulting in emphysema. Now, the mutation, and generally there's a single mutation that results in disease in the majority of patients, is because of the so-called the point mutation (inaudible) that leads to productions of protein, but misfolded protein that is then trapped into the plasma, particularly in the cell. And that misfolded protein then causes effectively a parasite death, eventual [cytottype serosis] and, sadly, liver failure or death in many of these patients. Not all VAP patients get this (inaudible).

And our hypothesis that reducing the expression of the VAT protein in the liver of these patients, will lead to significant improvement. And from an exploratory viewpoint, the things we can monitor have very powerful in this very interesting mouse model that we shared the data over the weekend. You can look at VAT levels in the livers of these patients, you can do biopsies pre an post, and at least from a mouse work the viewpoint of the (inaudible), very powerful indicator of efficacy in this context.

The other thing that's very characteristic of these patients is that at the ZA to accumulate livers on histology, using [h-estaining] you see so called PSs called globules, which are in the path (inaudible). But if you see those globules, PS positive, you've got ZA liver disease.

So will be also counting the number of PS positive globules. So reductions in PS positive globules, reductions in intra (inaudible) will be very powerful and efficacy in a devastating liver disease.

And then in plasma, Mike, we'll still be able to measure some of this DAT protein is still secreted. And so we'll be able to measure the knockdown of the plasma or CRM, ZAT, in addition to these liver biopsy type results. So multiple biomarkers that we'll be able to readout, as you know, one of our criteria in many of our programs, is that we have these type of biomarkers early in development to be able to assess clinical activity.

Right. I guess I was asking more about like call 182 and the PT PRC. Because it seems like you've got much more profound reductions in the AAT, and in the tumors, but these biomarkers don't seem to change, I mean -- there stats, but visually they don't seem to change as impressively.

No, you're right. There's a whole array of these experimental biomarkers relating to fibrosis. We continue to study them and we'll certainly be incorporating them in the context of the studies that we do. And we'll also be engaging the regulators in a discussion around that.

As you know, there's no single biomarker pattern on the market there, that have been sufficiently validated to lead to an approval of a drug. But also, important radiologic approaches, so elastography of the liver using ultrasound-based approaches has also been advocated. So certainly, we'll be incorporating all that. More news to come as we talk to regulators.

But why I am started this stuff -- John mentioned it -- that that's the heart of the disease and we think we've a very powerful argument that if we attack AAT levels in the circulation, in this reduces globules that's going to be very powerful evidence. (Multiple speakers)

I'm sorry.

And direct evidence relating to the (inaudible).

Okay and then a follow-up a strategic question. I guess picking up where Geoff Meacham left off, although, I don't know what conference he's talking about.

Is there something in January I don't know what that's about. You might want to get this information out a lot sooner. But, anyway. (Multiple speakers) Yes, right. Well, he's got dyslexia. The strategic question I have is -- you've got a wealth of programs here. So how do you start to think about how you manage the programs?

Just, sort of, order into clinic doesn't seem like it's always going to be the most efficient, capital efficient, or fastest to market. So has the, again -- the growth in the number of programs caused you to rethink how they get developed and along what timelines and what criteria you use to advance, et cetera?

Yes, Mike. I mean, obviously, we spent quite a bit of time on this topic, and, obviously, you get a lot of input from our advisers and our board on this, and we have a clear set of objectives, again, we'll highlight them in January of next year. But we're going to have multiple IDs next year. You already know that from our goals.

We talked about AS1 and PCSK9 IDs next year, and obviously we're going to be in Phase III next year with not only patisiran, but also with TTRSc. And then, we'll be progressing our hemophilia program through its Phase I trial next year. But these are all being invested in, in a manner that's consistent with the opportunities that we think are the most valuable. So, for example, our C5 program will be one of our higher priority programs because we believe that that target and our approach to that target can be very attractive for a wide range of complement mediated diseases.

And in some ways, it's a target that is not only genetically validated, but it's pharmacologically validated with the (inaudible) map. And so, when we factor all of this into our portfolio thinking, and resource allocation plans, and our planning exercise, which we do every year, in fact, we're in the midst of it right now, to really nail down what the plan is for next year. And you'll see the benefits of that in early January at some meeting that we might be at.

Yes, I'll scan the web for that. Thank you.

Good. Does that help answer your question?

Yes, it's perfect, thanks

Thanks, Mike

Thank you. I'm not showing any further questions in the queue. I'd like to turn the call back over to management for any further remarks.

Great. Well thanks, everyone. I think it's pretty clear that we continue to lead the advancement of RNAi therapeutics to patients. And we're very proud of our scientific, clinical, and business accomplishments.

We're excited about where things are going, and we look forward to sharing with you some of our progress in the weeks and months to come. Thank you. Bye-bye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may now disconnect. Everyone, have a great day.