ALN-TTR02 Phase II Results Preview

Although the phase I results for ALN-TTR01 in late 2011 and ALN-PCS02 in first half of 2012 should have caught the attention of the diligent biotechnology investor, it was the highly potent knockdown (>90%) reported for ALN-TTR02 in July of last year that put the spotlight back on RNAi Therapeutics. The results for the TTR amyloidosis drug candidate not only benefited Alnylam, they were a blessing to the entire field of RNAi Therapeutics allowing it to raise ~$300M over the ensuing 12 months.  It is therefore an understatement that the phase II results for ALN-TTR02 to be disclosed in about two weeks will be closely watched across the industry and investors.

Possibly hoping to relieve some of the tension around the event, Alnylam has long telegraphed what we should expect the results from this open-label study to be: just look at the multi-dose non-human primate data and this is what you will see repeated in humans.  Nevertheless, I doubt that the generalists are buying the argument that non-human primates studies are highly predictive of clinical results, at least in terms of gene knockdown.   Just witness the valuations of other RNAi Therapeutics companies that have reported impressive non-human primate data (one could call that a buying opportunity).

Study primarily designed for safety…

The phase II study for ALN-TTR02 is primarily one of safety for repeat administration of ALN-TTR02.  The initial two-dose study design seems an overly cautious approach given that products enabled by Tekmira’s SNALP delivery technology have already been dosed for several months in patients with cancer.  This could be due to differences in how the different divisions within the FDA view the safety of SNALP and/or RNAi product candidates. 

With regard to hypersensitivity reactions, which are probably the most critical hurdle ALN-TTR02 needs to overcome, multi-dosing should actually the lower the incidence of infusion reactions (desensitization) which were the major safety issue in the phase I single-dose study.  With regard to spleen toxicity, multi-dosing is predicted to increase risk (cumulative).

Overall, given the dose (study geared towards the 0.3mg/kg dose) and history of ALN-TTR02, I am quite optimistic that no nasty surprises will emerge on the safety front.  This would also be consistent with plans by Alnylam to reduce the use of immune suppressants in the extension phase of the study.

…but efficacy could drive volatility

Although we have already been told what the efficacy results should look like and that Alnylam is aiming for an 80% knockdown, I expect analysts to pay close attention to efficacy given that Alnylam is in an arms race with ISIS/GSK.  As a reminder, in the 300mg/week regimen that has been chosen for the ongoing phase II/III study, a ~70% knockdown was reported with the ISIS/GSK antisense compound.  However, while a phosphorothioate antisense compound for liver-targeted gene knockdown given weekly has a sustained knockdown effect over time, there are wider fluctuations between peak and trough knockdowns for a SNALP-delivered RNAi Therapeutics administered only once a month.  In other words, watch the time-course of the knockdown, especially after Alnylam announced that it is considering a once-every-3-weeks regimen for the extension phase of the study.

Wall Street ascribes most of Alnylam’s value to TTR amyloidosis program

The reason, of course, why the TTR amyloidosis data is expected to cause major volatility is because two thirds if not more of Alnylam’s market value is based on a discounted cashflow analysis for ALN-TTR02 and ALN-TTRsc in the polyneuropathy and cardiomyopathy markets, respectively.  It is estimated that with premium orphan pricing (you will be surprised how precisely Alnylam’s pharmacoeconomic models will arrive at a fair price of $300,000 per patient year), peak sales revenues for Alnylam’s TTR products will be somewhere between $1.3-$2.0 billion.

I am optimistic that the TTR product candidates will make it to market and dominate over any phosphorothioate-based antisense competitor.  However, there remain important uncertainties as it relates to pricing and reimbursement, especially in some of the European markets where many of the FAP patients reside.  Furthermore, there is always an element of chance when it comes to avoiding prohibitive toxicities from sequence-specific off-targeting in a chronic treatment setting.

Over time, however, it does look like the rest of Alnylam’s pipeline is finally gathering steam.  With the porphyria and AAT deficiency candidates ALN-AS1 and ALN-AAT, respectively, and the intriguing complement inhibitor program, additional differentiated, high-value orphan opportunities are emerging.  It remains to be seen, however, whether the GalNAc-siRNAs are potent enough to exploit the potential of RNAi Therapeutics for these diseases or whether other delivery technologies enabling deeper knockdowns would have been appropriate.  This concern e.g. applies to the hemophilia program where my feeling is that only deep knockdowns will allow you to see clinically meaningful improvements in clotting times.  Unfortunately, I am still trying to find results from clotting assays (which are standard in the field) and not just the thrombin measurements that Alnylam is providing.

Trading the event

As Alnylam's share price has tripled since last year's announcement of phase I results and given that the two-dose design won't do that much for additional de-risking, I am speculating that only in a very bullish, confident biotech market that seizes on every news opportunity there is much upside from the phase II top-line results.  Because of the nervousness that has been creeping into the markets the last two weeks, I am taking a small bearish position ahead of the event, in a way hedged by much larger long positions in other RNAi Therapeutics companies (Arrowhead Research, Tekmira, RXi Pharmaceuticals) which are more attractively valued on a relative basis and should benefit from renewed RNAi Therapeutics investor interest as a result of the data release.

Last reminder that the GTC RNAi Therapeutics conference will start this week.  Don't forget to mention 'RNABLG13' for 20% discount on registration.