Alnylam strikes a big win for genetic medicine

What happened

Alnylam released excellent late-stage clinical results

The HELIOS-B data released yesterday for Transthyretin amyloidosis (ATTR, a cardiac disease) are highly promising, showing good tolerability and better-than-expected efficacy. This positions Alnylam to file for approval by year-end.

Looking at options data about the stock, this event had significant implied volatility (-50%/+50%). Indeed, as the clinical trial compared three groups: placebo, Alnylam's drug, and Alnylam's drug plus the standard of care (Tafamidis), the market was understandably on the edge about whether Alnylam's drug alone would demonstrate benefits.

Impact on our Investment Case

A lucrative disease of aging

ATTR amyloidosis is a progressive disease caused by the liver producing misfolded proteins (amyloids) that build up deposits in organs and tissues. These deposits damage the organs over time, especially the heart and peripheral nerves (where they tend to accumulate more). These conditions are known as cardiomyopathy and neuropathy. The onset is often late in life but devastating. 

Cardiomyopathy affects around 500k people worldwide (vs. 30k to 50k for neuropathy), and most patients die within 5 years of diagnosis. Accessing this market, an opportunity estimated to be worth more than $5bn in annual peak sales, could dramatically change the company's earnings profile. Alnylam sales in neuropathy alone are ~$500mn for a market 10 times smaller. 

The end of an unchallenged Pfizer reign

Since 2011, Pfizer has been the only player on the market with a drug that brings little benefit to patients with cardiomyopathy but is nonetheless a blockbuster. Last year, it had over $2.2bn in sales, at $225k per year per patient. The acceleration to blockbuster status came in 2019 when the drug obtained both labels for neuromyopathy and cardiomyopathy.

The issue is cost-effectiveness. The ICER, a US committee that calculates the cost-effectiveness of treatments, computed that it costs around $1.1 million per patient using tafamidis to gain 1.25 years of life in good health. The benchmark of cost effectiveness for drugs is considered to be about $100k per year gained. In other words, to be cost-effective, either Pfizer needs to drop its price by 90% or a better drug needs to be developed.

There is significant potential for developing a better drug, explaining why Astrazeneca, Ionis, Alnylam, Bridgebio Pharma, Prothena, and Intellia (among the listed companies) are all trying to compete in this field.

Data published by Alnylam in 2022 showing signs of improvement in one of the cardiomyopathy subtests gave us confidence in their ability to show better-than-expected results during Helios B. But that confidence had foundations set years prior.

Alnylam has been a strong conviction in Atonra's strategies since 2020

Since January 2020, when we opened a position on Alnylam we detailed why Alnylam pioneering RNAi was one of our strong conviction in genetic medicine.

What is RNAi? RNA interference (RNAi) is a natural process where small RNA molecules inhibit the expression of specific genes, preventing the production of certain proteins. Many diseases are caused by the production of defective proteins due to genetic mutations.

Alnylam has leveraged the designability of RNA sequences to achieve a significantly higher success rate in clinical trials compared to the industry average: 54.6% from Phase I to the end of Phase III versus 5.5%.

Over 20 years, with an R&D investment of just $3.5 billion, Alnylam has successfully developed four RNA interference drugs. This is in stark contrast to the average $6.1 billion and seven years Big Pharma typically needs to bring a single drug to market, highlighting the efficiency of Alnylam's R&D.

Moreover, Alnylam has made dosing convenient. In the Helios-B trial, patients only needed a twice-annual at-home injection, which is much simpler than the daily pills required by the current standard of care.

A boon for the other genetic medicine players

Alnylam's data benefit other genetic medicine companies as well. For instance, Ionis and Intellia, working on the same disease and part of our portfolio, have seen their stocks rise on this news, validating their targets. Both are on par to bring treatments on the market that would be cheaper than the industry average and with a way above-average success rate.

Additionally, Alnylam's advancements pave the way for the FDA to expedite the approval process for genetic drugs by issuing more guidelines. Recently, the FDA's lenient approval of Sarepta's treatment underscores its commitment to fast-tracking therapies for rare and relatively rare diseases. Throwing in that the Inflation Reduction Act now provides a longer protection period for the patents of biologics versus small molecules, it is clear that genetic medicine is a very attractive investment area.

Our Takeaway

A win for patients is a win for the entire biotech industry. Alnylam's successful data will enable it to fund additional clinical trials and boost investor confidence in genetic medicine.

At atonra, approximately 25% of our strategy is invested in genetic medicine, anticipating significant growth in this sector. Alnylam is now our largest holding in this space and is set to remain one of our top convictions.