Alnylam Pharmaceuticals Inc (ALNY) 2013 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. And welcome to Alnylam Pharmaceuticals conference call to discuss Q4 and year-end 2013 financial results. (Operator Instructions). Please be advised that this call is being taped at the Company's request. I would now like to turn the call over to the Company.

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. 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, the slides we have made available via webcast can also be accessed by going to the investors page of our website at www.alnylam.com. During today's call, as outlined in slide two, John will provide some introductory remarks and provide general context for some of our recent progress and activities. Akshay will summarize the clinical progress with our Alnylam 5x15 pipeline, Mike will review our financials and guidance, and Barry will provide a brief summary of our business highlights and goals for 2014 before we open up the call to your questions.

Before we begin, 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 under provision 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'll turn the call over to John.

Thanks, Cynthia. Welcome, everyone and thanks for joining us this very snowy afternoon up here in Boston. The full year 2013 and the first weeks of 2014 were transformational for Alnylam and our continued efforts to advance RNAi therapeutics as a whole new class of medicines.

Indeed, we believe our recent alliance with Genzyme is a game changer for both the advancement of RNAi therapeutics as a new class of genetic medicine to patients around the world, and also for our commitment to build a leading, independent biopharmaceutical company that delivers value to our shareholders. This alliance provides Alnylam with expanded development and commercial opportunities for our Alnylam 5x15 pipeline and also our broader genetic medicine pipeline through Genzyme's established global infrastructure, commitment, and proven track record in rare diseases. Moreover, this alliance crystallizes Alnylam's strategy to develop and commercialize our products in North America and western Europe while Genzyme advances our products in the rest of the world.

And as you'll hear from Mike in just a minute, it also solidifies our balance sheet, enabling an increased investment in an expanded number of RNAi therapeutic programs while securing a cash runway that we believe provides us with financial independence to develop and launch multiple products. As many of you are aware, our Alnylam 5x15 product strategy establishes a path for development and commercialization of novel RNAi therapeutics as genetic medicines. That is to say RNAi therapeutics directed toward genetically defined targets for the treatment of diseases with high unmet medical need.

Since the launch of our Alnylam 5x15 product strategy in 2011, we have made tremendous progress and we now expect to significantly exceed our original goals. Indeed, we now expect to end 2015 with six to seven programs in clinical development, including at least two programs in Phase III and five to six programs having achieved human proof-of-concept results.

In addition, with the now nine active and disclosed genetic medicine programs we have in our pipeline, there are about a dozen more that you have yet to hear about. The reason for our accelerated productivity should be increasingly clear. Once we establish robust and well-tolerated delivery of RNAi therapeutics to deliver, especially with our GalNAc-conjugate platform that enables subcutaneous delivery with a wide therapeutic index and confirmed this with clinical validation, we've been able to establish the beginnings of a modular and reproducible platform for genetic medicines.

Overall, we're very pleased with the continued execution on our Alnylam 5x15 product strategy over the last several months including initiation of new Phase I, Phase II, and Phase III clinical trials across three distinct programs and we expect to have multiple data readouts in 2014. In sum, we believe that our recent business and clinical accomplishments strengthen our efforts to build a leading, independent biopharmaceutical company that delivers value to our shareholders.

I'll now turn the call over to Akshay, our Chief Medical Officer who will highlight of some our important clinical progress of recent days. Akshay?

Thank you, John. The past 13 months represent a period of remarkable execution on our clinical pipeline as we continue to deliver on the promise of RNAi therapeutics with notable clinical results and pipeline progress. I'll start with an update on Patisiran. As most of you are aware, Patisiran is our lead 5x15 program and is aimed at the treatment of TTR-mediated amyloidal or ATTR, in patients with familial amyloidotic polyneuropathy or FAP.

Our highlight in this past quarter was the initiation of our Apollo Phase III trial with Patisiran. As the Company's first ever Phase III study, this is a very significant milestone in our history and also for also field of RNAi therapeutics. The Apollo trial is a randomized, double-blind, placebo-controlled study to evaluate the safety and efficacy of Patisiran in ATTR patients with FAP. The primary end point of the study is the difference in the change in a neuropathy impairment score mNIS+7 between Patisiran and placebo at 18 months.

In addition, there are a number of important secondary end points including quality of life. The study's actively enrolling patients across a great number of sites and accrual in the study is a major focus for Alnylam for 2014. The strong Phase II data from this program is what gave us confidence to advance Patisiran into the Apollo Phase III study. As presented at the is ISFAP meeting, in November, and as you can see on slide eight, our Phase II results showed an up to 96% knock-down of serum TTR in ATTR patients. Patisiran activity was found to be rapid, dose dependent, and durable, with similar levels of TTR knockdown observed toward both wild-type and mutant protein. And Patisiran was also found to be generally well-tolerated.

Patients who are in the Phase II study have rolled over into an open label extension, or OLE study where they're eligible to receive continued dosing with the drug. The primary objective of this study is to evaluate the long-term safety and tolerability of Patisiran administration. The study will also measure a number of clinical end points which is the same of those measured in the Apollo Phase III study. We expect to present data from the Phase II [only] study approximately once a year with an initial data report in late 2014.

Another key highlight in 2013 was the demonstration of human translation and proof-of-concept for our GalNAc-siRNA conjugate platform. With key results from a Phase I study of ALN-TTRsc and RNAi therapeutic for the treatment of TTR cardiac amyloidosis. Specifically in this study as shown here on slide nine, ALN-TTRsc administration was associated with a greater than 90% mean knockdown of serum TTR with a highly consistent pharmacodynamic profile establishing what we believe to be a new benchmark for clinical activity of RNA therapeutics.

Late in 2013, we started a pilot Phase II trial of this RNAi therapeutic aimed at evaluating the tolerability and preliminary clinical activity of ALN-TTRsc in approximately 15 patients with familial amyloidotic cardiomyopathy which is caused by [a form] dominant mutation in the TTR gene or senile systemic amyloidosis which is caused by idiopathic accumulation of wild-type TTR in the heart. In addition, the study will assess preliminary clinical activity as mentioned by knockdown of serum TTR levels and additional exploratory tests such as cardiac imaging, cardiac biomarkers, six-minute walk test, New York Heart Association classification, as well as measures of heart failure symptoms and quality of life.

We expect to present results from the study later this year and assuming a positive outcome, begin a Phase III study by the end of the year. 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 anti-thrombin knockdown has a potential to rebalance the coagulation cascade in patients with hemophilia and other rare bleeding diseases, resulting in the potential for enhanced thrombin generation and improved hemostasis.

Further, as a subcutaneously administered medicine ALN-AT3 has a potential to provide patients with a fundamentally new approach for prophylaxis in a clinical setting that all other drugs are administered by frequent intravenous infusions typically two to three times per week and in where in the case of hemophilia inhibitor patients, there are simply no prophylactic therapies available and patients experience very frequent bleeding each year. At the ISTH meeting in July, as I shared on slide 11, we presented preclinical results demonstrating ALN-AT3 can normalize thrombin generation and improve hemostasis in hemophiliac mice and fully correct thrombin generation in a non-human, primate hemophilia-inhibitor model. We believe these results are important as thrombin generation is closely correlated with disease severity in patients with hemophilia.

More recently at the ASH meeting in December, we presented data demonstrating that ALN-AT3 has an expanded therapeutic index in the hemophilia setting and was shown to correct the Partial Thromboplastin Time, a measure of blood coagulation in mice with hemophilia A. Last month, we initiated a Phase I clinical trial of ALN-AT3, our second GalNAc-siRNA conjugate program to enter clinical testing with results expected later this year. This Phase I study is being conducted in the UK as a single and multi dose, dose escalation study comprised of two parts. Part A will be a randomized single blind placebo control single dose, dose escalation study enrolling up to 24 healthy volunteer subjects.

The primary objective of this part of the study is to evaluate the safety and tolerability of a single low-dose of ALN-AT3 with the potential secondarily to show changes in AT plasma levels at sub pharmacologic doses. Part B of the study will be an open label multi dose, dose escalation study enrolling up to 18 people 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 subcutaneously administered ALN-AT3 in hemophilia subjects. Secondary objectives include assessment of clinical activity as determined by knockdown of circulating AT levels and increasing thrombin generation at pharmacologic doses of ALN-AT3

I would like now to turn to ALN-CC5, a subcutaneously administered RNAi therapeutic targeting compliment component C5 for the treatment of compliment mediated diseases. The compliment system plays a central role in immunity as a protective mechanism for host defense. But its disregulation results in life-threatening complications in a broad range of human disease including paroxysmal nocturnal hemoglobinuria or PNH,atypical hemolytic uremic syndrome, or AHUS, and neuromyelitis optica amongst many others.

C5 which is predominantly expressed in liver cells is a genetically and clinically validated target. Loss of function human mutations are associated with an attenuated immune response against certain infections and intravenous anti-C5 monoclonal antibody treatment has demonstrated clinical activity and tolerability in a number of complement-mediated diseases. subcutaneously administered RNAi therapeutic that silences C5 represents a novel approach to the treatment of complement-mediated diseases with many potential advantages over Eculizumab, the only anti C5 monoclonal treatment available to patients today. As you can see on slide 14, we presented preclinical data for this program at the ASH meeting in December demonstrating subcutaneous administration of ALN-CC5 in non human primates led to an up to 98% knockdown of serum C5 and an up to 94% inhibition of serum hemolytic activity.

This level of complement activity inhibition exceeds the 80% inhibition threshold that has been validated as being associated with clinical benefit in patients with PNH. We're in final phases of optimization of the current GalNAc-siRNA conjugate lead molecule and expect to nominate ALN-CC5 as a development candidate early this year, and file an IND for this exciting program in late 2014 or early 2015. During this period, we'll also make important progress with some of our other 5x15 programs. We selected a development candidate in our ALN-S1 program. ALN-S2 is a GalNAc conjugate siRNA targeting ALAS-1 for the treatment of hepatic porphyria including acute intermittent porphyria.

We expect to file an IND for this program in late 2014 or early 2015. We are now partnered with The Medicines Company, also selected as a development candidate for ALN-PCSsc, an subcutaneously administered RNAi therapeutic targeting PCSK9 for the treatment of hypercholesterolemia. At the AHA meeting this past November we presented new data from non human primate studies showing that ALN-PCSsc administration resulted in up to 95% knockdown of plasma PCSK9 and up to 67% lowering of LDL cholesterol in the absence of statins.

ALN-PCSsc has a very promising durability profile that we believe will support the potential for every two-week dosing and possibly every four-week dosing. We expect to file an IND for this program in late 2014 or early 2015.

We continue to advance earlier phase programs such as ALN-AAT targeting alpha-1 antitrypsin for the treatment of liver disease associated with AAT deficiency where we presented new data, at the liver meeting this past November, ALN-TMP an RNAi therapeutic targeting TMPRSS6 or Temper6 for the treatment of Beta-Thalassemia and iron overload disorders while we presented new data at the ASH meeting this past December. And finally, ALN-ANG an RNAi therapeutic, targeting Angiopoietin-like 3 for the treatment of genetic forms of mixed hyperlipidemia and severe hypertriglyceridemia, where we presented new data at the AHA meeting this past November.

We expect to announce new development candidates from these and other programs in the months to come. And we then expect to file new IND filings in 2015. Furthermore you should expect to hear about new RNAi therapeutic genetic medicine programs during 2014 demonstrating that our (inaudible) position to build what we believe could become one of the most exciting genetic medicine pipelines in the industry for many years to come.

Overall, 2013 was a tremendous year for us as we continue to lead the translation of the science of RNAi toward the development of innovative medicines. As I think you can see, we're now advancing a broad pipeline of RNAi therapeutics as genetic medicines across all phases of clinical development and we expect multiple data readouts in 2014. I'll now turn the call over to Mike for a review of our financials. Mike?

Thanks, Akshay. I will be referring to slide 17 for discussion of our Q4 and year-end 2013 financial results. Alnylam continues to maintain a very strong balance sheet ending the fourth quarter of 2013 with $350 (sic - see press release) million in cash, cash equivalents and marketable securities. Our

GAAP revenues for the fourth quarter of 2013 were $10.8 million as compared to $8.5 million in the fourth 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 $3.9 million related to our collaborationwith The Medicines Company as well as research, reagent licenses, and other sources.

Looking ahead, GAAP revenues related to the recent general recent Genzyme alliance will be amortized over approximately 20 years, and include the premium on the stock purchase at closing as well as any deferred revenue remaining from the 2012 alliance. Moving to expenses, R&D expenses were $32.1 million this quarteras compared to $21.7 million in the prior year period. The increase was due to license fees related to the initiation of the Phase II trial of Patisiran, and an increase in compensation related expenses including stock-based compensation.

Looking ahead, we expect R&D expenses to increase significantly as we continue to develop our pipeline and advance our product candidates in clinical trials. G&A expenses were $8.3 million in the fourth quarter of 2013 as compared to $10.2 million in the fourth 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 services related fees related to business and legal activities. We expect G&A expenses to increase slightly in 2014.

Looking ahead to the first quarter, we expect to record a significant charge to operating expenses in connection with our acquisition of Sirna which we expect to close in the first quarter of 2014. The expected total amount of this expense will be based on a cash payment of $25 million as well as the value of 2.5 million common shares that we will issue to Merck upon closing, multiplied by our closing price of our common stock at the closing of the transaction.

Following the close of our new alliance with Genzyme, our balance sheet will be over $1 billion on a pro forma basis which will allow us to increase our investment in new RNAi therapeutic programs while securing a cash runway for many years to come that we believe will allow us to develop and launch multiple products. With respect to guidance for 2014, we expect we'll finish the year with greater than $825 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. I will now turn the call over to Barry.

Thanks, Mike. As you heard from John and Akshay, we had a tremendously productivity 2013 and recent period. We're delighted to be kicking off 2014 with the expansion of our Genzyme partnership.

We also had some other important business news at the start of the year, including our agreement with Merck to acquire Sirna Therapeutics. Specifically, we have agreed to acquire the entirety of Merck's RNAi assets including their wholly owned Sirna Therapeutic subsidiary. As you may recall, Merck acquired Sirna in 2006. Following that acquisition, Merck scientists made significant advances in SRNA chemistry and delivery including with GalNAc-siRNA conjugates which we view to be the best in class approach for the delivery of RNA therapeutics.

Our acquisition of Sirna brings those assets and technologies to Alnylam in a manner that accelerates and advances our overall efforts in RNA therapeutics. In addition, we have obtained over 125 issued patents from a Sirna acquisition in addition to later stage pre-clinical assets. Now, turning our 2014 goals and guidance, as we announced at the start of the year, and as John commented earlier, we now expect to significantly exceed our original 5x15 guidance. Our Alnylam 5x15 strategy which we launched in early 2011, stated that we expected to have five programs in clinical developments by 2015.

We now expect to significantly exceed that guidance with six to seven programs in clinical development by the end of 2015 which includes at least two programs in Phase III and five to six programs that will have achieved human proof-of-concept results. As you can see on slide 20, we view the year as one that promises to bring us closer to the market with our Phase III trials, yield multiple data readouts that provides expanded proof-of-concept, and broaden our opportunities with a significant growth and our clinical pipeline of potential high impact genetic medicines. Specifically, with regard to our Patisiran program,we continue to enroll patients in our Phase II Apollo study. We believe the study will read out in about two-and-a-half to three-and-a-half years from now.

If the study is positive, it will enable a possible NDA submission in 2017. We also continue to enroll and treat patients in our Phase II open label extension study or OLE study with plans to present data from the study for the end of the year. We continue to enroll patients in our Phase II study with ALN-TTRsc and are on track to present data from that study later in the year. Now, assuming positive results, we plan to start a Phase III study with ALN-TTRsc and the TTR [Cardiac Amyloidosis] indications by the end of the year as well.

Turning to our ALN--AT3 hemophilia program, where we initiated our Phase I study last month, we expect to present initial data from the study by the end of the year. We're also on track to select a development candidate for our ALN--CC5 program early this year as well as potentially other programs over the course of the year. And from our CC5, AS1, and PCSsc programs, we expect to advance two into IND filings by the end of the year with the third into IND filing in early 2015. Over the course of the year, you can also expect to see us continue to advance our genetic medicine pipeline including AAT, Temper6, ANG and others.

Importantly as Mike said, we plan to end the year with greater than $825 million. In addition to the upcoming scientific meetings, we have plenty of updates on several of our Alnylam 5x15 programs including ASA for Patisiran, ATVB for PCSsc, DDW for AAT, WFH for AT3, Tides meeting for some updates on earlier stage programs, and the Compliment Therapeutics meeting for CC5.

As you can see, and as we've discussed, 2014 promises to be an incredibly exciting year for Alnylam. So with that, I would like to turn the call over to the operator. Sam, we'll take questions now.

Thank you, sir. (Operator Instructions). Our first question comes from Geoff Meacham of JPMorgan. Your line is now opened.

Good afternoon, guys. Thanks for taking the question and congrats on all of the progress.

Thank you, Geoff.

I know it just happened, but where are you guys on the integration of Merck's Sirna programs and what's your initial view of the targets or differences in the tech platform and I have one follow-up.

Yes, so Jeff, we obviously, as part of the acquisition, we did extensive due diligence. But until the deal closes, we're only in planning stages around any integration activities. Obviously the deal has to close before we can integrate the technologies. But what clearly -- what's clear to us obviously is there are two dimensions of important things that the acquisition brings to Alnylam.

One is the fact that we, of course, get access to additional intellectual property that was in Merck's hands. That really continues to help Alnylam build and expand our pipeline, advancing medicines to patients. But the second part of it and perhaps the most exciting part of it is the technology that Merck scientists developed over the years, following their acquisition of Sirna.

And that technology, particularly the technology around conjugates and SRNA delivery, when added to the Alnylam GalNAc conjugate platform, really goes a long, long way to continue to optimize that platform for the future and for Alnylam's efforts. So very exciting when we obviously close a deal, we'll fully integrate all of this but clearly, what we believe we have access to in that acquisition is a very powerful array of technology but also intellectual property.

Okay. That's helpful. And then for the Apollo study, I was just curious about the natural history, just with respect to the volatility of disease progression say over the 18 months of the trial. And if you guys can talk about any background meds or interventions that can be used over the study, that would be great. Thanks.

Yes. Akshay, you want to handle that?

Yes, Geoff, we have a pretty good understanding of the natural history of this disease, both from literature as well as from the placebo arms in the tafamidis (inaudible) and most importantly, data we collected both from the US and Europe across very significant triple digit number of patients with a variety of mutations. So I think we've got a got a handle on the increasing [amyloidosis] as expected over time. In terms of factors that influence [amyloidosis] of course in the context of the study, placebo-controlled study. So they won't be on any other potentially disease-modifying treatment. And in that respect, really, the only thing to consider is tafamidis, the approved drug in the EU. And that's not allowed in the course of our study, of course. So I think we've got a pretty, pretty good handle on the (inaudible) study the way we (inaudible) it, and we expect that increase in the neuropathy worsening.

I would just add, Geoff, that everything Akshay said is spot on, of course. But we've also stratified enrollment for a number of known factors that correlate with changes or differences in disease progression. That includes age, it includes genotype, and other variables, as well. So the stratification has been an important element, too.

Gotcha. Okay. Thanks.

Yep, thanks, Geoff.

Thank you. Our next question comes from Alethia Young of Deutsche Bank. Your line is now opened.

Hey, guys, congrats on all of the progress.

Thanks, Alethia.

I just have two questions. One is housekeeping. The other one is about FAC. So with the FAC, I'm just wondering if you can think abouthow -- expectations on the Phase II coming up. You're studying a lot of things beyond TTR knockdown but help us with our expectations there. My second question is just on the share count. Does it go up by roughly 11 million shares when the Genzyme deal closes?

That's exactly right. We'll have around 75 million shares outstanding after both deals close. So then turning to FAC Akshay, you want to handle that?

So with respect to the Phase II study, Alethia, I think the most important elements for us and for the Phase III effort that should start by the end of the year will demonstrate safety in the context of this Phase II study, TTR knockdown as you mentioned, obviously pharmaco kinetics is another major element. Those three are key. I think we're confident around those and that will guide us to the Phase III study.

The other elements we're measuring of course to try and demonstrate over time potentially preliminary clinical activity of things like changes in cardiac biomarkers, BNP and troponins amongst others, echo cardiogram, and other measures, clinical measures such as six-minute walk and quality of life questionnaire. And many of these will be carried over into a subsequent study when these patients get rolled over into a long-term extension study. We'll have the benefit of studying these patients over a long period of time and be able to evaluate many factors beyond just TTR knockdown. Certainly for this year, I think the focus is let's demonstrate TTR knockdown and safety in PK and use that knowledge to guide the Phase III.

I think it's important, Alethia, that these exploratory, clinical end points are, in fact, exploratory. I think in the course of this year, where patients will be exposed on a limited basis to drug treatment, I would be surprised if we see changes on those end points that are of note. But we'll certainly report all of the data when we import the data later in the year.

Can I sneak in one other one?

Yes, please.

Okay. So when you think --

Your first one was very short. It is two and a half.

Awesome. So when thinking about FAC pricing, I know it is early. Just when you're thinking about going into a Medicare population predominantly and orphan drug pricing, how do you reconcile all of that in your mind? What are your initial thoughts?

Great question. Barry, you want to handle it?

Alethia, as we've discussed, we think that when we look at the FAC population and the opportunities that we're developing to intervene earlier in the disease, and the number of patients, that the pharmaco economics support orphan-like pricing. As we develop the data, we'll share more thoughts on that as the Phase III gets going and we get closer to market.

Clearly, there is a significant cost in the management of these patients, the burden of heart failure and the implications are quite significant, quite expensive and obviously that's going to be a core part of the argument that we ultimately make if our data supports the efficacy level that we expect to achieve.

Great. Thanks, guys. Congrats.

Thank you.

Thank you. Our next question comes from Alan Carr of Needham & Company. Your line is now opened.

Thanks for taking my questions.

Hey, Alan, how are you?

I'm good. Thank you. First is on the burn for 2014, it looks like you're aiming for around a couple hundred million. I wonder if you could comment on that and then if I have that right. Also at what point do we start to see a contribution from Sanofi in terms of covering R&D? And then also I wondered if you could comment a bit on a couple of the newer programs that you all have disclosed, the AAT and ANG, a bit more about the opportunities there. Thanks.

All right. So Mike, you want to handle the first part? And Akshay and I will handle the second.

Sure. Alan, you're correct. We finished the year with $350 million. If you add in the proceeds from Genzyme upon closing, it takes us over a billion dollars in cash and we're guiding greater than $825 million.

A little color on that, we mentioned that we expect G&A expenses to increase slightly in 2014. We will make a cash payment of $25 million to Merck upon that deal closing. And other things. But everything else that makes up that $200 million or so burn is related to R&D expenses to drive our program forward.

And your second part of your question was when do we expect the contribution from Genzyme from an R&D reimbursement perspective. That will start beginning in 2015. That was one of the terms in the agreement that that reimbursement would be started in 2015.

But then getting on to your other question, Alan, these are two really exciting programs that are moving through our pipeline. Certainly candidates for potential INDs in 2015 as they stand right now. One is our Alpha-1 Antitrypsin program. This is a gain-of-function genetic disease in the liver where expression of the genetic -- the mutated form of Alpha-1 Antitrypsin results in a liver injury and a liver fibrosis that ultimately, if untreated, can lead to cirrhosis and the need for liver transplant, if it's available in these patients.

Very high on that need. About 10,000 patients that are known in US and western Europe in the system. Very interesting opportunity by all accounts. Very clearly validated genetically.

Then the ANG program is a terrific target. It is a protein that's involved in both endothelial lipase as well as liproprotein lipase activity. It's been genetically validated in GWA studies where mutations are associated with increased risk of cardiovascular disease. And clearly, the knockdown of this target in our preclinical studies are associated with over 95% decreases in trig levels, in animal models, with well over 50% decreases of LDL cholesterol.

So the setting that we're interested in here would be severe forms of mixed hypertriglyceridemia and mixed hyperlipidemia where these patients are at risk for significant pancreatic -- pancreatitis and other cardiovascular risk factors. Akshay, anything to add?

No. You covered that very nicely, John. Thank you.

Thank you.

Thanks very much.

Thank you. (Operator Instructions). Our next question comes from Mike King of JMP Securities. Your line is now opened.

Hey, guys, thanks for taking the questions. If I keep all of my questions short, can I just keep going? (LAUGHTER)

How are you, Mike?

I'm good, thanks. Just a couple of technical questions. I just wanted to know, remind us there is a heart (inaudible) aspect to the Sirna acquisition and is there any concern on your part at all about FTC issues blocking it or requiring divestiture or other methods to complete the acquisition?

So, Lawrence, you want to handle that?

Yes. Hey, Mike. That process is on-going. We filed together with Merck for the clearance a while back and that process is on-going. And obviously we'll respond to any questions we get asked but we have no significant concerns. We put together the process with Merck. We're completely optimistic that we'll close hopefully in the near future. As John mentioned a few minutes ago, we'll go on integrating and advancing that technology.

Okay. And then I guess a clinical question for either Akshay or Barry. In FAC, you said you're also going to enroll individuals with A, just wondering if there is any difference between SSA and FAC or if there is any different progression or presentation, et cetera.

Yes, those diseases are very similar. FAC is mutation-based TTR cardiomyopathy. The most common mutation predisposing to that is this mutation [13221i] which is prominent in African Americans although there are many others as well. The majority of those patients, particularly the [3122i] patients will present in their 60s with heart failure and go on to have disrhythmias, diastolic dysfunction. Sadly, median survival is on the order of two to four years.

The SSA patients have a TTR cardiomyopathy that mediates by wild-type TTR. They tend to present a few years later, typically late 60s, 70s but they're very similar clinical echo cardiographic biopsy and other features and their clinical course tends to run true (inaudible - background noise) to what I described for FAC and the median survival there is also pretty poor. So, they're more alike than different. And most people think of them very similarly.

Okay. So there's not going to be any confusion about the readout when the studies -- when the Phase IIs are over?

No. The kinds of readout -- everything from the biomarker aspect such as BNP and troponins are commonly utilised in the study of those two cardiomyopathies. Echo, cardio MRIs, technician scan, and a variety of other imaging modalities are commonly used in both settings. And then of course, the very concrete clinical end points, six-minute walk test, hospitalization, mortality, the kind of stuff that's used in heart disease. So, there is a plethora of things to choose from there. We're working hard to define the details of that Phase III study.

Okay. I've got some others but I'll jump back in queue and give some other people a shot.

Thanks, Mike.

Thank you. Our next question comes from David Friedman of Morgan Stanley. Your line is now opened.

Hi. This is Brianne calling in for Dave. Thanks for taking my call.

Hi, Brianne, how are you?

I'm good. How are you guys?

Good.

Just a quick question on the ALN-TTRsc Phase II program. Will you be doing MRI or other measuring to look at amyloid changes in the heart?

Yes. We will. And I think as we were discussing earlier with Alethia, the focus this year in terms of data will be safety and TTR knockdown et cetera to guide the Phase III. Those end points will be more important and interesting to follow in the long run as those patients roll over into the open label extension study corresponding to the Phase II program.

Thanks.

Thank you.

Thank you. Our next question comes from Mike King of JMP securities. Your line is now opened.

Wow, that was quick.

That was quick!

(LAUGHTER) I'm not even prepared. (LAUGHTER) So I just wanted to ask Mike about the commentary about G&A because it seems to me like your G&A ought to be going up more since you're going to be ramping up, more advanced programs with larger patient numbers, if you push forward with some of the other pipeline like whatever TMP. That costs money, as well. So I'm wondering how you get away with that.

Mike, you mean G&A or R&D?

Well, I guess both. You need --

Well, R&D definitely. That's going to go up.

Mike, the main components of our G&A expenses are clearly public company costs and costs to support our IP portfolio so we do expect certainly a slight increase in 2014 as the Company grows with that. But from an R&D perspective, as I mentioned, we certainly expect a significant increase in 2014 to support all of these newer programs as well as the more advanced programs.

Okay. So just -- so then to be clear, any head count, the majority of any head count increases would go through R&D and not G&A.

That's correct.

Okay.

We keep a relatively flat G&A in this Company and again, I think the only notable place where there will be an increase and it's slight increase relates to the increased costs on the IP for the folio from the Sirna acquisition when that closes.

Right. Fair enough. Just as far as the -- John, your commentary about proof-of-concept. Just to be clear, how you guys are going to -- are you going to continue to look at it in sort of the same way that you have to date, meaning you get knockdown gene expression and reduction of culprit protein or are you at some point going to raise the bar as to what you guys consider to be proof-of-concept of your clinical candidates?

Well, we've already raised the bar so when we talk about the five to six human proof-of-concept data points we expect to have, it would be things like -- in the case of TTR, it is knockdown of this disease-causing protein. In the case of a program like PCSK9, it is LDL reductions. In a case of a program like our hemophilia program, it is increased thrombin generation. In the case of our C5 program, it is demonstrating that subjects treated with ALN-CC5 that their serum does not like PNA [teriphercites.]So these are the types of POC data points that are very derisking as it relates to the fundamental program advancement into Phase III toward approval.

Got it. Got it. Extremely helpful. Thanks, guys.

Thank you.

Thank you. Our next question comes from Stephen Willie of Stifel. Your line is opened.

Thanks, guys for sneaking me in.

Hi, Steve. How are you?

I'm doing well. How are you?

Good.

Just a quick question, I guess, regarding FAC and maybe just -- what's the level of comfort right now just around what a Phase III needs to look like, I guess specifically in terms of functional end points that FDA might want to see. I guess just given the fact that the Phase II data I think is being targeted as a late 2014 event which I guess overlaps with the start of a Phase III. Should we expect to get that data in conjunction with trial design specifics on a three? Thank you.

Yes. Akshay, do you want to handle -- first part? I can handle the second part.

Yes, sure. The design of the Phase III, Steve, it is February. We're still in the thick of it. We're confident, based on precedent and also literature that there are a number of ways to attack this. And also remembering its [lawful] indication.

It is a little premature to get in on what the primary end point design might be. We certainly will as we did for the FAP indication, later in the year we will be sharing it. But as we were discussing earlier on the call, the plethora of end points to think about here.

The cardiac bio markers are shown to be responsive in changes in heart rate and things like BNP and troponin. They're fairly responsive in other amyloidotic cardiomyopathies like AL cardiomyopathy The echo technician scan and other imaging modalities, cardiac MRI, many of them have key characteristics on TTL cardiomyopathy so that's important to think about. Then, as you mentioned, there are -- conventional clinical end points as well. So we're working to all of that, more details to come.

We'll be obviously talking to the FDA and EMA about those trial designs and getting alignment with them with our end of Phase II meetings and scientific advice meetings as well. But then in terms of how the news flow will work, Steve, that, too, is too early to tell. Obviously we'll aim to present the Phase II data at a scientific or clinical meeting toward the end of the year.

We'll have those data, in our hands at least in advance of presenting them. So those data are going to be useful and our dialogue with the FDA and EMA or at least some of those data. Not necessarily all the data. And stay tuned. I think it is too early in the year to say how we'll do it but we will do it.

Okay. So I guess with respect to the open label extension part of the study starting in mid 2014 --

Yes.

Then presumably, I guess you would need to get something onthe calendar with respect to FDA regarding an end of Phase II. So do you think, having less than six months of open label extension data around what could be exploratory end points would be sufficient at this point or --

Oh, Yes. We think the therapeutic hypothesis that is going to be evaluated in the Phase III is going to be very well supported by the time we have our discussions with the FDA both in terms of patient exposure -- keep in mind, we're also obviously finalizing and completing our chronic tox studies in non clinical species to support long-term dosing in our Phase III trial. And that's on-going, as well. There's a lot of other stuff.

We're also, of course, wrapping up our GNP production to get to a scale and final process that will support the Phase III dosing as well. So these are all things that go on behind the scenes that nobody ever seems to understand. But it is part of the heavy lifting that we do before we go into a Phase III.

Fair enough. Appreciate the color. Congrats on the great year.

Thanks, Steve. So... oh, go ahead.

I'm show no further questions at this time.

Okay. Look, thanks, everyone for joining us on this snowy afternoon. We fully expect that 2014 will be another exciting year for Alnylam. We're off to a great start. We look forward to updating you as the year progresses. Have a good and safe rest of the day. Bye-bye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.