Alnylam Pharmaceuticals Inc (ALNY) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Alnylam Pharmaceuticals conference call to discuss their first quarter 2014 financial results. There will be a question-and-answer session to follow. 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, President and Chief Operating Officer; Akshay Vaishnaw, Executive Vice President and Chief Medical Officer; and Mike Mason, Vice President of Finance and Treasurer. Lawrence 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 2, 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 and broader genetic medicine 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 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 annual 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.

Thank you, Cynthia. Welcome, and thanks, everyone, for joining us this afternoon. The first quarter and recent period have truly been game-changing for Alnylam and our continued efforts to advance RNAi therapeutics as a whole new class of medicines. For starters, I think there is little doubt that our recent alliance with Genzyme is transformational for both the advancement of RNAi therapeutics and also for our commitment to and prospects for building a leading independent biopharma company that delivers value to patients and then to our shareholders. This alliance provides Alnylam with expanded development in commercial opportunities for our Alnylam 5x15 and broader genetic medicine pipeline through Genzyme's established global infrastructure and proven, in fact, pioneering, track record in rare diseases. Moreover, this alliance crystalizes 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 has also significantly solidified 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.

In addition, we are making terrific progress on our pipeline and have recently presented some key clinical and preclinical data, and Akshay is going to go through that in just a minute. But I want to highlight some key points and some highlights of these recent efforts. These include positive initial data from our Phase 2 open label extension study with Patisiran, which is being studied in patients with ATTR polyneuropathy; excellent progress on our ALN-TTRsc Phase 2 study as we are reporting today in TTR cardiomyopathy; initiation of our Phase 1 study with ALN-AT3, an innovative RNAi therapeutic targeting antithrombin for the treatment of hemophilia; selection of development candidates in our ALN-AAT alpha-1 antitripsyn deficiency program; and as of today we are very pleased to announce that we have selected our development candidate for our ALN-CC5 complement C5 program. And then, finally, new preclinical results with ALN-PCSsc demonstrating very robust knockdown of PCSK9 and reductions in LDL cholesterol with the potential for a once-monthly and possibly even once-quarterly subcutaneous dosing regimen. We believe this profile could be highly competitive with anti-PCSK9 monoclonal antibodies in a very significant market opportunity.

Notably, our AT3, PCSsc, CC5 and AAT programs and in fact all future programs are using our Enhanced Stabilization Chemistry, or ESC GalNAc conjugate platform, which enables subcutaneous dosing with increased potency and durability with a wide therapeutic index. We are very encouraged by the potent knockdown and durability results emerging from our programs that utilize this improved technology.

In sum, we are very excited about our overall pipeline progress and the accumulation of the robust datasets, which are defining a very attractive product profile for our RNAi therapeutic medicines. Including the ability to clamp down disease targets in a predictable, sustainable and durable manner. We certainly look forward to sharing additional updates from our pipeline in the coming weeks. I will now turn the call over to Akshay to provide you with some more details. Akshay?

Thanks, John. We have indeed had a steady stream of data from our pipeline of RNAi therapeutics. I will start with Patisiran. Patisiran is our lead 5x15 program and is aimed at the treatment of patients with TTR-mediated amyloidosis, or ATTR, who have familial amyloidotic polyneuropathy, or FAP. This program is in a Phase 3 trial with over 10 sites active in four countries. As the Company's first ever Phase 3 study, this is a very significant milestone in our history and also for the entire field of RNAi therapeutics. The APOLLO Phase 3 trial is a randomized, double-blind, placebo-controlled study designed to evaluate the efficacy and safety of Patisiran in ATTR patients with FAP. The primary endpoint of the study is the difference in the change in neuropathy impairment score, called mNIS+7 between Patisiran and placebo at 18 months.

At the International Symposium on Amyloidosis just last week, we presented updated results from the Patisiran Phase 2 study, which was conducted in 29 patients with FAP, where patients received two doses of Patisiran administered in an intravenous infusion. In this study, and as you can see on slide 8, Patisiran demonstrated a rapid, dose-dependent and durable knockdown of serum TTR of up to 96%, and an average TTR knockdown of approximately 80%. Patients who were in this Phase 2 study have rolled over into an open label extension, or as we refer to it, OLE, study, where they are eligible to receive continued dosing with Patisiran. The early study is measuring a number of clinical endpoints every six months, including mNIS+7. All of the 29 eligible patients we expect 27 to roll over into the OLE study. We view this as an encouraging number of patients that have agreed to receive continued dosing.

At ISA, as shown here on slide 9, we presented initial positive results from 23 patients showing that the TTR knockdown observed following the first dose in the early study closely matched TTR knockdown shown in the Phase 2 study with a essentially superimposeable pharmacodynamics. Furthermore, repeat dosing of Patisiran to a sustained TTR knockdown of approximately 80% through up to day 168. This is equivalent to up to 8 doses of drug, and these data provide the first clinical evidence of sustained RNAi-mediated TTR knockdown in FAP patients be on two doses of Patisiran. In fact, for those of you that have been following our progress over the years, these data documents are the most clear and sustained RNAi effects in man to date.

Repeat dosing of Patisiran was found to be well tolerated with minimal adverse events and the use of our proprietary microdosing in the infusion regimen found to significantly reduce the incidents of infusion-related reactions. As long-term dosing continues, we continue to plan on reporting initial clinical endpoint data from this study in late 2014. And specifically, we expect the initial dataset to include six months mNIS+7 results from approximately 20 patients. We look forward to sharing these results later in the year.

Also at ISA we presented results of the natural history cross-sectional analysis study of 283 FAP patients. These findings showed rapid progression of the Neuropathy Impairment Score in correlation with disease severity, providing support for our ongoing Phase 3 APOLLO trial.

And, finally, we presented a preclinical update from our ATTR program. Specifically, we showed data confirming that the degree of TTR knockdown in a mouse disease model was highly correlated with regression of TTR tissue deposits. In addition, results from comparator studies with TTR stabilizer, tafamidis, and the TTR-specific antisense oligonucleotide, or ASO, showed our RNAi therapeutics have superior pharmacologic profiles. First, we showed that tafamidis had only a marginal effect on TTR tissue positioned in a mouse disease model, while our RNAi therapeutics resulted in significant reductions in TTR tissue deposits in all tissues examined.

In the case of comparative studies with the TTR-specific ASO, we showed clear evidence that the RNAi therapeutics were considerably more potent and achieved TTR knockdown with over 100-fold load tissue exposure in the liver and over 1,000-fold load tissue exposure in the kidney, which is considered an off-target tissue. In our view, these data strongly support the potential for INR therapeutics to emerge as the optimal therapeutic approach for the treatment of ATTR.

Also from our ATTR program, we are advancing ALN-TTRsc for the treatment of ATTR patients with cardiac amyloidosis. This program is in a Phase 2 study aimed at evaluating the tolerability and preliminary clinical activity of ALN-TTRsc in patients with familial amyloidotic cardiomyopathy, which is caused by autosomal-dominant mutations in the TTRG, or senile systemic amyloidosis, which is caused by idiopathic accumulation of wild-type TTR in the heart.

Based on encouraging enrollment in this study to date, we recently amended the protocol to enroll up to 25 FAC or SSA patients. The previous enrollment target had been 15 patients. We remain on track to present data from this trial in late 2014.

Patients completing our Phase 2 trial will be eligible to participate in an OLE study for further assessment of general tolerability and clinical activity with long-term dosing, and we expect to initiate that study in mid-2014.

We plan to begin a Phase 3 trial in TTR cardiac amyloidosis patients by the end of 2014. In addition, related to our ALN-TTRsc program, we have amended the protocol for our original Phase 1 study with ALN-TTRsc to enroll additional human volunteer subjects. As you may recall, we presented positive data from this study in September of last year. The amendment is being done to evaluate effects on nonweighted adjusted dose regimen in support of the plan Phase 3 trial.

In the quarter, we also made significant progress with our ALN-AT3 program for the treatment of hemophilia and rare bleeding disorders, advancing it into a Phase 1 clinical trial. 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 the potential for enhanced thrombin generation and improve hemostasis.

In the first quarter we initiated a Phase 1 clinical trial with ALN-AT3. As a reminder, this is our second GalNAc siRNA conjugate program to enter clinical testing. And the first employing our enhanced stabilization conjugate technology that John mentioned earlier. This Phase 1 study is being conducted in the UK as a single and then multidose escalation study comprised of two parts. Part A is a randomized, single blind, placebo-controlled, 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 pharmacologic doses. We are administering low doses of ALN-AT3 in this part of the study and we have a dose-escalation stopping rule to achieve no more than 40% knockdown of AT.

Part B of the study will be in 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-ATE in hemophilia subjects.

Secondary objectives include assessment of clinical activity as determined by knockdown and circulating AT levels and increase in thrombin generation at pharmacologic doses of ALN-AT3.

We remain on track to initiate Part B in mid-2014, and we plan to present initial clinical results from this study by the end of the year. We also plan to have an update from the ALN-AT3 program at the World Federation of Hemophilia meeting taking place next week.

I would now like to turn to ALN-CC5, a subcutaneously administered RNAi therapeutic targeting complement component C5 for the treatment of complement-mediated diseases. The complemented system plays a central role in immunity as a protective mechanism for host defense. But at this regulation results in life-threatening complications in a broad range of human diseases 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 an infection, and intravenous and C5 monoclonal antibody therapy have demonstrated clinical activity and tolerability in a number of complement mediated diseases.

We believe that subcutaneously administered RNAi therapeutic that targets C5 represents a novel approach for the treatment of complement mediated diseases with many potential advantages over eculizumab, the only anti-C5 monoclonal available to patients today.

Previously, and as shown on slide 13, we presented preclinical data from this program demonstrating the subcutaneous administration of ALN-CC5 in nonhuman primates led to up to 98% knockdown of serum C5, and up to 94% inhibitional serum hemolytic activity. This level of complement activity inhibition exceeds the 80% inhibition threshold that has been validated and is providing clinical benefit in patients with PNH.

We are very pleased to announce today that we selected our development candidate to move into clinical trials with this program. This new development candidate will also utilize our ESC-GalNAc technology. We believe this program can be a compelling opportunity for Alnylam, and we now expect to file an IND by the end of this year. In addition, we will be presenting updated preclinical results from our CC5 program in June at the Complement Therapeutics Meeting being held in Greece.

Moving to our cardiometabolic disease programs, we are excited to share our new preclinical data at the Arteriosclerosis, Thrombosis and Vascular Biology Meeting that was held last week. From our ALN-PCSsc program, we presented new single dose data in primates showing robust knockdown of PCSK9 of up to 96%, and a reduction in LDL-C of up to 77%. You can view those results on slide 14. Importantly, these results were observed in the absence of statin incurred administration. A single dose of ALN-PCSsc maintains less than 50% reduction in LDL-C for over three months, a level of durability that we believe support the once monthly and possibly once quarterly subcutaneous dosing regimen.

To say the least, this represents what we believe could be a highly competitive profile with anti-PCSK9 monoclonal antibodies. ALN-PCSsc also employs the Company's ESC GalNAc conjugate technology. We plan to file an IND or equivalent for ALN-PCSsc by late 2014 or early 2015. As a reminder, this program is partnered with The Medicines Company.

In addition at ATVB, we presented preclinical data from a new program, ALN-AT3, an RNAi therapeutic targeting APO lipoprotein C3 for the treatment of hypertriglyceridemia. Specifically, administration of a GalNAc conjugated siRNA targeting APOC3 resulted in knockdown of APOC3 levels of up to 95%, and a reduction in serum triglyceride levels of up to 68% with durability out to over 20 days. We plan to continue additional preclinical work in this program to finalize our development candidate.

And, finally, just this week we announced that we have selected our development candidate for ALN-AAT, an RNAi therapeutic targeting alpha-1 antitrypsin for the treatment of AAT deficiency associated liver disease. AAT deficiency liver disease is caused by accumulation of mutant AAT protein in liver tissue with subsequent liver injury, fibrosis, cirrhosis, and in some cases hepatocellular carcinoma. At the Digestive Disease Week meeting, we shared new preclinical data from this program that highlights the potential for ALN-AAT as a novel therapeutic approach. We are now initiating IND enabling studies with this program and have a goal of filing an IND in mid-2015. This would position ALN-AAT as the seventh clinical program as part of our Alnylam 5x15 guidance that we extended earlier this year.

In summary, I hope you agree that it's been an especially exciting time for us as we continue to lead the translation of the science of RNAi toward the development of innovative medicines. I will now turn the call over to Mike for review of our financials. Mike?

Thanks, Akshay. I will be referring to slide 16 for a discussion of first quarter 2014 financial results. This quarter we significantly strengthened our balance sheet with just over $1 billion in cash, cash equivalents and marketable securities. Our GAAP revenues for the first quarter of 2014 were $8.3 million as compared to $18.6 million in the first quarter of 2013. GAAP revenues this quarter included $5.5 million related to our collaborations with Takeda, $1.4 million related to our collaboration with Monsanto, and $1.4 million related to our collaboration with The Medicines Company.

The decrease in GAAP revenue this quarter compared to the first quarter in 2013 was due primarily to the recognition of the remaining deferred revenue under the Cubist agreement of $9.7 million due to the termination of that agreement in the first quarter of 2013.

Regarding the GAAP accounting related to the upfront payment from our recent Genzyme agreement, we recorded this share issuance using the price of our common stock on the date the shares were issued to Genzyme at closing, which was approximately $50 million in excess of the proceeds received from Genzyme. We are amortizing this difference of $50 million offset by the remaining deferred revenue of $33 million from our 2012 Genzyme alliance over a five-year period, resulting in an approximately $900,000 per quarter reduction in GAAP revenue.

Moving to expenses, R&D expenses were $43.8 million this quarter as compared to $22.2 million in the prior year period. This increase was due to additional expenses related to the advancement of our Patisiran and ALN-TTRsc programs, as well as license fees due to certain third parties as a result of our Genzyme collaboration. The Company expects that research and development expenses will increase for the remainder of 2014 excluding the one-time license fee in the first quarter due to Isis as a result of our 2014 Genzyme collaboration.

In addition, in the first quarter we incurred a $224.7 million charge to in process R&D expense in connection with the purchase of the Sirna RNAi assets from Merck. As a reminder, at the closing of the transaction, we paid Merck $25 million in cash and issued approximately 2.1 million shares of Alnylam common stock. We will issue an additional 378,000 shares of common stock to Merck upon the completion of certain technology transfer activities, which are expected to be completed in the second quarter of 2014.

G&A expenses were $8.9 million in the first quarter of 2014, as compared to $6.3 million in the first quarter of 2013. The increase in G&A expenses in the first quarter of 2014 as compared to the first quarter of the prior year was due primarily to an increase in consulting and professional service expenses related to business development activities. For the remainder of 2014, the Company expects that general and administrative expenses on a quarterly basis will remain consistent with the first quarter of 2014.

The non-GAAP net loss for the first quarter of 2014 was $26.3 million as compared to a non-GAAP net loss of $9 million for the same period in the previous year. The non-GAAP net loss for the first quarter of 2014 excludes the $224.7 million charge to in process R&D expense for the purchase of the Sirna RNAi assets from Merck.

With respect to guidance for 2014, we expect we will finish the year with greater than $825 million in cash, which provides us with a strong balance sheet to invest in a broad pipeline of genetic medicines and to maintain financial independence through to multiple product launches.

Of course, starting in 2015, we expect a significant share of our expenses on Patisiran and TTRsc programs to be shared with Genzyme pursuant to the terms of our alliance agreement. Accordingly, we see our non-GAAP net loss to be beneficially impacted by this alliance starting in Q1 2015. I will now turn the over to Barry.

Thanks, Mike, and hello, everyone. As you have heard from John and Akshay, we had a tremendously productive first quarter and recent period. In addition to kicking off the year with our Genzyme-Sanofi partnership, we completed a major acquisition of Sirna Therapeutics from Merck. Specifically, we have acquired the entirety of Merck's RNAi assets including their wholly-owned Sirna Therapeutics subsidiary.

Following the acquisition by Merck in 2006, Merck scientists made significant advances in siRNA chemistry and delivery, including GalNAc-siRNA conjugates, which are viewed to be best-in-class approach for liver 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 and cements our continued leadership in the RNAi field.

As part of the acquisition, we obtained over 125 issued patents. One of these patents is the McSwiggen patent, which was recently upheld in oral opposition proceedings in Europe. The McSwiggen patent estate broadly describes chemical modifications of RNAi therapeutics that we believe are critical for achieving drug-like properties in siRNA. Specifically, the McSwiggen patent covers chemical modifications in siRNAs that are required to achieve potent GalNAc siRNA conjugates such as those delivered in our ESC GalNAc conjugate platform. These patents are now owned and controlled by Alnylam. When coupled with our legacy Alnylam IP estate, we believe that the Merck-Sirna acquisition gives us the broadest and deepest patent portfolio in the field of RNA therapeutics and provides us and provides our partners an unparalleled level of exclusivity for our clinical and preclinical programs.

A final component of the Sirna acquisition was a couple of later stage preclinical assets. We view one of these as an attractive new opportunity for Alnylam and we look forward to sharing some of the details of the program with you in the future.

Let me now turn to our 2014 goals and guidance. First, as we announced at the start of the year, we now expect to significantly exceed our original 5x15 guidance. When we launched our 5x15 guidance in early 2011, we stated that we expected to have five programs in clinical development by the end of 2015. We now expect to significantly exceed that with guidance of six to seven programs in clinical development by the end of 2016, including at least two programs in Phase 3 and five to six programs where we will have achieved human proof-of-concept results. We view the coming period as one that promises to bring us closer to market with our Phase 3 trials, yield multiple data readout that we believe will provide expanded proof of concept, and broaden our opportunities with 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 3 APOLLO study. We believe this study will read out in about two and a half to three and a half years from now, and if positive, we expect that the study will enable possible NDA submission in the 2017 time frame. We also continue to enroll and treat patients in our Phase 2 OLE study, and we remain on track to share more findings from the study by the end of the year. Additionally, we continue to enroll patients in our Phase 2 ALN-TTRsc study and are on track to present data from that study later this year as well. Assuming positive results, we plan to start a Phase 3 study with ALN-TTRsc in the TTR cardiac amyloidosis indication by the end of the year.

Now, regarding our ALN-AT3 hemophilia program, where we initiated our Phase 1 study earlier this year, we expect to present initial data by the end of the year. And importantly, we will also have an update form this program next week at the World Federation of Hemophilia taking place in Melbourne, Australia.

Turning to other programs, we have been successful in accelerating our ALN-CC5 program, and we now plan to file an IND this year. From our ALN- AS1 and ALN-PCSsc program, we plan to file IND late this year or early next.

Over the course of the year, you can also expect to see us continue to advance our genetic medicine pipeline as we have done recently with ALN-AAT, for which we now plan to file an IND in mid-2015. As Mike said, we plan to end the year with greater than $825 million.

In summary, 2014 continues to be a very promising and extremely exciting year for Alnylam, and we look forward to sharing more updates from our pipeline in the coming weeks. Cynthia, I'd now like to turn the call back to you.

Thanks, Barry. We will now open the call up to your questions. As a reminder, we ask you to limit your questions to two each and jump back in the queue if you need to. Sam, we'll take questions next.

Thank you. (Operator Instructions) Our first question comes from Alan Carr of Needham & Company. Your line is now opened.

Hi, guys. This is actually Mark on for Alan. Thanks very much for taking my questions. I'm wondering if you guys could talk a little bit about how discussions with payers are going with ATTR. I know you talked about conducting some surveys with payers. I wonder if you could give us an update on that?

Yes, that's a great question. We just, in fact, a few -- about a month ago now we had an excellent panel here at the Company with payers. Barry, do you want to summarize the key findings?

Yes. The bottom line is the discussions are going incredibly well. We have talked to US private and government payers and we have been talking to payers throughout Europe, and with our Genzyme partnership have interfaced with payers in other parts of the world. I think to summarize it, the payers recognize that ATTR is an orphan disease and it is a fatal disease where after onset of symptoms people die within 5 to 15 years. They recognize that TTR is a pathogenic protein and are actually quite excited by seeing our data and ability knockdown or remove that pathogenic protein. It's not every day they run across a modality that actually reads out so early in the clinical trial. At least for the Phase 3 study that we have articulated now for APOLLO, there is complete buy-in that the mNIS+7 readout accompanied with a secondary endpoint should provide good proof and good health benefits for orphan-like pricing. So, I think we've got good buy-in there.

On TTRsc, we haven't yet declared exactly what the Phase 3 design looks like. We talked generally about it, but, again, they recognize that this is a fatal disease. Patients are very sick and there is extreme cost to the healthcare systems. And the kind of outcomes that we've been talking about are very attractive to them for this patient population as well.

Does that answer you question?

Yes, that's great. Thanks very much and good luck on getting everything going.

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

Thanks, guys, for taking the question and congrats on all the progress to date. I just wanted to maybe follow-up on that question on TTRsc, because I received a couple of questions from clients. Regarding perhaps the difference in the economics for that market relative to Patisiran and FAP, with respect to, I guess I missed it at ISA. But I understand there was a Pfizer epistudy of tafamidis population being more of a Medicare population, and whether that had any aspect on pricing and would that be less of sort of the orphan pricing and more towards pricing of some of the other drugs that are out there for rare disorders, like either the Aegerion drug or some of the drugs for PAH, etc. I wonder if you could comment?

Sure. Barry?

Yes. Mike, we're not at a point where we are crafting exact pricing for our drugs. But I think that today the cardiac amyloidosis patient consists of the FAC population, where the mutation holds and through genetic counseling you can track people and their families earlier, and then the SSA population in which the idiopathic form of wild type TTR creates a cardiac amyloidosis. In that disease, people are picked up in the healthcare system freely. Their disease may tend to be much, much older. The thought is that in the mutation side, because it's a known mutation, you can start picking up people earlier, we'll in fact be able to intervene earlier in the disease. And instead of people expiring in two to four years after disease diagnosis, people can live much longer with much less comorbidities, at least in our case, by removing the pathogenic protein. And if we can achieve that profile, there will be health economic arguments that achieve orphan-like pricing, and that's right now our perspective on it.

Okay. So, does that mean that you'd see a couple of Phase 3s, Barry, in terms of one Phase 3 for SSA and then another Phase 3 for the patients with the mutation?

Yes, Mike this is John. We believe at present, and we're beginning our dialogue with regulators as we speak, so we don't want to get too far ahead of our skis on this one, but we do believe that there is going to be benefit in studying these populations in Phase 3 trials separately. And so our current thinking is around studies that would look initially at FAC and then would also ultimately look at the SSA population as well. And, of course, that is subject to change if our dialogue with the agencies gives us encouragement to do something different, but at least as we sit here today, we think that's the right strategy with the goal of having a more homogenous population that we would study in our clinical studies. Akshay, anything to add to that?

No, I think that's exactly where our thinking is right now. From a clinical strategy and a regulator strategy viewpoint, it makes a lot of sense to us, but let's engage with folks and report back.

Yes, good. Does that answer your question, Mike?

Yes, it does. I'll jump back in queue.

Thank you. (Operator Instructions) Our next question comes from Marko Kozul of Leerink Partners. Your line is now opened.

Maybe just following up on the last one. So, with your latest thinking maybe being two different studies for SSA and FAC, can you comment on whether these would still be small studies, possibly for FAC, and does your dialogue with the agency suggest anything about risk associated with combining the two indications in a 300, 400 patient study?

Okay, good question. Akshay, do you want to tackle that one?

Yes. I mean, I will use the skiing metaphor again, let's don't get too far ahead of our skis, because I think we've been studying this whole landscape very carefully and as we were discussing with Mike King just now, certainly doing two separate studies to reduce heterogeneity seems like a smart thing to do. And we are working very hard in terms of thinking around endpoints and the trial design around those two populations, and we really want to engage with regulators. We are very excited about it. I think the pharmacodynamic activity strongly suggests that we will have a very significant clinical impact in both populations. But that's about as far as we can go today.

Marko, I'll just add one other thing, which we haven't yet presented these data. But not unlike our natural history dataset that we've generated with FAP, we've been looking very closely at rates of progression in different disease measures in the FAC and SSA setting. And so we have certainly been looking closely at those epidata sets to help guide our thinking about the Phase 3 trial design.

Terrific, thanks. And I actually had two of my own bigger picture questions. The first one being, while you're making progress with your Enhanced Stabilization Chemistry, GalNAc conjugate technology, can you give us your views on any growing trends in the space and in the delivery field towards an increasing number of companies exploring use of GalNAc conjugate strategies in (inaudible) --

Yes. Well, it seems like all roads lead to GalNAc at the end of the day. We were surprised at the ISA meeting to hear our friends at Isis talking about GalNAc conjugates now, and so -- and, of course, Regulus has been doing that for quite some time. I think the bottom line is that's a technology that is superior, it works. It works great. Of course, we have an approach with RNAi which is very potent with low tissue exposures, and so we feel that we are clearly at best-in-class approach. I think the latest PCSK9 data also highlights very important differentiation strategy, which is really once monthly, maybe even once quarterly type dose frequency. So, we are in a great position, but we are flattered that other companies are admiring our progress with GalNAc conjugates and are pursuing and advancing that approach as well. It's a good sign. It certainly provides some important validation of our efforts.

Thanks. And just a last one here. Looking out beyond 5x16 or 17, or 7x15, sorry, and some of your emerging programs, can you talk a little bit about your collective experience and what that is leading to as far as how quick you can go from bench to clinic with new programs that we may be seeing a year or two down the line?

Yes. You know, we are operating at about a 12- to 18-month clip from light bulb to the start of a development candidate that is robust and one that we believe in. And then you can add, depending on the program, six to nine months to an IND. So, we are at a pretty fast clip from where we are. And we are really at a stage of significant expansion of our pipeline. I think you are seeing that already. We will have two additional INDs this year, so by the end of the year we will have five programs in clinical development. You know, the sixth rolling into early 2015, and AAT obviously will be in the clinic next year as well, so that will take us up to seven programs. We are seeing a pretty remarkable increase in our productivity and that we only expect to continue significantly.

Let me just add to that, Marko. As you know, our business model, at least from the genetic medicine pipeline, is commercialized in North America and Western Europe, assuming Genzyme is in. So, we have been very diligent about the targets we are picking, how good those targets are, what the clinical development plan looks like and what our commercial opportunity, aligned with the strategic imperatives of the 5x15 progress. So, you are seeing, as John said, an acceleration extension of our pipeline. But for programs we think in a meaningful impact on patients represent robust development plans with very significant commercial opportunities that we will commercialize on our own.

Thank you. Our next question comes from Geoff Meacham of JPMorgan. Your line is now opened.

Hey, John and Barry, this is Carter on for Geoff. Just some quick questions on AT3. I know in the past you spoke about directing this agent for inhibitor patients. Can you give us some additional color on how you are thinking about this market opportunity, thinking of number of patients, frequency of dosing, things like that? And then with the coming approval of new agents for hemophilia A and B, with the promise of lower rates and neutralizing antibodies, how at all has this colored your thinking? Thank you.

Yes. So, Carter a couple of comments. One is, just as an overlay, and Akshay, you should jump in here, too. We are going to be presenting some updated data next week at the World Federation of Hemophilia, so that will be, I think, helpful in understanding the overall opportunity and promise with this approach. But we do view there to be significant unmet need in the inhibitor population, but also a significant opportunity in patients that are using their replacement factor on demand. And that's a very significant proportion of the US population and in fact populations in many parts of the world, where rigorous prophylaxis is not always adhered to. And so that's the population where the possibility or the opportunity of a once-weekly subcu injection to reduce their need for on demand therapy would be highly attractive for those patients. So, I think it's the inhibitor patients, I think it's on demand patients, I think it's rare bleeding disorder patients with Factor X deficiency, VII deficiency, V deficiency, possibly Type 3 von Willebrand. It's an opportunity that will expand substantially over time. Akshay, do you want to add anything to that?

No. I mean, that is completely right. The on demand situation is very interesting because it comes from a number of angles, one of the chief ones being kind of the therapies are intravenous and many patients that may have been on prophylaxis during childhood fall out, then, as time goes on because they can't maintain three times a week IV, etc. And so there are lots of youth and adult patients, about 50% in the US with hemophilia A and B, who are on demand because they can't manage their lifestyles with an intravenous therapeutic. And so what we hear from speaking to experts is that for individuals like that, a subcutaneous once a week would be extremely advantageous and attractive.

And I think, Carter, you mentioned something about the newer agents and the rate of inhibitor formation. There is certainly no rigorous evidence at all that suggests that there is a change in the incidence of inhibitors with some of the newer agents that are emerging. So, I think we will just have to wait and see how that plays out. In the meantime, there are an estimated 2,000 to 3,000 patients worldwide that have inhibitors who are bleeding frequently because they have no prophylactic option, and so we view that an important unmet need.

Thank you.

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

Maybe just a follow-up on a prior question. With respect to the cardiomyopathy indication, are you guys thinking about endpoint selection in the context of pricing? Are you looking maybe at something more that is more along the lines of an adventure of an endpoint, maybe like what tafamidis is using as being something that could secure greater pricing power with payers? Or do you think you could maybe go ahead with some kind of measurement of surrogacy and then supplement with longer term outcomes data?

Well, Steve, I actually don't know how you can have any pricing discussion without a consideration of what the endpoints are, both primary endpoints of the study and also secondary. So, that is factored into every aspect of our thinking on this. And certainly, again, we are in the midst of discussions with regulators on the program in the Phase 3 trial design, and so let's get through that process. We certainly know the range of different endpoints that can be considered. It is pretty well documented in the literature and there is certainly a lot of thinking that we have had the benefit of with our KOLs to help guide us in this regard. But it would be premature to sort of say what we think the endpoint would be. Again, that trial will be starting toward the end of the year this year, and it's not locked down yet from a protocol endpoint. Barry, do you want to add anything to that?

No, I think you got it.

And would your kind of review of the natural history data confirm that a 30-month follow-up in terms of looking at CV-driven events would be appropriate from a powering perspective?

I don't think we view that as needed, Steve. I think with any of these diseases, there is one question that the longer you treat the more likely it is that it's better. But we believe that earlier endpoints than that duration can be used in the design of the study. And, again we have evidence to support that and we will bring that evidence in front of our friends in Washington and in the EU, and we will certainly get their alignment with that, and we'll report back at the right time.

Okay. And the just with respect to CC5, how are you guys thinking about establishing proof of concepts there?

Great question.

Would that something of a switching study or do you think you could actually do something on a head-to-head basis or find naive patients?

Yes. Akshay, do you want to handle it?

Yes. I mean, Steve, there are a number of components to think about there and we're mapping that all out very carefully. But the types of things to think about, and of course the experience with eculizumab in the literature provide rich information on this. So, for example, reduction in red cell hemolysis is associated with a rapid reduction in a serum biomarker termed LDH, or lactate dehydrogenase. Another aspect is taking serum from patients or individuals that have been treated with a drug like ALN-CC5 and treating PNH red cells with it and assessing the level of hemolysis. And that could be a powerful insight into how a drug like ALN- CC5 can help PNH patients. And ultimately the outright clinical evidence such as change in hemoglobin, change in hemolytic (inaudible) transfusion needs. And so there really is a very rich landscape here and I think we are very confident that both in the short term with very sophisticated but informative in vitro studies, biomarkers, as well as in the long run with clinical studies, we can unequivocally show the benefit of our drug.

And I think I would add just one other interesting population, Steve, which we are certainly looking at is patients that have polymorphisms in C5 that are completely resistant to eculizumab, and that is certainly a very small population but one that does define potentially an interesting development strategy that we might consider.

Okay, thank you, and congrats on the progress.

Thank you. And our final question comes from Mike King of JMP Securities. Your line is now open.

I was just wondering, would you -- I just wanted to go to the milestone chart here and look at APOLLO. You've got ongoing accrual in the Phase 3 throughout the rest of 2014, but I was wondering if you might want to venture a guess as to when we could contemplate full enrollment of APOLLO?

Well, that's a great question. I mean, look, it's going well. It's not without a lot of effort on our part, but I must say, and I wouldn't have said this, and I didn't say this the last time we were on a call a while back, that we feel encouraged with where we are. We are making good progress. The ISA meeting was another encouraging data point. It helps with accrual and we know where our competitors are at this point in time, and we are aiming to meet them at the same [adcom] or beat them to that adcom. So, that is where we are heading.

Okay. And you said 10 sites, 4 countries, did I hear that correctly?

That's right. That's correct.

And what would you think you would ultimately get to in terms of sites and in how many countries?

Well, we're going to keep that a little bit close to our vest. As you can imagine, we are playing a little bit of a tactical chess game here with the other side, and I don't think we need to disclose that information.

Okay. Anything you want to say, John, I know you guys were excited going into the ISA regarding the epidata that was going to be presented there on FAP. Just perhaps for the record comment about how it makes you feel like you powered APOLLO for success?

Yeah, I mean, Akshay, you should comment on that. I mean, it's a very important data point for us.

Yes. We had looked at available datasets at the time of designing the Phase 3 study, and I think the full presentation we gave and (inaudible) did a superb presentation summarizing all the natural history data we have and comparing it to what was learned from tafamidis and (inaudible) experiences. And it all points to, you know, the same thing, which is about a 15 to 20-point increase in mNIS+7 per annum, and that is exactly how we have powered our Phase 3 study. So, I think we feel vindicated in the approach and are confident that we've got a very robust statistical design and approach for the Phase 3 studies. So, lots of data there and beyond that, lots of understanding of how changes in this relate to the severity of the patient disease and things like that. So, but all in all, I think our Phase 3 design is spot on.

And just as a reminder, Mike, we have been conservative in our [effect] size sort of more in the study, which I think is appropriate, and so we are powered to show as little as a 37.5% difference. But obviously we expect more than that from a performance standpoint, but we'll have to see how the data speak at the end of the day. But we have been conservative in how we've designed the study. We want it to be robust and unequivocal. We think that is important.

Can you talk about how the 17-point in deterioration is impacted by the late versus the early onset and how that breaks down proportionally? I know you stratified, but I just wonder if in your enrollment criteria if you expect to mirror what the distribution is in the patient population?

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

I am trying to get my head around your question. We have stratified.

Well, I thought the late onsets deteriorate faster in your mNIS+7, so I'm just wondering what the balance might look like in the population at large versus what you're going to enroll in APOLLO and how you adjust for that?

I think the APOLLO infill population will reflect what is going on out there. We are not sort of capping off the early onset versus late onset. We haven't set any particular level. But what we are doing, importantly, is making sure the early versus late are balanced across the two arms. So, the ratio that end up will be very likely the disease out in the real world. In addition, we have a very important real world aspect about it I think is the range of mNIS+7 scores that allow you to be in the study, which are in the 5 to 100 range. And they really kind of reflect what -- 10 to 100 range -- they really reflect what's going on out there in terms of what the clinicians see and what the patients are suffering with. And very different from the very early tafamidis population that was barely symptomatic and has scores below 10 on average.

So, I think it's going to be a well balanced study, but it's going to be a very real world study encompassing the full spectrum of mutation with active disease and getting back to the natural history study of Professor Adams. The rate of change is going to be brisk during the course of the study, which is important for an intervention like Patisiran.

Right, okay. Thanks again for taking my questions. Appreciate it.

Okay. Well, thanks, everyone, for joining us this afternoon. I think we are off to a great start in 2014. We fully expect this to be another exciting year for Alnylam and for advancing RNAi therapeutics to patients. Look forward to talking to you in the coming months. 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.