Trading in Alnylam Pharmaceuticals (ALNY) shares has been choppy since my last update, and all year frankly, with a small decline in the share price since that last update in late September. Since then, the company has reported another good quarter of Onpattro sales, as the healthcare community learns more about how to work around the COVID-19 pandemic, as well as further positive data on multiple programs, including the early-stage ALN-AGT program in hypertension.

While a pause in a Phase III study of fitusiran (managed/controlled by partner Sanofi (SNY)) is a negative development, updates on Oxlumo and ALN-AGT have been more positive, leading to a small net improvement in my estimated fair value, taking the fair value to a little over $160. Two more Alnylam compounds should receive FDA approval before year-end, and 2021 is set to see multiple significant clinical developments, including the initiation of a study for a compound that works outside the liver. Given a high-quality pipeline, the potential to expand its technology into new treatment areas, and solid growth potential in its approved compounds, I continue to believe that Alnylam is a biotech stock worth owning at these levels.

Onpattro Sales Continuing To Recover From COVID-19 Disruptions

Despite the predictions of some Alnylam perma-bears, the company has seen prescribing doctors and patients adapt to the new circumstances created by COVID-19 and the disruption to Onpattro prescriptions, dosing, and revenue has moderated. Revenue rose 24% sequentially in the third quarter, beating expectations by about 3%, with 21% qoq growth in the U.S. (after a 13% decline in Q2) and 27% growth in ex-U.S. markets (after 16% growth in Q2). Inventory stocking played some role in the third-quarter performance, but patient counts improved 14%, as did patient compliance.

Givlaari revenue rose 52% qoq, making up just under $17 million of Alnylam’s $125 million reported revenue for the quarter and beating expectations by 6%. Alnylam has secured reimbursement for the overwhelmingly majority of its addressable market in the U.S., and while the ramp won’t likely be as impressive as it was for Onpattro, new patient identification should expand the market over time.

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ALN-AGT Looks Like A Viable Option For A Large Addressable Market

Alnylam had previously announced some preliminary efficacy data from its Phase I study of ALN-AGT, an RNAi drug to treat hypertension, but provided more extensive data at the recent American Heart Association annual meeting. The data was broadly consistent with the prior realize, showing a significant knockdown in angiotensinogen, a meaningful reduction in blood pressure, and a clean safety and tolerability profile.

Alnylam’s update included data from 60 patients with mild-to-moderate hypertension, 40 of which received the drug across five dosing groups (10mg, 25mg, 50mg, 100mg, and 200mg). The only adverse effect of note was a somewhat common incidence of transient injection site reactions (about 12.5%). None of the patients in the study were on active medical management of their hypertension, and baseline starting systolic BP was in the 135-141 range across the groups.

Efficacy data were encouraging. ALN-AGT produced consistent dose-dependent reductions in angiotensinogen (or AGT), with the 200mg dose showing a 95% reduction at eight weeks (at 97.6% at 12 weeks), and 90%+ reductions in the 100mg dose. Both the 100mg and 200mg doses delivered 10pt-plus reductions in systolic blood pressure, with the 200mg dose producing an average 11.0 and 7.7 mmHG reduction in systolic and diastolic BP, respectively.

As I mentioned in my May update on Alnylam, there is a wide range of opinions about how to best manage hypertension, but there’s broad agreement that a greater than 5mmHG reduction in systolic blood pressure is clinically meaningful, so I believe a 10-point-plus reduction can position ALN-AGT as a significant step forward in the treatment of hypertension. I also note that the administration profile of ALN-AGT could be a major factor in its commercial success. Patient compliance is a well-known issue with hypertension; there are numerous studies out there suggesting patient compliance rates of 50% or worse, with somewhat better compliance for medical management (pills) than for lifestyle interventions (low-salt diets, in particular). With ALN-AGT potentially suited to quarterly or bi-annual administration, patient compliance on the medical side would be significantly easier.

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It’s still very early in the process, though. Alnylam hasn’t even completed this initial Phase I study, with management intended to explore a 400mg and possibly 800mg dose in this study. Management is also intending to pursue a single-dose study in patients with controlled salt intake, a multi-dose study in obese patients with an active comparator (irbesartan), and an open-label single-dose study in combination with irbesartan.

A Modest Setback For Fitusiran, But Progress Elsewhere

While I have not seen a press release from either Alnylam or Sanofi, a joint statement from the World Federation of Hemophilia, European Hemophilia Consortium, and National Hemophilia Foundation indicated that Sanofi had voluntarily put a hold on its Phase III Hemo A study of fitusiran due to two non-fatal thrombotic events. Given that this was a voluntary hold and the events were non-fatal, I would expect Sanofi to resume the study within three months, but there is a risk that this pushes the timeline for the program back by three to six months.

Fitusiran is Alnylam’s compound, but Sanofi controls the clinical and commercial development, with Alnylam entitled to royalties. This program contributes about $20/share to my fair value estimate for Alnylam, so it is not a trivial concern. That said, thrombotic events are not rare in hemophilia management, Roche’s (OTCQX:RHHBY) Hemlibra has a black box warning for thrombotic events, and I don’t believe this will be a severe impediment to adoption.

Alnylam also provided more information from its ILLUMINATE-B study of Oxlumo (lumasiran) in pediatric patients. Treatment produced a 72% mean reduction in spot urinary oxalate at the six-month mark, and 50% of kids on the drug saw a urinary oxalate level of less than 1.5 times the upper limit of normal. While the short duration of the study likely contributed to the absence of change in the rate of kidney stone events, nephrocalcinosis improved in 8 of 18 patients and remained stable in the other 10.

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Alynlam should see FDA approval of Oxlumo relatively soon (the PDUFA date is December 3), as well as approval of its out-licensed cholesterol drug Leqvio (inclisiran) by year-end.

Management will give a more thorough review of its R&D efforts in December, with an R&D event scheduled for December 15 and 16.

Bottom Line

Given the thrombotic events seen in the fitusiran study and the updated ALN-AGT data, I’m modestly adjusting some of my valuation assumptions – reducing my estimate for peak market share for fitusiran and increasing my odds of the ALN-AGT compound reaching the market. These are relatively small changes, but they do lead to a small (around $4/share) increase in my fair value to over $161.50. With worthwhile upside, a strong pipeline, and an expanding set of addressable clinical opportunities, I continue to believe that Alnylam shares are worth owning for investors who can accept a higher level of risk and volatility.

Disclosure: I am/we are long ALNY, RHHBY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.



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