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Alnylam (NASDAQ:ALNY) surprised investors with the announcement of pushing back the HELIOS-B data readout from early 2024 to June/July 2024. Analysts and investors were left trying to read the tea leaves of what this delay means for the odds of clinical success. It’s unusual for a Phase 3 trial endpoint to be abruptly changed at a time when investors were imminently expecting the data readout based on what the company stated just a few months prior. The uncertainty created a sizeable drop in the stock price. The question that needs to be answered is whether this change is a red flag or simply a smart move by management. This article will detail the changes being made in the trial and whether it warrants cause for concern.
When investing in biotech, it’s important to limit downsize exposure, and I believe this most recent change adds a degree of risk to the stock. While I remain long-term bullish on the stock, I’ve trimmed some exposure and changed my stock recommendation from a Buy to a Hold.
HELIOS-B Changes
In my previous article, Alnylam’s Huge Opportunity, I discussed in detail Alnylam’s approach to treating Transthyretin Amyloidosis (ATTR) in cardiomyopathy and how their Phase 3 trial, HELIOS-B, if successful, is a game changer for the company. In short, treatments for ATTR-cardiomyopathy are a steadily growing, multi-billion dollar market in desperate need of innovation and new treatment paradigms to stop/reverse this progressive, deadly disease. Since the article’s publication in early January 2024, the stock has retreated roughly 20%, in large part due to the confusion around changes and adjustments in the HELIOS-B trial. In the most recent conference call, the company did announce some surprising changes to HELIOS-B that warrant an in-depth review for current and prospective investors of Alnylam.
For quick background, Alnylam’s HELIOS-B trial is a Phase 3 clinical trial evaluating vutrisiran in patients with ATTR-Cardiomyopathy (CM). The company took the information learned from its failed APOLLO-B trial (ATTR-CM) and applied it to its HELIOS-B trial. First, HELIOS-B enrolled around twice as many patients (665) as APOLLO-B and followed their outcomes for nearly 3 times as long, or 36 months, in most patients. Through information gathered in APOLLO-B and Pfizer’s tafamidis Phase 3 trial, Alnylam found the majority of cardiovascular events and all-cause mortality began to show up in the data after 18-24 months. As a result, Alnylam set the initial HELIOS-B’s study duration for 36 months, with primary analysis conducted when the last patient reaches month 30.
On the most recent conference call, management announced a change to HELIOS-B’s study duration, primary endpoint and secondary endpoints. The study duration added an extra 3 months for primary analysis to when the last patient reaches month 33. The company expects the additional 3 months will result in 60% of patients remaining actively enrolled in the study will have longer follow-up, and an additional 20% of patients will hit the full 36 months of follow-up.
Perhaps more importantly, the company changed the primary endpoint from a composite outcome of all-cause mortality and cardiovascular events in the overall population into 2 separate endpoints. The original endpoint will stay the same (vutrisiran vs. placebo), but the company will now compare patients who received vutrisiran to patients on placebo AND not on tafamidis at baseline.
Alnylam Q4 Earnings Presentation
Remember, ATTR-CM is a progressive and often deadly disease, so many patients take Pfizer’s tafamidis to help stop the progression of the disease. Of the 665 patients enrolled in HELIOS-B, 40% take tafamidis at baseline. This means that patients will fall into 4 buckets in the study: patients receiving only vutrisiran, vutrisiran and tafamidis, only tafamidis and no therapy at all. Here is where the company wants to drill down further into the patient populations. Alnylam wants to get a clearer picture of how their drug, vutrisiran, performs against a true placebo. The company has stated that 90% of commercial insurance plans restrict the use of combination therapy, so it’s unlikely patients would receive both tafamidis and vutrisiran despite possible synergies. A generic version of tafamidis is not expected until late 2028. As a result, Alnylam wants to ensure insurers and regulators get a clear picture of vutrisiran as a monotherapy. On the Q4 conference call, Alnylam CEO, Pushkal Garg, stated,
the analysis in the monotherapy population allows us to demonstrate the true impact of vutrisiran as the standalone treatment, providing a dataset that will be particularly relevant to patients, prescribers and others as it closely aligns with where we see the treatment landscape over the next several years.
Reading the Tea Leaves
The question that remains is why change the study now? The company already knew that tafamidis wouldn’t lose exclusivity until late 2028 and insurers were unlikely to support combination therapy due to excessive costs. So, did Alnylam see something in the data that spurred them to extend the study and add a monotherapy endpoint?
During the conference call, analysts tried to parse out as many details as possible, but management continually claimed the change has come from what their team has learned from the APOLLO-B trial and how an extra 3 months adds to the trial’s statistical power.
When pressed by an analyst on the conference call if the trial design change was driven by blinded event rates tracking below their expectations, CEO Garg, stated,
We have teams that are looking at the blinded data primarily to ensure excellent study conduct and execution, make sure the right patients are enrolled, make sure that the data are clean, make sure that we have got a complete capture of all the events, etcetera. And of course, they are looking at event rates. But we are not going to be sharing dribs and drabs the data, and that’s not the driver here. Those types of events rates are extremely variable – subject to a lot of variability and interpretation.
Clearly the company was concerned that the final analysis may fail in a similar fashion as APOLLO-B and not show a strong enough statistical result to warrant FDA approval. This was why they moved the goal post at the last minute to include the primary endpoint of vutrisiran vs. placebo and remove tafamidis from that analysis. Because many ATTR-CM patients see benefit from tafamidis, an ongoing worry in ATTR-CM trial design is not getting as many event rates as expected, which in turn makes achieving clinical meaningfulness of the drug’s treatment effects difficult.
When Alnylam designed HELIOS-B, they chose to only include patients with more mild classifications of heart failure (NYHA I & II). The company chose to do this based on prior results which show these patients are most likely to benefit from treatment. In trial design, this can be a double-edged sword when your primary endpoint relies on showing a statistically meaningful improvement in all-cause mortality and cardiovascular events. The patients with less developed heart failure from ATTR are also less likely to experience these events, especially as they begin to show symptoms and begin taking the current front-line treatment for ATTR-CM, tafamidis.
Q4 Results
Alnylam continues to grow their ATTR franchise in polyneuropathy. Quarterly revenue from ONPATTRO and AMVUTTRA (vutrisiran) grew 33% year-over-year to $254 million and total patients on therapy went from 2,975 to over 4,060. This steady expansion is a good sign of doctors becoming more familiar and comfortable with the treatment, and also patients craving a more effective and efficient treatment. In another good sign of Alnylam’s innovation, patients are rapidly switching from the company’s initial treatment, ONPATTRO, to the second-generation drug, AMVUTTRA (vutrisiran). AMVUTTRA is administered once every 3 months, compared to ONPATTRO’s once every 3 weeks.
For FY2024, the company expects to grow net product revenue from $1,241 million to $1,400 – $1,500 million, or 17% at midpoint of guidance. Importantly, this figure does not include any potential revenue for ATTR-CM patients in a potentially successful HELIOS-B trial.
The company remains well capitalized, with $2.44 billion in cash on hand. Due to its large cash balance and expanding revenue base, it’s unlikely the company would raise funds through share offerings at this point.
Take Away
I don’t necessarily believe Alnylam extending the HELIOS-B trial by 3 months and adding another primary endpoint is a sign of a doomed Phase 3 trial, but it should cause some concern for investors. Making these changes this late in a trial doesn’t come from a position of strength. It likely comes from a healthier patient population not having as many cardiac events as expected. It is also likely the additional endpoint was added because the 40% of patients on tafamidis at baseline made the initial primary composite outcome of all-cause mortality and recurrent cardiovascular events in the overall population difficult to show statistical significance.
It could be possible that HELIOS-B achieves clinical success, but at the same time doesn’t show a large benefit over tafamidis. If this scenario plays out, investors will be left wondering how much market share vutrisiran can steal from tafamidis. Remember, tafamidis has been on the market for ATTR-CM for several years and if a clear benefit isn’t seen in HELIOS-B over tafamidis, how many doctors would be willing to switch their patients to a new drug they aren’t as familiar with prescribing? It’s possible a positive outcome could result in approval of vutrisiran for ATTR-CM, but its sales achieve a slower ramp than expected by the market, which in turn could hurt the stock.
At this point, all of this is speculation, but when a biotech company changes their largest Phase 3 trial at the last minute, it warrants further examination of the possible outcomes. As I’ve written before, Alnylam has a massive opportunity to capitalize on the ATTR-CM market. I remain optimistic the company can bring a new beneficial treatment to market, but I am far more cautious about the various possible outcomes than I was before this announcement.
Valuing biotech stocks is a never-ending process due to frequent significant changes in future earnings potential based on clinical trial data. A wildly successful HELIOS-B trial could add $3-4 billion dollars to Alnylam’s revenue base over the next 3-5 years. On the other hand, a modest success could result in a longer product ramp where the company only adds $1-2 billion in revenue in 3-5 years. A failed trial, similar to APOLLO-B, would be absolutely devasting to the company. The result from this clinical trial is massive and could result in tremendous volatility in the stock price.
In terms of valuing the stock as it stands today, it currently trades at 10x sales when including royalties and revenue from collaborations. At its current price of $150/share, the company has a market cap just shy of $19 billion. In my view, it’s currently fairly valued. It’s definitely a better entry price compared to when I wrote my first article back in January and the stock was $190/share. I change my rating from a buy at $190/share to a hold at $150/share because we now have more information. Taking in all the information presented during Alnylam’s conference call, I believe the HELIOS-B trial will most likely be a moderate success. Meaning, it may show success over placebo but may not show superiority over tafamidis.
Investing in biotechnology companies is notoriously difficult because it often comes down to a binary outcome. When new information becomes available, investors need to be able to adjust and not sit idly by. Investors should hope for a wildly positive HELIOS-B but should prepare for a mixed result. Whether that’s through scaling down positions or buying downside protection through options, investors should proceed with caution until Alnylam announces their final HELIOS-B data in late June to early July.
