Alnylam Pharmaceuticals Inc (ALNY) 2018 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Alnylam Pharmaceuticals Conference Call Third Quarter Earnings. There will be a Q&A session to follow. Please be advised that this call is being taped.

I would now like to turn the call over to the company.

Good morning. I'm Christine Lindenboom, Vice President of Investor Relations and Corporate Communications at Alnylam. With me today on the phone are John Maraganore, Chief Executive Officer; Barry Greene, President; Akshay Vaishnaw, President of R&D; Manmeet Soni, Chief Financial Officer; and Yvonne Greenstreet, Chief Operating Officer.

For those of you participating via conference call, the slides we've made available via webcast can also be accessed by going to the Investor page of our website, www.alnylam.com.

During today's call, as outlined on Slide 2, John will provide some introductory remarks and provide some general context; Akshay will review recent clinical updates; Barry will provide an update on our commercial progress, including the initial ONPATTRO launch performance; Manmeet will review our financials; and Yvonne will provide a brief summary of upcoming milestones before opening the call for your questions.

I would like to remind you that this call contains 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 disclosed in our most recently quarterly report on file with the SEC.

The press release and related financial tables, including a reconciliation of GAAP to non-GAAP measures that we will discuss today can also be found on the Investor page of our website. We believe non-GAAP measures provide useful information to management and investors regarding our financial condition and results of operation. 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 obligation to update such statements.

With that, I'll turn the call over to John.

Thanks, Christine, and thank you, everyone, for joining the call this morning. The third quarter of 2018 was, without a doubt, a major milestone quarter for Alnylam. In August, the U.S. FDA approved ONPATTRO, a first-in-class therapy for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults. And in Europe, the EMA approved ONPATTRO for the treatment of hereditary ATTR amyloidosis in adult patients with Stage 1 or Stage 2 polyneuropathy. ONPATTRO was the first-ever RNAi therapeutic to receive regulatory approval, representing the culmination of nearly 2 decades of work to transform Nobel prize-winning science into commercial reality, work that has been pioneered by the team here at Alnylam. I couldn't be more proud of the hundreds of Alnylam employees, both present and past, that made this happen.

Barry will provide details on the initial launch in just a minute. But on a high level, we are pleased with the initial acceptance by physicians and patients with 125 start forms received in the U.S. during the first 7 weeks of ONPATTRO launch through September 30. We believe this encouraging demand likely reflects a bolus of patients from our expanded access program, or EAP, and also from patients known to the APOLLO investigators. Accordingly, we don't think this number of patients reflects a true run rate at this very early stage of our launch, and it will be important to see results from several quarters before we can more accurately forecast ONPATTRO results.

We do believe, however, that the advancement of ONPATTRO into commercial stages brings us 1 step closer to achieving our Alnylam 2020 goals of becoming a global multiproduct commercial-stage company with a robust development pipeline and sustainable research engine. We are now witnessing the maturation of our pipeline with multiple late-stage clinical programs, including recent positive interim analysis results from the ENVISION Phase III study of givosiran and initiation of the ILLUMINATE Phase III program with lumasiran as well as the imminent start of the HELIOS-A Phase III study for ALN-TTRsc02.

With this progress, we plan to launch new RNAi therapeutics essentially on an annual basis in each of the coming years, assuming positive results in our pivotal studies and favorable regulatory reviews. In addition, we are encouraged by the progress from our partners of The Medicines Company and Sanofi, with inclisiran and fitusiran, respectively, with both programs currently in ongoing Phase III trials. Beyond these late-stage programs, we are also advancing our earlier stage pipeline, with recent news, including a CTA filing for ALN-AAT02, our first clinical programs to utilize our ESC+ GalNAc-conjugate technology and recent platform progress on extrahepatic delivery in the CNS and eye, a very exciting advance in our leading RNAi efforts.

Altogether, these latest developments of all of our clinical pipeline in platform in a way that we believe can make a difference in patients' lives and also fuel long-term value and sustainable growth. Accordingly, we hope you'll be able to join us in New York City on December 6 for our R&D day, where we'll review these programs in much more detail and also our earlier-stage clinical pipeline as well.

With that, I'll now turn the call over to Akshay to say more about our latest pipeline progress. Akshay?

Thanks, John, and good morning, everyone. It has indeed been a remarkable quarter marked with substantial progress across our late and early stage pipeline, along with our partners' programs in addition to exciting progress on our platform assets.

Let me start with patisiran, now known by its commercial name, ONPATTRO. In addition to the approval and subsequent launches of ONPATTRO in the U.S. and EU, we were very pleased in July that the results from the APOLLO Phase III study were published in the New England Journal of Medicine. We believe the publication of the APOLLO results in the journal underscores the clinical benefit and encouraging safety profile of ONPATTRO demonstrated in APOLLO and reinforces the strong therapeutic potential of this medicine for people living with the polyneuropathy of hATTR amyloidosis.

More recently, in September, we were pleased to see exploratory cardiac endpoint data from the APOLLO study, published in the journal, Circulation. We believe these data highlight the potential of patisiran to favorably impact certain cardiac manifestations of hATTR amyloidosis, and we believe the results support further study of patisiran in hATTR amyloidosis patients with cardiomyopathy.

I'll now move on to discuss ALN-TTRsc02, our follow-on program in development for ATTR amyloidosis, which utilizes our ESC GalNAc-conjugate technology, enabling infrequent low volume subcutaneous dose administration.

We're pleased to announce HELIOS-A, a pivotal Phase III study for TTRsc02 in patients with hATTR amyloidosis, has been aligned with the FDA and EMA feedback. HELIOS-A is designed as an open-label study in approximately 160 patients, with hATTR amyloidosis with co-primary endpoints of mNIS+7 and the Norfolk Quality of Life scores at 9 months comparing the effects of TTRsc02 to results from the placebo arm of the APOLLO Phase III study of patisiran.

Secondary endpoints will support a comprehensive assessment of disease burden. Importantly, given the findings from the exploratory post-hoc analysis conducted in APOLLO, we're prospectively specifying additional secondary end points on death and hospitalization, which will be assessed at the 18-month time point.

In addition, certain cardiac parameters will be included as endpoints. This study will also include a small reference arm of approximately 40 patients receiving ONPATTRO, although no formal comparisons on the co-primary endpoints will be conducted between the TTRsc02 and ONPATTRO arms. We're on track to start the HELIOS-A study in the coming weeks and plan to start additional Phase III studies of TTRsc02, including in wild-type ATTR amyloidosis in 2019 and beyond.

Let's move on to givosiran. Our investigational RNAi therapeutic in development for acute hepatic porphyrias. In late September, we announced positive top line interim analysis results from the ENVISION Phase III study of givosiran. The interim analysis cohort consisted of 43 patients with acute hepatic porphyrias, of which 23 were randomized to receive givosiran and 20 to receive placebo. Givosiran successfully met the prespecified interim analysis endpoint of a reduction in urinary levels of aminolevulinic acid, or ALA, relative to placebo in acute intermittent porphyria patients at 3 months, with the p value less than 0.001. Urinary ALA is the biomarker reasonably likely to predict clinical benefit. And this outcome suggests that monthly givosiran administration has the potential to significantly reduce the frequency of attacks in these patients.

As of the data cut off date of August 22, serious adverse events occurred in 5 out of 23 or 22% of patients on givosiran and in 2 out of 20 or 10% of patients on placebo. There was 1 treatment discontinuation, which occurred in a patient on givosiran, who experienced an increase in the liver transaminase ALT to greater than 8x the upper limit of normal, but was subsequently resolved.

We now look forward to reporting top line results on the annualized attack rate primary endpoint from the full study's 94 patients in early 2019 likely in March. In the meantime, with FDA support, we plan to initiate a rolling submission of an NDA for givosiran in 2018, with full clinical sections submitted in mid-2019, assuming positive results.

I'll now turn to recent progress with lumasiran, an RNAi therapeutic we're developing for primary hyperoxaluria type 1 or PH1. At the European Society of Paediatric Nephrology meeting last month, we presented updated positive results from the Phase I/II study of lumasiran. These results show a 75% mean max reduction in urinary oxalate, a metabolite that's overproduced in PH1 and which complexes with calcium and deposits in kidneys, leading to a painful and recurrent syndrome of kidney stone that contribute to the development of significant renal impairment. All 20 patients achieved oxalate lowering to less than 1.5x the upper limit of normal. As of the cut-off date, there were no discontinuations from treatment. SAEs were reported for 1 out of the 3 placebo patients and 5 out of the 20 received lumasiran. None were related to study drug. Adverse events were generally mild or moderate and were reported in all 3 placebo patients and 19 of the 20 lumasiran-treated patients.

Injection site reactions were reported in 3 patients receiving lumasiran and were mild to moderate in severity as well as self-limiting. More recently, at the American Society of Nephrology meeting, we reported new clinical results with lumasiran from the ongoing Phase I/II, the only study showing plasma oxalate results that demonstrate the 75% mean max reduction relative to baseline, with 50% of patients achieving plasma oxalate levels within the normal range. These reductions in plasma oxalate paralleled the sustained reductions in urinary oxalate. For those patients who have transitioned to the Phase II OLE study, which is designed to evaluate long-term safety and efficacy, the tolerability profile of lumasiran remains generally consistent with the data from the Phase I/II study. As of the data cut-off date, there were 2 SAEs, neither of which were assessed as related to study drug.

Another key highlight from the recent period of lumasiran was the initiation of ILLUMINATE-A Phase III study. This is a randomized double-blind placebo-controlled study in approximately 30 patients with PH1. Patients will be randomized 2:1 to receive either 3 mg per kg lumasiran or placebo, given a 3-monthly loading doses followed by quarterly maintenance doses. Primary endpoint in the study is the reduction of urinary oxalate at 6 months relative to baseline in the lumasiran group versus placebo. The study will also include a number of key secondary and exploratory endpoints and will evaluate additional measures of urinary oxalate, estimated glomerular filtration rate, safety, tolerability and quality of life. We expect to report top line results from ILLUMINATE-A in late 2019, and if positive to initiate regulatory filings beginning early 2020.

In addition to this pivotal trial, we also have aligned with the FDA on the trial design for ILLUMINATE-B, a Phase II/III study of lumasiran in patients less than 6 years of age with preserved renal function. We plan to initiate ILLUMINATE-B study in 2019.

Turning now to our partner programs, The Medicines Company announced recently that the Independent Data Monitoring Committee for the ORION Phase III program for inclisiran conducted its fourth review of safety and efficacy data and recommended that the Phase III studies continue without modification. This is important as this safety database for inclisiran now provides nearly 1,900 years of patient exposure to an investigation RNAi therapeutic representing the industry's most comprehensive body of safety data for an RNAi therapeutic. We very much look forward to seeing the top line Phase III results for inclisiran, which The Medicines Company expects to report in mid-2019. With fitusiran in development for the treatment of hemophilia and rare bleeding disorders, our partner, Sanofi, has continued enrolling and dosing patients in the ATLAS Phase III program.

Turning now to our earlier-stage pipeline, I'll start with patisiran, our investigational RNAi therapeutic targeting complement component C5. We announced in our press release this morning that we've discontinued the Phase II study of patisiran in atypical hemolytic-uremic syndrome as a result of recruitment challenges. We now plan to focus on our efforts on the Phase II study in IgA nephropathy and expect to start this study in the coming months. In the meanwhile, we filed our CTA for ALN-AAT02, an investigational RNAi therapeutic for the treatment of alpha-1 antitrypsin deficiency-associated liver disease. This is the first clinical program that utilizes our ESC+ GalNAc-conjugate technology, which offers increased target cell activity and on wider therapeutic index. We look forward to initiating Phase I studies by the end of this year with initial data expected in 2019.

Finally, I'll close with a very exciting preclinical results we presented last month at the OTS Meeting. Data from non-human primate showed that a single intrathecal injection of an siRNA conjugate resulted in broadly distributed and durable target gene silencing across the brain and spinal cord. Intrathecal administration of this normal siRNA conjugate was found to be generally well tolerated in both rats and NHPs. We're very excited about the potential for RNAi therapeutics to achieve potent, robust and highly durable target gene silencing in the CNS, where there are a large number of opportunities. Also at OTS, we showed new preclinical results demonstrating delivery of siRNA conjugates to ocular tissues in rats and NHP. Specifically, a single intravitreal injection led to approximately 98% silencing of TTR and mRNA in the retinal pigment epithelium of NHPs and the incomplete knock down of TTR protein. There were no notable safety findings related to the intravitreal administration of siRNA conjugates.

And with that, let me now hand it off to Barry to discuss our commercial progress. Barry?

Thanks, Akshay. In addition to the tremendous R&D progress over the last quarter, we made exciting progress with the launch of ONPATTRO. Through 7 weeks between the U.S. launch of ONPATTRO on August 13 and the end of the third quarter, we received, as John highlighted, 125 U.S. patient start forms. Start forms are requests that come to our Alnylam Assist patient hub to guide fulfillment of an ONPATTRO prescription by a physician. We believe these are a reliable measure of demand, although they do not capture all demand, which might otherwise be fulfilled outside our patient hub through direct orders to our distribution channel.

In addition, while we expect the vast majority of start forms to result in patients receiving commercial drug, there will be start forms that are ultimately not fulfilled. Of the 125 start forms we received in the third quarter, around 60% came from patients previously participating in the patisiran EAP.

Now importantly, we've seen a diverse range of prescribers and physician specialties, including neurologists, cardiologists and hematologists, reflecting what we believe to be both polyneuropathy and mix polyneuropathy cardiomyopathy patient phenotypes. While we will not be providing any specific guidance on market assumptions or sales projections, it is important to note that we're in the early stages of the launch. We believe the initial start forms likely represent a bolus of patients with a significant number of patients converting from EAP and also diagnosed patients known to APOLLO investigators. Therefore, we don't necessarily expect this rate to be reflective of the future run rate. We'll need several quarters to process the initial bolus of patients before we can develop a truer understanding of the run rate of ONPATTRO demand.

As we previously discussed at this early stage of our launch, it will take a few months to get patients started on commercial drug after receiving the start form. We do not expect this time line -- we do expect this time line to decrease significantly as our launch progresses. We appreciate there are many questions from you about payer mix, prescriber base, patient genotype and phenotype. We expect to provide additional insights on these questions in upcoming quarters. In the meanwhile, we're very pleased with our launch, our ability to supply product immediately after approval, the receptivity to our field-based team and the initial feedback from health care providers and patients.

Our global rollout is also well on its way. We recently launched ONPATTRO in Germany, and we're pleased with our initial performance, with over 30 patients in Germany on our expanded access program. And while Germany represents an underdeveloped market for hATTR, we believe there are potentially several hundred patients in this market alone. Our commercialization efforts for the rest of Europe are also progressing well, and we look forward to updating you on our fourth quarter call.

In late September, we filed a Japanese NDA for ONPATTRO with the PMDA. Based on the accelerated review time line from an orphan drug, we expect to receive a regulatory decision in Japan in mid-2019. If positive, it would represent ONPATTRO's expansion into a very important market. We're in the process of building on infrastructure in Asia, with the initial focus on Japan. This includes building capabilities for sequencing the potential commercial launches in Asia, starting with ONPATTRO in Japan in 2019, and givosiran and then subsequent products thereafter if approved.

Further, as announced in our press release this morning, we'll soon be expanding to Latin America. We've hired Norton Oliveira as our Head of Latin America, who joins us from Gilead. Norton's initial focus is on building capabilities in Brazil, another important market for ONPATTRO.

Now turning to our medical education patient diagnosis efforts, we believe that there is about 3,000 diagnosed patients in the U.S. and about 2,000 in Europe with hATTR polyneuropathy. And believe from epidemiology there's 20,000 to 30,000 hATTR amyloidosis patients worldwide with polyneuropathy as part of their clinical presentation. Of course, it will take time to educate the healthcare community, since early and proper diagnosis is the biggest challenge in this rare disease.

Our medical affairs colleagues have been engaging closely with the hATTR amyloidosis community in the last several years to raise the disease awareness and improve diagnosis. As we've highlighted previously, our Alnylam Act program is a third-party genetic screening initiative aimed at facilitating diagnosis of patients suspected of having hATTR amyloidosis. As of October 31, more than 8,700 samples have been submitted and 584 have tested positive for pathogenic TTR mutation.

We're also aiming to improve education of healthcare providers and patients with targeted websites that provide information, education and additional resources for disease awareness, accurate diagnosis and patient care. Metrics across our HCP and patient website demonstrated a strong interest in educational resources related to ONPATTRO and hATTR amyloidosis. When we look at metrics like e-mail sign-ups, time spent on these website pages, there is notable engagement from key constituencies, including patients, caregivers, medical professionals from a spectrum of practice specialties and others.

In summary, Alnylam is now a commercial stage company. And while early, we're encouraged by our performance in our first 7 weeks. Longer term, we aim to bring you the same excellence and innovation as a commercial company as you've seen from Alnylam over the past 16 years as an R&D company.

With that, I'll now turn it over to Manmeet to review our third quarter financial performance. Manmeet?

Thanks, Barry, and good morning, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the third quarter of 2018.

I would like to take this opportunity to provide a brief overview of 3 key areas: our cash position, our third quarter results and our reaffirmed 2018 financial guidance.

Moving to Slide 21. Let me start with our cash balance. We maintained a solid balance sheet, ending the third quarter with approximately $1.27 billion in cash, cash equivalents, marketable debt securities and restricted investments, excluding equity securities.

As Barry mentioned, we will not be providing any revenue guidance on today's call nor we will be providing any guidance on market assumptions for up revenue potential. We will continue to evaluate the possibility of providing guidance once we have better visibility on the ramp of the launch, market dynamics and key metrics over the next several quarters.

Moving to our financial results for the third quarter, we begin to record net product revenues for the first time this quarter as a result of approval of ONPATTRO by the FDA on August 10, 2018. We recorded $460,000 of ONPATTRO net product revenue during the third quarter, with the mid-August launch date.

Prior to the third quarter of 2018, our revenues were generated entirely through R&D collaborations. We recognized $1.6 million of collaboration revenue during the third quarter of 2018 as compared to $17.1 million during the third quarter of 2017.

Gross to net discount during the third quarter was higher than what we expect to be the normal run rate, due to certain startup, fixed costs and data fees paid for distribution of our product, which we recorded as contra revenue. There were no commercial contracting or discounting, which led to this higher gross to net. During the third quarter, other than fixed costs and data fees, most of our discounting relates to mandatory discounts for 340B entities. As we discussed in our launch call in August, depending upon the payer mix, we expect gross to net discount to be approximately mid-20s based on payer mix, resulting in approximately $345,000 of average annual net product revenue per patient. We will continue to update on our expectation of gross to net discount as we progress with the launch of ONPATTRO and actual payer mix.

Moving to cost of goods sold. Our cost of goods sold for the quarter were $137,000. Certain manufacturing costs of ONPATTRO were expensed prior to regulatory approval, and therefore, are not included in cost of sales during the current period. Cost of goods sold for the third quarter consisted primarily of fixed period expenses and onetime costs that resulted in higher cost of goods sold than what we expect it will be as of a percentage of revenues in future quarters. In the long run, we expect normalized cost of goods sold to be in mid- to high teens as a percentage of ONPATTRO for our revenue, including royalties paid to third-parties.

Moving to other operating costs and expenses. Our GAAP R&D expenses were $129.9 (sic) [$139.9] in the third quarter of 2018 as compared to $95.3 million in the third quarter of 2017. Non-GAAP R&D expenses were $94.2 million in the third quarter of 2018 as compared to $80.2 million in the third quarter of 2017. The increase in non-GAAP R&D expenses was due to increased compensation and related expenses as a result of an increase in headcount during the period as we continue to expand and advance our development pipeline. Non-GAAP R&D expenses exclude stock-based compensation expense.

GAAP SG&A expenses were $116.5 million in the third quarter of 2018 as compared to $47.6 million in the third quarter of 2017. Non-GAAP SG&A expenses were $74.4 million in the third quarter of 2018 as compared to $36.8 million in the third quarter of 2017. The significant increase in non-GAAP SG&A expenses was due primarily to an increase in commercial and medical affairs headcount and commercial-related services to support corporate growth and the launch of ONPATTRO in 2018. Non-GAAP SG&A expenses also exclude stock-based compensation expense.

As you would have noted in the press release issued this morning, stock-based compensation expenses were significantly higher during the third quarter of 2018 as compared to previous quarters. The increase was due primarily to an accounting for nonrecurring performance stock awards -- stock-based awards as a result to the approval and launch of ONPATTRO and clinical achievements with respect to our givosiran Phase III study. We would expect stock-based compensation expenses to be significantly lower during the fourth quarter of 2018 as compared to third quarter of 2018.

Turning to losses. The GAAP net loss for the third quarter of 2018 was $245.3 million or $2.43 per share on both basic and diluted basis as compared to a net loss of $122.9 million or $1.34 per share on both a basic and diluted basis for the third quarter of 2017. The non-GAAP net loss for the third quarter of 2018 was $157.3 million or $1.56 per share on both a basic and diluted basis as compared to a non-GAAP net loss of $97 million or $1.06 per share on both a basic and diluted basis for the third quarter of 2017.

Non-GAAP net loss for the third quarter of 2018 and 2017 excludes stock-based compensation. With respect to guidance for 2018, we remain on track to end 2018 with approximately $1 billion in cash, cash equivalents, marketable debt securities, restricted cash and restricted investments, excluding equity securities. We continue to expect our 2018 annual non-GAAP R&D expenses will range between $420 million to $460 million, and 2018 annual non-GAAP SG&A expenses will range between $280 million to $320 million.

I will now hand it Yvonne to review our upcoming goals. Yvonne?

Thanks, Manmeet. Without a doubt, 2018 has been a landmark year for our organization, but we still have some exciting milestones to look forward to before we close the books on the year.

Starting with givosiran, we intend to initiate a rolling submission of a new drug application by the end of this year, with full clinical sections to be submitted in mid-2019, assuming positive inpatient results.

With TTRsc02, we expect to initiate the HELIOS-A Phase III study in patients with hereditary ATTR amyloidosis in the coming weeks. Having recently filed our CTA for ALN-AAT02 in alpha-1 liver disease, we now expect to initiate the Phase I/II study by the end of the year.

We also plan to initiate a new clinical program this year with ALN-HBV02 in development for the treatment of chronic hepatitis B virus infection, which we're advancing in partnership with Vir Biotechnology. And as Akshay further highlighted, we have also made exciting strides in CNS delivery of investigational RNAi therapeutics in NHPs, and we remain on track to select our first CNS development program by the end of this year. We plan to recap all of this progress at an R&D day in New York City planned for Thursday, December 6.

Let me now turn it back to Christine to coordinate our Q&A session. Christine?

Thank you, Yvonne. Operator, we will now open the call for questions. (Operator Instructions)

(Operator Instructions) Our first question comes from Alethia Young with Cantor Fitzgerald.

This is Irina on for Alethia. On ONPATTRO, one of -- on the identified patients, what percentage of them do you think are in TTR centers currently and that you might be able to reach by their next doctor visit? And then can you maybe speak to how frequently that might be, so when we might see some turnover there?

Sure. Good question. Barry, you want to handle that?

Yes, it's a great question. As we've talked about, this is a rare and often not looked for disease, even in centers of excellence, patients can be misdiagnosed. So what we're talking about are the potential number of diagnosed patients. Keep in mind that many of these patients are on ongoing or upcoming clinical studies. So they're not all available for commercial patients. We see physicians asking their patients to come in every 6 to 12 months for a checkup. So it's hard to give any specific numbers. Our team's out there educating, and we are seeing an uptick of awareness. We are seeing an uptick in centers of excellence and the excellent start of amyloidosis centers across the United States. So we're encouraged by the work thus far and the continued growth of available patients.

Our next question comes from Alan Carr with Needham & Company.

Wonder if you could talk a bit more about in the process -- getting these patients ready and generating, well, revenue from them? A bit more detail about how long this might take and the steps involved in that? And then also, can you talk about Europe too? How you expect that to play out in terms of rollout across countries and that sort of thing?

Great. Barry?

Yes. So Alan, we've talked about this a little bit before. So the way to think about patient availability really is in 3 different buckets. The first, our patients on the expanded access program. As I mentioned, the current -- the initial start forms represent about 60% of those start forms represented EAP patients. We previously mentioned that over 100 patients from EAP were in the United States. So we see those continuations to roll out over the next several months. That requires the start forms to be filled out, insurance to be verified, infusion centers, including home and centers to be picked. And so once that's in place for a patient, it continues on an ongoing basis. The second bucket of patients are patients known to APOLLO investigators or sites that, for whatever reason, were not in any clinical studies. And then third represents truly new patients and the future run rate. As I mentioned on the call, it will take several quarters to work through the EAP and currently diagnosed patients. And we truly won't know our future run rate for several quarters to come. In terms of the process, in the United States, once a start form is received, it's processed by Alnylam Assist. It undergoes insurance verification, as I mentioned, selection of infusion site and then orders to begin. At the very beginning, we anticipated that could take several months. As we ramp up, that will move down to weeks rather than months. You also asked about Europe. As we mentioned on the call, the launch has started in Germany. We're encouraged by the start, and we'll have update in future quarters. All other countries require, as you're well aware, processing of health technology assessment discussions. We're encouraged by what we're hearing from each country right now and we're not anticipating a lot of headwinds in that direction. It really is about patient education, finding patients, urgency to treat and getting patients on drug.

Do you have a sense of timing in terms of working through these individual countries, which ones might come next, that sort of thing and the sense of when?

We do, but we're not going to share that. I mean, it's obviously a competitive landscape out there, Alan. And we're -- we have a specific staging strategy that we have formulated and we're executing on. And we have extensive discussions with HDAs to facilitate reimbursement in specific countries. But we're just not going to share those details for obvious competitive reasons.

Understood. And any -- what if you can comment just quickly on AAT02, what sort of changes you made there? Do you have some more confidence with this one compared to some of the safety issues that showed up with the previous one?

Yes. Akshay, you want to handle that?

Yes. Alan, and for AAT02, it utilizes our ESC+ GalNAc technology. And essentially, this is some very nice signs from our research group to show how we can modify a single residue in the C sequence, which is the critical part of the siRNA, that allows for the cleavage of the target. And this modification, which was published and shared extensively, allows maintenance of the on-target effects so we expect very good and potent knock down of AAT, but diminishes the likelihood of any off-target effects, which may be responsible for transient ALT changes of the type that we saw with previous molecule AAT01. We're very excited to take that in the clinic, and test the hypothesis to see what modification improves the therapeutic index I've anticipated from the animal work.

Our next question comes from Paul Matteis with Stifel.

This is Ben Burnett on for Paul Matteis. Just one on ONPATTRO. Understanding that it's early days, I guess, do you have a sense of what your average price will be? And how does this compare with what you're expecting from the value-based agreements in the $345,000 number that you cited back in August?

Sure. Barry, you want to start?

Yes. As you said, it's very early on in the launch, and we really will need several quarters to give you a true color on the dimensions that will matter, namely payer mix, institutional ordering with prespecified government discounts. So it's very early. We think that the $345,000 number is the right number to use in your projections. And as you analyze how many patients you think are commercial, that's the right number. In terms of impact of value-based agreements, we can say that very positively we've had tremendous discussions with the payers. And because of the proactive nature of our offering here, we've had enthusiastic reception to talk about medical benefits and patient finding and other dynamics. The potential discounts on the VBAs really won't kick-in until 4 or 5, some times 6 quarters in as patients become VBA patients. So that's sort of a -- that's going to be a next year thing.

Anything to add, Manmeet?

Yes, we'll have to estimate some discounting on the VBA upfront and we will do that, but we expect that $345,000 is still being the net effective price, including the VBA discounting.

Yes. And what I was talking about was actuals not necessarily GAAP accounting.

Yes. For GAAP accounting, we would be recording the discount as we do those sales and record revenue, but $345,000 is a good estimate. As we mentioned in that launch call also that -- the 23% to 24% discount make sense because of either 340B mix, right, which could be the primary and other portion could be a VBA discounting if it comes in.

Does that help -- does that answer your question?

Yes. So if I could just clarify, so if these VBA agreements, as you get more quarters of experience and see -- like for example, is there a scenario where there is less discounting than you're expecting, which used to restate past quarters. I guess, how do you account that from accounting perspective?

Sure. Obviously, we'll have to see the -- our real experience, but all our VBAs will have our best price production clause. So I think we'll have the higher number to be reserved at the beginning, but obviously, we'll release those results as we will have the actual experience. You're totally right.

Our next question comes from Anupam Rama with JPMorgan.

Can you remind us how many patients were enrolled into the EAP globally? I think you said there were 30 in Germany, but maybe you could give us some patient counts for some of the near-term launch countries like Canada and Brazil as well?

Yes, there were over 200 patients globally in the EAP. And so obviously, the majority of them were in the U.S., right? So those patients, 60% of the 125 start forms that we received come from EAP patients directly, okay? So the remaining 40%, you can do the math, have not yet converted as of September 30. Of course, there's been conversion since September 30. And then, of course, we have over 40 patients that we commented on in Germany in the EAP, and we do expect those patients to convert to commercial drug in due course. So that's -- that EAP, obviously, has been put in place to help patients with ONPATTRO, but it also does represent an early source of patients for commercial drug.

Our next question comes from Ted Tenthoff with Piper Jaffray.

I wanted to ask about givosiran and sort of the filing. So with the decision to wait for the full data and seek full approval, how does that filing process work from here?

Yes. Thanks, Ted. Let me start and then Akshay should comment as well. What we -- after obviously, the positive interim analysis results which we're very excited about, we certainly met with the FDA to discuss the approach for the NDA filing. And we got full support from the FDA to start rolling submission with the -- with our data, which is terrific. But as we discussed the timing for the full results with the FDA, which are now scheduled to be in the March time frame of next year, it really -- there was really no time advantage -- substantial time advantage to file with the interim analysis data for an accelerated approval in light of the timing for when the full results would become available, in light of the fact that the FDA would likely need to do a PDUFA extension to accommodate the full data results that they would see after they were available in March. So for all those reasons, it makes more sense for us and the FDA concurs to file with a full approval path as opposed to the interim analysis path. Of course, we'd be doing the NDA submission starting with the rolling submission this year, so that'll help hasten the review of certain nonclinical sections of the givosiran NDA. Anything else to add, Akshay?

Yes, I think the rolling submission, of course, will also allow earlier submission of the CMC sections and the agency can go on and review that. And then in March also, when we get the full data, we then look forward to filing the final clinical section. And so we'll guide exactly on the anticipation around the completion of the NDA filing. But as many of you know, we completed the patisiran filing within 90 days. So we look forward to an aggressive approach here as well. We think we can do that. And we'll get a very complete label with all the data and corporate label, which I think is great for physicians, patients and payers.

Yes. And also, one other added benefit, Ted, is it aligns our U.S. and European filing strategy. Before we were going to be submitting on an interim in the U.S. and then waiting for the full data for Europe. Now we will be using the same single data set essentially to file both in the U.S. and Europe, and that is much more efficient. So at the end, we're obviously committed to bringing givosiran to patients as quickly as possible. But the full -- the compression of time between our faster-than-expected enrollment in ENVISION and the interim analysis conduct just made it a bit of a moot point to file to the interim.

Next question is from Gena Wang with Barclays.

Mainly on ONPATTRO launch. Just wondering did you get any like different feedbacks from doctors in Europe versus U.S., especially in the patients with mixed phenotype? And also, any impact from tafamidis expanded access program?

Yes. Barry, do you want to comment?

Yes, Gena. So I think the feedback from healthcare professionals across the world has been fantastic. It's been a while, but the APOLLO data really resonated with people. When you have a progressive, debilitating, fatal disease and we see a halting of disease progression and a reversal in certain disease symptoms, so that's resonated from -- across the world. The 1 difference and you highlighted this between U.S. and other parts of the world is that, that physicians in other parts of the world have had experience with tafamidis and have witnessed their patients progress on tafamidis. So there's a lot more enthusiasm for potentially earlier intervention where tafamidis might have been used. We want to see how that develops over time and after we see what happens with Pfizer and their launch, and their market entry. Right now, people are enthusiastic about ONPATTRO in the United States and in Germany, and we'll see as we launch in each country what the uptake looks like.

Okay. Any impact from tafamidis expanded access program?

Yes, Barry?

Yes. It's -- again, it's very early in the launch. But Gena, we do expect that there will be some patients who might have -- with nothing else available might have been an ONPATTRO patient. But with potential EAP available for tafamidis, their physician may use -- may choose the EAP for tafamidis. It's hard to know what that number looks like. Tafamidis in general, we do anticipate that, that being used for wild type and for TTR cardiomyopathy patients. We believe that based upon data and physician enthusiasm, that ONPATTRO is clearly the choice for polyneuropathy or the mixed phenotype.

Okay. Just one quick question regarding this quarter revenue. I think a rough calculation about like 10, 15 patients -- may be a revenue from 10, 15 patients. Just wondering if you can share your estimate processing time to receive the insurance coverage?

Yes. Do you want to handle that, Barry?

Yes. So I can't really comment on numbers of patients. Keep in mind that we understand patient demand from start forms and from other orders that happen to our channel that come outside the start forms. When a start form comes in, insurance processing can move very quickly and site selection can move very quickly. Others take a bit of time as we understand patient insurance background and infusion site. As I mentioned, right now, from start form to order fulfillment, it can be very quick or in some cases because of patient and location can take months. We do anticipate those timelines shortening as we refine the process. And clearly, once the patient is on drug, has the site and ordered, we are seeing reorders come in, which is very gratifying to see.

Our next question is from Terence Flynn with Goldman Sachs.

I was just wondering if you can give us any more color on U.S. reimbursement dynamics thus far with respect to what you're seeing on the coverage side at either the commercial or government level? And then, any color you can provide on October start forms?

Well, we can't help you with October start forms, Terence. That's -- that'll be the fourth quarter results, which we may provide color at the beginning of the year, in concert with one of the key investor conferences that happen at the beginning of the year, but the full results will be in February. Barry, you want to handle the other question?

Yes. So I can tell you that government reimbursement is going well and is fast. And then, on the commercial payer side, and remember, we've highlighted that with the VBA's signed or in discussion, we anticipate I think about 70% of commercial patients covered under VBAs. We have been enthusiastically met with the payer conversations. We have not seen headwinds on the payer side. And in fact, still a color, we've actually been reviewing medical benefits with several of the payers, so that they make sure that they're getting it right and can speed product to patients. So I think they understand the debilitating and devastating nature of this disease and appreciate the potential that ONPATTRO brings to the patient that they're covering.

Okay. Can you give us a sense of where you stand in terms of coverage of commercial lives right now versus where do you think you'll be like year-end or first quarter?

Yes. That's the level of color that given just as very, very early stage of the launch, Terence, we're going to wait a little bit further into our commercialization efforts before we provide that type of visibility. We obviously have internal numbers for the 125 patient start forms we've received. We know the mix, but that's the level of granularity that we'll wait till probably a quarter or 2 before we provide that type of color.

Next question from Vincent Chen with Bernstein.

This is Peter for Vincent Chen. Congrats on the launch. I just had one quick question. What are the gating factors with effect to starting the TTRsc02 study in the cardiomyopathy patients? And when are we likely to learn more about the design, for example, whether it's head-to-head or whether it's -- it would have a comparator arm?

Yes, thanks for that. It's a very important question. Obviously, we are very, very keen on getting ALN-TTRsc02 evaluated in the cardiomyopathy setting both for wild type and hereditary ATTR. We do currently believe that a study that compares TTRsc02 to tafamidis is the right type of study that makes the most sense for clinicians and patients. That is the study that requires the approval of tafamidis before we can provide tafamidis as a study drug comparator. So we await that approval. So we'll start next year is really the time frame, and we'll just have to wait till tafamidis is approved. Anything to add to that, Akshay?

No, I think that's it.

Next question is from Madhu Kumar with B. Riley FBR.

So let me ask a little nagging question on start forms. Do your start forms allow for questions around first-degree relatives for genetic disorder like TTR?

Yes. Barry, do you want to handle that?

Yes, I can handle that. The start forms are pretty simple. It's patient name, insurance information, genotype and the fact that they have documented neuropathy. We do offer through Alnylam Assist access to patient education and genetic counseling. And we are working with the centers that are recommending genetic counseling. And we are seeing a more favorable uptake by patients and now receiving genetic counseling now that therapies are available.

Okay. And following from that, to what extent do you -- like these type of index patient and then genetic counseling reach outs kind of contribute to your launch strategy for ONPATTRO in hereditary TTR?

Yes. Barry?

Yes. So for all players involved in hereditary genetic disease, as you called it, the index patient, genetic counseling is the critical part of what we will see. We believe that there will be siblings. There will be children of patients found. But again, the majority of patients are out there and not diagnosed. So the -- most of the launch and the run rate will come from newly diagnosed or newly found patients that have symptoms, but were wandering our healthcare system before appropriately diagnosed.

So to that point, is that the same both in the U.S. and Europe? Or is -- can they like class people to say that like in Portugal, it's really genetically well-defined? Or is the idea that this strategy is going to be kind of universal across geographies?

I think it's universal across geographies. Even in endemic areas, where diagnosis rates are good relative to the rest of the world, the experts believe that they're still only catching about 50% of patients. And yes, as you mentioned Portugal is a unique situation. There's a number of diagnosed patients that just aren't on any therapy because of the country's affordability. So those are all dynamics that will play into the commercial side of our equation.

Our last question will come from Do Kim with BMO Capital Markets.

This is Keith Tapper on for Do. Just wanted to know -- well, first congratulations on the launch. I wanted to know the kind of patients that you're seeing that are the early adopters on ONPATTRO, like severity of disease, level of PN versus CM, the ones that are not coming from the EAP program?

Yes. Barry, do you want to handle that?

Yes. I think it's too early to give any color on that other than, as I mentioned, we are seeing a variety of patients both polyneuropathy and mix phenotype coming from a broad range of prescribers, neurologists, cardiologists, hematologists. So it gives us a sense as to the broad range out there that are finding these patients.

Thank you, everyone. This concludes today's question-and-answer session. I will now turn the call back over to today's speakers.

All right. Well, thanks, everyone, for joining us on the call. These are exciting days for Alnylam, for RNAi therapeutics and most importantly, for patients. We are pleased with the R&D and commercial progress we're making, and we look forward to updating you on our continued progress in the coming weeks and months. Thank you very much.

Thank you, everyone. This concludes today's teleconference. You may now disconnect.