Feb 9, 2012
Operator
Ladies and gentlemen, welcome to the Alnylam Pharmaceuticals conference call to discuss fourth quarter and full year 2011 financial results. [Operator Instructions] Please be advised that this call is being taped at the company’s request, and I would like to now turn the call over to the company.
Cynthia Clayton
Good afternoon. I'm Cynthia Clayton, Vice President of Investor Relations and Corporate Communications at Alnylam.
With me today are John Maraganore, our Chief Executive Officer; Akshay Vaishnaw, Chief Medical Officer; Mike Mason, Vice President of Finance and Treasurer; Laurence Reid, Chief Business Officer; and Barry Greene, our President and Chief Operating Officer.
Cynthia Clayton
For those of you participating via conference call, we have made the slides available via webcast and they can be viewed by going to the Investors page of our website at www.alnylam.com. During today's call, as outlined in Slide 2, John will provide some introductory remarks and general context.
Akshay will summarize our clinical and pre-clinical R&D activities. Mike will review our financials and guidance, and Barry will provide a brief summary of our business highlights and goals before opening the call for your questions.
Cynthia Clayton
Before we begin, and as you can see on Slide 3, I would like to remind you that this call will contain 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 discussed in our most recent quarterly report on file with the SEC.
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 obligations to update such statements.
Cynthia Clayton
I will now turn the call over to John.
John Maraganore
Thanks, Cynthia. Welcome, and thanks to everyone for joining us this afternoon.
I'll be referring to Slide 4 during my brief introductory comments.
John Maraganore
For quite some time now, we have emphasized that Alnylam’s focus is on generating clinical data and our belief that clinical data are what matters the most for Alnylam and the entire field of RNAi therapeutics. I'm pleased to say that our team has delivered, and I'm also pleased to see that people appear to recognize the significance of our recent progress.
Indeed, 2011 prove to be a remarkable year of important clinical achievements for Alnylam, putting us on what we believe is an exciting and strong trend trajectory to fully transition from a platform company to a product company focused on RNAi therapeutics.
John Maraganore
Notably, last January we demonstrated RNAi proof of mechanism in our Phase I trial with ALN-VSP for liver cancers, documenting RNAi proof of mechanism in patient biopsy samples. And then at ASCO, we highlighted promising anti-tumor activity for this drug.
Then just a few months ago, we were quite thrilled to report preliminary human proof of concept data from our ALN-TTR01 Phase I study demonstrating the first-ever RNAi silencing of a human disease gene, namely the transthyretin or TTR gene, which is involved in the pathogenesis of TTR amyloidosis. And then more recently, new preliminary data from our ALN-PCS severe hypercholesterolemia program showed first-ever RNAi efficacy as measured toward a clinically validated end point, namely LDL cholesterol.
John Maraganore
These data in particularly were important not only for this program but also for the overall advancement in our LNP-delivery research and our 5x15 strategy, as they were the first to be reported using Alnylam’s second generation LNP technology. I must say that in my over 25 years in biotech, I can't recall a single calendar year with positive clinical data from 3 distinct programs, let alone positive clinical data surrounding the advancement of a potential whole new class of medicines.
John Maraganore
We believe the impact of all this for Alnylam and our value creation should be clear. With these important accomplishments in hand, we are more confident than ever in the execution of our Alnylam 5x15 strategy, including the continued advancement of our ALN-TTR02 program for ATTR where we recently obtained approval to start a Phase I study and where we expect to start pivotal trials next year -- and also for ALN-APC for hemophilia.
John Maraganore
I'll now turn the call over to Akshay to review our clinical activities, our pipeline and our scientific progress. Akshay?
Akshay Vaishnaw
Thanks, John, and hello, everyone. As we transition from a platform company to a product company, we are committed to focusing our near-term efforts on what we believe to be our highest value opportunities.
Specifically, as John just mentioned, we will focus on our ALN-TTR02 program for ATTR disease and our ALN-APC program for hemophilia, as we believe these programs represent our strongest opportunities for accelerated clinical development and for advancement of RNAi therapeutics to markets with the highest unmet medical need.
Akshay Vaishnaw
Let me start with the TTR program, where we made considerable progress in the past several months. Last November at the 8th International Symposium on Familial Amyloidotic Polyneuropathy, we reported positive preliminary clinical results from our ALN-TTR01 Phase I study showing statistically significant reductions in serum TTR proteins levels in TTR patients.
We believe this data represent the first time RNAi has been shown to silence a disease-causing gene in patients. Specifically, we showed a statistically significant mean reduction of 41% knockdown in serum TTR at the top dose of 1 milligram per kilogram, including a patient showing an over-80% knockdown in serum TTR.
Akshay Vaishnaw
These results are very important since TTR is the pathogenic protein and we've demonstrated that we can effect its knockdown in symptomatic TTR patients. Furthermore, ALN-TTR01 was found to be well tolerated with no serious adverse events related to the administration of study drug, including no elevations in liver enzymes and no injection-site reactions.
We've completed enrollment in the Phase I study and expect to report final data in the first half of 2012.
Akshay Vaishnaw
We are also pleased to announce today that we have received acceptance by the U.K. MHRA to initiate a Phase I trial with ALN-TTR02, which we believe is our go-to-market product from this program.
ALN-TTR02 is comprised of the same siRNA as ALN-TTR01, but is formulated in a more potent, second-generation LNP, including the proprietary on Alnylam lipid MC3.
Akshay Vaishnaw
The Phase I trial will be conducted in the U.K. as a randomized single-blind, single-ascending dose study, enrolling up to 32 healthy volunteer subjects.
The objectives of the study are to evaluate safety and tolerability as well as pharmacodynamics, as measured by serum TTR levels following a single dose of ALN-TTR02, with subjects enrolled into 5 sequential dose cohorts ranging from 0.01 to 0.5 milligrams per kilogram. We expect to begin enrollment in the first half of 2012 and report data in the third quarter of 2012.
We also expect to initiate a Phase II multi-dose study of ALN-TTR02 in TTR patients in the second half of 2012 and, assuming positive results, start a pivotal trial for ALN-TTR02 in 2013.
Akshay Vaishnaw
Lastly, early in January, we also announced plans to advance a subcutaneous program in ALN-TTR efforts, utilizing a GalNAc-conjugate delivery approach. This approach provides an opportunity for product differentiation in the TTR indication.
We’re encouraged by the pre-clinical data we've generated to-date with ALN-TTRsc suggesting that once-weekly dosing enables robust and sustained silencing of TTR over a multi-week period. We expect to file an IND or IND-equivalent for ALN-TTRsc in the second half of 2012, with data expected in the first half of 2013.
Akshay Vaishnaw
Turning to our hemophilia program, we recently presented pre-clinical data with ALN-APC at the 53rd ASH meeting, showing proof of concept for this exciting approach for novel therapeutic strategy for the management of hemophilia. Our approach in this program is to silence a key endogenous anticoagulant enzyme, resulting in increased thrombin generation and improved hemostasis in hemophilia.
Akshay Vaishnaw
This strategy has been validated in human genetics based on coinheritance or prothrombotic mutations in hemophilia patients, where these patients exhibit significantly reduced bleeding complications. Our focus in this program is to target protein C, where pre-clinical data we showed at the ASH meeting demonstrated rapid dose-dependent and durable silencing of protein C messenger RNA after a single dose of the drug.
We will continue advancing this program towards the clinic with a goal of initiating a Phase I trial in the first half of 2013, with data expected in the second half of 2013.
Akshay Vaishnaw
In addition to our efforts with our ALN-TTR and ALN-APC programs, we're also making progress in our additional Alnylam 5x15 programs including ALN-PCS for severe hypercholesterolemia, ALN-HPN for refractory anemia and ALN-TMP for hemoglobinopathies. Just last month, we presented positive preliminary data from our Phase I clinical trial with ALN-PCS at the Brigham and Women's Hospital.
The results reported are very exciting for Alnylam for a variety of reasons. Importantly, they demonstrated safety and tolerability, as well potent, robust and statistically significant knockdown of PCSK9 plasma levels and reductions in low-density lipoprotein cholesterol or LDLc levels, a clinically validated endpoint.
Akshay Vaishnaw
In particular, we showed a greater than 66% knockdown of PCSK9 and a greater than 50% lowering of LDLc. We're continuing dose escalation in this study and we expect the result may improve with higher doses.
In addition, results from this important study demonstrated improved potency with our second-generation MC3-based LNPs in human studies, which will likely become a go-forward formulation for certain Alnylam 5x15 programs. We plan to partner our ALN-PCS program, prior to initiating a Phase II study.
Akshay Vaishnaw
We also recently designated our fifth Alnylam 5x15 program for the treatment of hemoglobinopathies. Hemoglobinopathies are defined by genetic defects in the globin chains of hemoglobin, and are associated with chronic anemia, extra-medullary hematopoiesis and iron overload.
Our therapeutic candidate, ALN-TMP, comprises of systemically delivered RNAi therapeutic targeting TMPRSS6 or Tmprss6 for the treatment of hemoglobinopathies, including beta-thalassemia and sickle cell anemia.
Akshay Vaishnaw
Tmprss6, a genetically validated target expressed on hepatocytes, functions normally by cleaving hemojuvelin, resulting in reduced hepcidin levels and increased iron mobilization. Pre-clinical studies with ALN-TMP have demonstrated corrective effects on iron overload and in addition, broader disease-modifying effects including improvements in hemoglobin levels and splenic histopathology.
We see this program as a potential breakthrough strategy for the treatment of hemoglobinopathies, where there is a significant unmet medical need, and we plan to partner this program prior to conducting a Phase I study.
Akshay Vaishnaw
To sum up the progress we've had made with our Alnylam 5x15 programs, we also presented pre-clinical data from our ALN-HPN program for refractory anemia at the recent ASH meeting. These data documented transferrin receptor type 2 or TFR2 as an ideal target for hepcidin pathway antagonism and demonstrate efficacy in animal models.
We plan to partner our ALN-HPN program prior to initiating a Phase I study.
Akshay Vaishnaw
Now in addition to our Alnylam 5x15 programs, we have a number of programs focused on other disease indications with existing partnerships that we have formed or new alliances that we expect to form in the future. This includes our RSV program, which has completed enrollment in its Phase IIb study.
We expect to report results for this study in mid-2012. This also includes our liver cancer program where we established RNAi proof of mechanism, and as of today still have 3 patients with disease control receiving ALN-VSP under an extension protocol, including an endometrial cancer patient that has been on drug for over 20 months.
We plan to partner this program prior starting to Phase II.
Akshay Vaishnaw
We're also advancing ALN-HTT, our Huntington's disease program that we are working together with Medtronic and the CHDI Foundation, and we expect to file an IND, an advanced ALN-HTT interclinical trials in the second half of 2012.
Akshay Vaishnaw
With that, I'd like to now turn the call over to Mike for review of our financials. Mike?
Michael Mason
Thanks, Akshay, and good afternoon, everyone. Please refer to Slide 14 in our slide deck.
We continue to maintain a strong financial profile, ending 2011 with $260.8 million in cash, cash equivalents and marketable securities. Our GAAP revenues for the fourth quarter of 2011 were $20.5 million and for the full year 2011, we recognized $82.8 million of GAAP revenues.
As you know, we continue to record the amortization of upfront payments from the strategic alliances we have formed, which accounts for a significant and recurring portion on our quarterly GAAP revenues.
Michael Mason
Moving to expenses, R&D expenses were $23.4 million in the fourth quarter of 2011, as compared to $26.1 million in the prior year period. For the full year of 2011, R&D expenses were $99.3 million as compared to $106.4 million for the prior period.
R&D expenses in 2011decreased slightly as compared to the prior year, primarily as a result of lower preclinical expenses in connection with our ALN-PCS program as we advanced this program to a Phase I clinical trial.
Michael Mason
G&A expenses were $10.7 million in the fourth quarter of 2011 as compared to $7.5 million for the prior year period. For the full year of 2011, G&A expenses were $38.3 million compared to $37.7 million for the prior year.
The increase in G&A expenses during the fourth quarter as compared to the prior year period is primarily due to higher consulting and professional services expenses related to business activities, primarily legal activities.
Michael Mason
With respect to guidance for 2012, we believe we will finish the year with greater than a $180 million in cash. This financial profile provides us with a strong balance sheet to build our business, mainly through execution on Alnylam 5x15 product strategy.
Michael Mason
This concludes the financial highlights and I will now turn the call back over to Barry.
Barry Greene
Thanks, Mike, and hello, everyone. The progress we've made this past year has positioned us for an extremely exciting time ahead, and we are more confident now than ever in our ability to harness the RNAi pathway for the development of high-impact, innovative, commercially attractive medicines.
We're continuing our transformation from a platform company to a product company. And so as we have discussed, we're focusing our near-term efforts and resources in what we believe to be our highest value opportunities, specifically accelerated clinical development plans for our amyloidosis program and our hemophilia programs, where we see clear development clarifications [ph] with significant unmet needs.
Barry Greene
As a result of this increased focus, we recently implemented a strategic corporate restructuring which included an approximate 33% reduction in our work force. While difficult for all of us at a personal level, we're extremely confident that it was the right move and an important step in building our company for the long term.
Of course, we are extremely grateful to all of our employees, past and present, for their dedication, passion and commitment in advancing RNAi therapeutics to patients.
Barry Greene
Looking forward, we have set out exciting goals for 2012 and beyond, which you can see on Slide 16. Specifically, we expect to accelerate development of our ALN-TTR program, which includes the presentation of final data from our Phase I study for ALN-TTR01 in the first half of 2012; initiate our Phase I trial with ALN-TTR02 in the first half of 2012, with data expected the third quarter of this year; start a Phase II multi-dose study of ALN-TTR02 in patients in the second half of 2012; and assuming that data are supportive, initiate a pivotal trial for ALN-TTR02 in 2013.
Further, we expect to file an IND for a subcutaneous version of this drug, ALN-TTRsc, in the second half of 2012 with data expected in the first half of 2013.
Barry Greene
Additionally, we expect to advance our ALN-APC program toward the clinic with the goal of initiating a Phase I clinical trial in the first half of 2013 and report data in the second half of 2013. We will, as mentioned, continue our Phase I trial with ALN-PCS with planned dose escalation ongoing, and our plan is to report additional data in the first half of this year.
As we've guided, the plan is to partner this program prior to initiating a Phase II study.
Barry Greene
On other 5x15 programs, we expect to advance our ALN-TMP program for hemoglobinopathies and our ALN-HPN program for refractory anemia via partnerships prior to conducting clinical studies. On the other pipeline opportunities, we will continue to advance our partner-based programs, including reporting data from our Phase IIb study with ALN-RSV01 in mid-2012 and filing an IND to advance our Huntington's disease program into clinical trials in the second half of 2012.
Rounding out our goals, as we've mentioned before, we expect to form additional partnerships and we will maintain a strong balance sheet, ending 2012 with greater $180 million cash.
Barry Greene
With that, I'd like to turn the call back over to the operator for your questions. Brian, we’ll take questions, please.
Operator
[Operator Instructions] And your first question comes from the line of Marko Kozul of ThinkEquity.
Marko Kozul
It looks like you’ll have a lot of interesting data sets and drivers coming up as well. First question, do you plan on filing INDs for ALN-TMP and HPN, the refractory anemia program, or is it something that you think you’d do in conjunction with a partner?
John Maraganore
Yes, Marko, we're going to do that in conjunction with a partner. The near-term plan is to really focus on the TTR amyloidosis program and the hemophilia program as things that we drive forward full force, deep into clinical development toward pivotal trials, including TTR in pivotals in 2013.
And the other programs are going to continue to move forward, but we'll obviously leverage partnerships that we expect to form on those programs as they move forward.
Marko Kozul
John, you plan on partnering these programs before initiating Phase I. Should we be thinking that you might be near partnerships for those compounds?
And if so, what kind of deals do you think we should be thinking about?
John Maraganore
It's always hard to predict, and we don't want to predict when partnerships might occur. We certainly expect to do partnerships this year, and that's our goal.
And we'll certainly let you know when those partnerships occur. But it would be premature to say when and what stage they’re at.
We have a lot of discussions that are always ongoing.
Marko Kozul
And then maybe just a quick one on financials. I realize there is a lot of moving parts, but I was wondering if you could give us some thoughts on your longer-term expenses, maybe beyond 2012.
John Maraganore
Sure. Mike, do you want to do that?
Michael Mason
Sure. Marko, we definitely expect to see R&D expenses decrease in 2012 due to the recent restructuring.
And in G&A, we expect to decrease slightly in 2012. And then going forward, we expect our -- we are not giving any specific long-term guidance, but we do expect these expenses to stay in line going forward.
John Maraganore
I think the other thing I'll add, Marko, is that obviously as we bring new partnerships in to fund some of these additional programs, we think that's obviously going to be part of our financial story going forward.
Marko Kozul
And if I could just sneak in a quick one on your announcement today regarding the circulating extracellular RNA detection method, I was wondering what else do you need to do in order to validate this and maybe use it in humans? And how would you envision the technology applied in the real world to some of your programs?
John Maraganore
Marko, it's actually a very exciting discovery by our scientists, and one that we think could be actually rather revolutionary in the whole RNA therapeutics space -- not just sRNAs but also anti-sense, as evidenced by Isis taking a license to the technology, microRNA therapeutics, even gene therapy. We are, as we speak, advancing this technology on human samples from our clinical studies.
And stay tuned on that. But being able to measure knockdown of the mRNA in animal studies, or in humans obviously, in concert with modulation of the protein at the same time just adds a whole new dimension of biomarkers that we can use in our clinical research.
So it is a powerful tool. We believe it'll have high impact for the entire field, and it's something which we're obviously very actively involved in translating its use in humans.
And we believe that the entire industry will find it to be a very useful technology and we're prepared to help enable them with licensing.
Operator
And your next question comes from the line of Ted Tenthoff of Piper Jaffray.
Edward Tenthoff
A question on the TTR02, I know guys have shown some pretty compelling data regarding the increased silencing of the protein. How big of a magnitude should we expect that to translate into humans, or kind of a way you think about that?
And ultimately what does that mean for the clinical outcome and the clinical applicability of the drug?
John Maraganore
That’s a great question, Ted. Akshay, do you want to handle it?
Akshay Vaishnaw
Ted, in terms of the translatability, what's looking increasingly clear to us is that the non-human primate is rather representative with products like ALN-TTR01, which use the first-generation LNP and with ALN-PCS02 where we used the second-generation LNP. The data there are very representative of what eventually turned out to be true in the human study, so for example, a 40% knockdown at 1 mg per kg on average in the non-human primate with TTR01.
And at that dose level, that's exactly what we saw in TTR01 human study, which we reported in Japan in November. Similarly, with PCS02, on a mg-per-kg basis, the results we're seeing are almost exactly in line with the knockdown we saw for PCSK9 in the non-human primate.
So I think if we carry that lesson forwards -- and of course, we're projecting here, so we can't be sure, but increasingly I think we feel confident that with TTR02, we should, at doses in and around 0.3 and above, see very significant knockdown. So for example, a dose of 0.1 mg per kg of TTR02 in the non-human primate gives you 70% knockdown.
There's no reason why that shouldn’t happen in the human being, I think, and we'll find that result out soon. And you know, at 0.3 and above, I think we're anticipating 80%, 90% or better knockdown after single doses.
And certainly, both we feel and the field considers that kind of knockdown would result in significant clinical efficacy in terms of improvement in TTR patients.
Michael Mason
The only thing I'll add, Ted, is when you think about the profile of our drugs for TTR, you're talking about once-a-month IV infusion with far greater than 50% knockdown that’s sustained for 3 to 4, to 5 weeks. So it starts to set off this once-a-month dosing paradigm, a very attractive profile for a drug.
Operator
Your next question comes from the line of Alan Carr of Needham Company.
Alan Carr
I wanted to ask you about the TTR02 trial that you have coming up. Can you comment a bit more about that?
It looks like it's in healthy volunteers, and I think it was single ascending dose, as opposed to patients for TTR01. What's the rationale behind that?
John Maraganore
Sure. Akshay, do you want to handle that?
Akshay Vaishnaw
I think, Alan, if you look at the body of work over the last few months, you've seen that we've shown a target knockdown against multiple targets, TTR and PCS. We've shown it with our first generation, we've shown it with our second generation, we've shown in healthy volunteers, we've shown it in disease settings.
We are very confident that TTR02 will knock down TTR, both in patients and healthy volunteers. The reason why we selected healthy volunteers for the SAD study is simply so that we could move very, very quickly and demonstrate the POC and a dose that we can carry forwards into later development.
And I think today's announcement is very exciting for us. We are cleared to initiate our Phase I study.
And so in the first half, I think we're going to be getting important data there.
John Maraganore
I'd just add, Alan, that I think over really the last couple of years, between our VSP liver cancer program and the TTR01 program, we've learned a lot about the safety profile. That is an important factor when you consider going into human volunteers.
So both with the PCSK9 program and now with this TTR02 program moving into human volunteers, to get quick sets of data that allow us to go into Phase II is certainly now enabled by the safety data that we have in general. So that's certainly a factor in this as well.
Alan Carr
And then a second question I have, in light of the restructuring. Can you give us a sense of what percent of your resources this year are going to be going into the APC and TTR programs versus other programs and some of your discovery-stage work?
John Maraganore
That's a great question. Let me just give you some general color on that and then, Mike, you can also add some additional color.
I think we're at a stage now as a company where it's about 65-35 mix of activities around development versus -- if you look at our R&D activities versus delivery-related research. We still have an ongoing delivery-research effort within the company, but it’s proportionally now more focused on our pipeline-related activities.
And so that's the general mix of the overall spend. As it relates to TTR, both the 02 program and the subcu program, obviously those 2 programs combined are the most significant investment that we're making in the company.
The hemophilia program now is ramping up quite a bit and will ramp up toward the back-half of the year, as we effect our R&D transition toward an IND filing in the first half of 2013. So TTR is certainly the most -- the program where we have the highest level of investment in the company, for all the right reasons.
And that is probably -- the second up on that ranking order would be the hemophilia program. And then obviously the other programs are being advanced with partnerships.
Mike, do you want to add anything to that?
Michael Mason
No. That's exactly right.
I think, as John mentioned, approximately 2/3 of our R&D spend is directed toward the development organization, with TTR and APC taking the majority of that spend and with the rest of it going to research, which is the other third of our R&D spend for 2012.
Alan Carr
Where I'm going with this is that you guys have been able to bring forward several candidates here and you're focusing on a couple of them internally. Several, you're looking to partner.
But I'm wondering if, out of your research programs, are you going to be bringing forward some more candidates that you might develop internally, a third one behind TTR02 and APC?
John Maraganore
Yes, Alan, we absolutely are, because we have a research engine that is able to generate, frankly, more clinical assets than our clinical organization can afford to invest in. But what we're doing in the very, very near term is we're just charging our whole organization to be hyper-focused on our TTR program and our hemophilia program.
Our research effort is obviously generating new and pretty exciting preclinical programs. We've commented on some of them before: program in alpha-1 antitrypsin deficiency; a program in acute intermittent porphyria.
So there are programs in the research side. But obviously, the real core focus of the company is what we're doing on our TTR program and hemophilia program because we know we can drive those programs pretty rapidly now into pivotal studies.
And that's the near-term goal of the company.
Alan Carr
Do you all have any kind of internal goal about bringing forward another program behind those 2, specifically for internal development all the way through Phase III, or have you reached what you wanted?
John Maraganore
No, we have internal goals that relate to our research organization continuing to advance new, important genetically-defined target programs forward. And so there is an ongoing body of work that goes on in that regard.
Alan Carr
And I guess as they move forward you would, at some point, decide whether or not those are something that could bring forward internally?
John Maraganore
Absolutely, or partner them. I mean, there’s a lot of -- I think our data over the last 3 months now has really been important, not only, I think, in the general outside world but also in the eyes of the pharma industry, who appreciate that our results are pretty important for what we do and opportunities for partnering.
Operator
Your next question comes from the line of Mike King of Rodman & Renshaw.
Michael King
Just a couple of questions, don't know how much more color you want to give on the financial guidance. When we model your expenditures, it doesn't seem like you've got to bring in a whole lot more in terms of partnering revenue to meet the financial projections we’ve got for you guys for '12.
So I guess my question is if you do, do some partnerships, do you think you might turn the dial back up on R&D to address some of the programs you just spoken about in answer to the previous question, in terms of the alpha-1 antitrypsin or other?
John Maraganore
Mike, let me answer that in a general sense. You're right on your math.
The year-end forecast really doesn't include any significant business development. And we have some ongoing revenues from existing licenses and other agreements out there.
It is just a conservative thing to do. And obviously, as new partnerships arise, depending on what programs they're focused on, that will have 2 effects: one is to offset the overall spend profile on a net basis; and the other is to obviously enable investment in additional programs.
And from a general flavor standpoint, that's certainly the case. These will end up being case-by-case, and so as we get color on specific partnerships that are formed this year and even into the next year, we'll provide you better guidance and flavor as to what that means financially for the company.
Michael King
Is it safe to say that you won't start another program until one of the 5x15 programs is partnered?
John Maraganore
Well, I think it's safe to say that we've got a lot of programs that we can partner. And we want to keep our belt pretty tight around here because it is something which -- I mean, I think with where we've taken the technology and the company right now and having the line of sight we've got around TTR and hemophilia, we just want to make sure that we drive those programs ahead.
So a lot of what we're doing around here is making sure that people are pretty focused. And that's important just even culturally for the company, to make sure that we nail those programs.
But there are lots of different things that we can do with the technology. It's pretty endless, and we’ll advance that as new partnerships come together.
Michael King
And you might have to come up with a new catch phrase?
John Maraganore
As always.
Michael King
16 or something like that?
John Maraganore
Thanks, Mike.
Michael King
Just putting that out there. Tuck that away.
You guys talked about you've got a GalNAc version of TTR coming with -- why not PCSK9 because it just seems like with the competition, a GalNAc version of PCSK9 would give you a lot of advantages from a competitive standpoint and maybe drive better partnership terms, et cetera?
Michael Mason
Yes. We love conjugates, and we love where that can go for lots of different reasons.
And PCSK9 is a very good place for it, and so obviously with the human clinical data we have got -- which obviously, as we dose-escalate, we expect to only get better, we think that becomes an important aspect of the partnering discussion because it’s not just the LNP-delivered form but also a potential conjugate base form as well.
Michael King
And then just real quick, now that you've got cERD technology, is it fair to say that you will couple cERD to all of your programs, most of your programs, as many as you can? I mean, how does that fit in?
John Maraganore
As many as you can. Yes, Mike, if you look at the slides that are now on our Capella website, what you'd see is that the target gene -- at least with the current sensitivity of the assay doesn't have to be a super-abundant message, but it has to be reasonably abundant.
And so depending on the target mRNA that we're going after, at least in the current manifestation, that could influence exactly the utility of the cERD assay. But so far, we're very encouraged by it.
And obviously in the data that we showed in the poster, we were able to knock down and detect both TTR, Tmprss6 as well as synuclein from intraparenchymal infusion in the CSF. And so those data are pretty compelling and we think are going to pretty important for the whole field.
Operator
And the next question comes from the line of Kaey Nakae of Chardan.
Kaey Nakae
Question for Mike with respect to the financial guidance. If we think about the level of operating expense in each of the quarters in 2012, how level should we be thinking those are going to be?
Michael Mason
Well, I think the one thing to keep in mind -- actually 2 things to keep in mind. The first one is the restructuring, so we will take a charge for $4 million that will take place all in the first quarter of 2012.
And the split, we don't have a specific guidance on what the split between R&D and G&A is, but it will certainly be heavily R&D-weighted just because that stuff is the makeup of our company. And the second one, different --not so much an expense perspective, but our GAAP revenues related to Roche, so our straight-line amortization under our Roche alliance ends in August of 2012.
So the recurring Roche revenue that you've seen over the last few years will end during the third quarter, so that will go away during the fourth quarter of this year.
Kaey Nakae
And then for Akshay, for TTRsc, as you move that into humans, is the inclusion criteria going to be TTR-confirmed patients, given that you've got some additional variables there?
Akshay Vaishnaw
So specifically, Kaey, for TTR -- I’m sorry. You’re talking about TTRsc, you said.
Right? Well, I mean, the plan is to file the IND or equivalent later in the year.
And we haven't as yet announced the exact target population, is it healthy volunteers, is it patients. We did --on this call earlier, our discussion about how one can honestly move very quickly in healthy volunteers.
And as we finalize those plans, we'll get them out. But I think we're confident that we can file this year and look forward to the data in terms of proof of concept from TTRsc in the first half of 2013.
John Maraganore
Kaey, I mean, one of the reasons we're excited about subcu program in this effort is obviously we view the TTR amyloidosis clinical setting as being one with multiple distinct opportunities for product development and having the opportunity with our platform of having both an LNP-based formulation for FAP patients, for example, and then being able to broaden out the opportunity with the subcu formulation is something which we’re -- we think is compelling. And obviously in the near term is to generate the translational human data in the Phase I study, which -- we are eager to generate those type of data.
And then it will open a number of different doors for us in terms of how we think about clinical development.
Kaey Nakae
And Akshay, just back to the Phase I for TTR02, what's the risk in going in the healthy volunteers with the different formulation? And we appreciate it's the same payload.
Akshay Vaishnaw
Well, I mean, I think in terms of risk, we are cautiously optimistic because, recall that TTR02 and the PCS program where we announced the proof-of-concept data in early January, they show the same LNP, the second-generation LNP that's based on that MC3 lipid. To-date, the safety performance of that second-generation LNP with PCS has been very good.
And we reported those data. So the payload, as you emphasized, with the TTR-sRNA is the same as TTR01.
The LNP has been evaluated in the PCS context. We're optimistic and I think it should be rapid progress, and hopefully announce POC soon with that.
Operator
And your next question comes from the line of Christopher James of MLV & Company.
Christopher James
I just had a question about the TTR02 program and the pivotal phase -- the pivotal program in 2013. Do you get a sense from the clinicians as to what additional knockdown you need to see with the second generation for this to be a clinically meaningful drug?
And what number of total patients do you think you need to go into?
John Maraganore
Those are great questions. Akshay, you want to comment?
Akshay Vaishnaw
Chris, the clinical data around not just TTR but systemic amyloidosis in general -- and as you know, there are number of different systemic amyloidotic disorders. There is AL disease that occurs in the context of myeloma, there is AA amyloidosis that occurs in the context of inflammatory disorders.
And that landscape teaches us that greater than 50% reduction of the pathogenic protein will translate to clinical efficacy. So even with TTR01, from the data we have there, we started feeling pretty good.
In fact, many investigators said, “Come on. Let's go and do the pivotal study with TTR01.”
But with TTR02 I think we clearly have the capacity to achieve 80-plus percent knockdown at low doses. And so we're looking forwards to demonstrating that in short order now.
The Phase I study is about to start. And I think we'll do a quick Phase II study in patients and looking forwards to Phase III in 2013.
But with the knowledge that 80% or greater reductions should comfortably deliver significant clinical efficacy in this high unmet medical need area.
Christopher James
And with respect to PCS, did I hear you correctly? You're going forward with the third generation?
Michael Mason
No. That was not said, and that is not the case.
So we're advancing the existing drug. We're dose-escalating in the Phase I.
We'll be reporting on those complete data in the first half of the year, Chris. And then obviously the plan is to partner that program.
Christopher James
And when could we see the full data set for the Phase I study in terms of publications and scientific meetings?
Michael Mason
First half of this year.
Christopher James
First half. Not first quarter.
Michael Mason
First half. That’s correct.
Operator
And your next question comes from the line of Stephen Willey of Stifel, Nicolaus.
Stephen Willey
I was wondering if you could just maybe elaborate on one of the earlier questions with respect to deal structure and just in terms of how you're thinking about some of these earlier-stage assets strategically. And I guess I am wondering if there is any scenario by which you would entertain some kind of cost-sharing arrangement within the clinical development process, such that maybe you are able to retain a high percentage of backend economics and what not?
John Maraganore
Stephen, we're always open to different structures. It does depend on what we think are the going-forward costs, and what we think are the challenges for the program specifically, and how well it might fit with our overall plans and strategy.
And in general, we can be pretty flexible on those type of things and have been in the past. As you know, we have done deals with companies like Cubist where there is a potential for sharing in the value proposition at the end.
We have done other partnerships like with Novartis where it's more of a traditional milestone royalty-type structure. And it’s pretty case-by-case and it typically is something which, in the context of discussions, often gets ferreted out.
Laurence, you should comment as well here, in terms of how you see this playing out. But it depends on the program.
It depends on the company's needs. And we always think about how we make sure that we enable maximum value creation out of any partnership structure.
Laurence Reid
Yes. I think that’s right.
I think in the immediate future, obviously the kind of partnerships we're looking to do, we're not looking to increase the burn by taking a lot of sort of extra cost sharing in some of the incremental programs that we've stated we want to partner. I think creating optionality for the longer term as a way to expand our portfolio beyond the 2 core programs is certainly in the back of our mind.
But in the short term, I think we want to get some of these extra programs beyond the core 2 programs driven forward with partners, but with a significant amount of that cost covered by the partnership.
Barry Greene
And Steve, you and others have asked the question about the pipeline assets, which John and Laurence covered very well. If you take a step back, it's our belief set that driving TTR and driving the hemophilia program forward are the highest value-creating activities.
And owing those commercially in major markets is how we're going to create the most amount of value. As partnerships emerge and those programs advance, we can certainly round our clinical pipeline.
But those 2 assets we think are -- we see clear lines of sight developmentally and we see them as very attractive commercial opportunities.
Stephen Willey
And so when you think about like potentially a deal structure for something like PCS02, would you envision providing a potential partner with a license that would also provide access to GalNAc conjugates, or do you envision that being kind of a separate licensing agreement?
John Maraganore
No, it would certainly be part of the license agreement.
Stephen Willey
So they would kind of have carte blanche access?
John Maraganore
They would likely fund the company to do research on generating that lead candidate, if that were of interest to them.
Stephen Willey
And then maybe just lastly, if you could provide just a little bit of color around the recent issuance of the 44A [ph] patent and maybe what the implications are, if any, from like a economic, royalty-bearing perspective and how that might kind of change, if so, the ongoing litigation with Tekmira?
John Maraganore
What is the 44A [ph] patent again?
Stephen Willey
Around the second-generation LNPs.
John Maraganore
So that's obviously an exciting patent that covers our MC3 lipid. And I think what's very clear about the award of that patent is that the patent office is looking at all of the available art [ph] in the world, identified the novelty and the uniqueness of the MC3 lipid and the distinct characteristics of it from a patentability standpoint.
And it is something which obviously provides Alnylam with, I think, a very important asset as it relates to second-generation LNPs, which clearly are critical for the advancement of RNAi therapeutics with LNP-based technologies. So I am going to have to stay limited there in my comments on it, other than the fact that we're obviously pleased with that new patent.
And it's an important invention made by Alnylam and AlCana scientists, and it's an important lipid going forward.
Operator
And your final question comes from the line of Charles Duncan of JMP Securities.
Charles Duncan
I was going to ask you about partnering and I apologize to everyone on the line if this has already been asked. But the TTR02 partnership I think we’ve discussed and if we think just strategically about that, what timing in terms of stage of development do you think would make most sense?
Or is there a way to get all the way to the end-game commercial stage with that product internally?
John Maraganore
Well, I think we were really attracted to the latter opportunity. And it is not to say that there wouldn't be or couldn't be partnership, things that we'd entertain.
But it would obviously have to consider very importantly our involvement with that and our driving of that. And it would probably be shaped and framed around geographic aspects of it, where Alnylam maintains the U.S.
But certainly the other side of it is we just drive this program and don't focus on any partnership activity with that entity.
Charles Duncan
Makes sense. Seems like you could do.
If I could ask a follow-up on the APC program, and again I apologize if it's been asked. With regard to that program, could you remind us whether or not you've demonstrated improved thrombin levels with APC knockdown?
John Maraganore
Not experimentally as of yet. That's being done as we speak.
There is a number of pre-clinical studies that remain to be reported. We know from both the genetics as well as from other experimental evidence that you will improve thrombin generation by knocking down protein C.
Charles, as you know, it's a field I know pretty well from Angiomax days. It’s pretty incontrovertible.
So at the end of the day, it's very well validated that, that is going to be an outcome of knocking down protein C.
Charles Duncan
Makes sense. Final question probably for Mike, and this probably comes more from my associates than me.
But I'm wondering if you can provide some additional color on operating expenses going forward. I think you're giving some type of guidance.
Can you give us some more color on that?
Michael Mason
Sure. A couple of things to think about.
One is we do expect, as a result of the recent restructuring, 2 things. One, there will be a charge of $4 million that we'll take in the first quarter of 2012, a onetime charge.
And we also expect research and development expenses to decrease during 2012 compared to 2011. On the G&A side, we expect expenses to decrease slightly in 2012 compared to 2011.
And the other thing I mentioned earlier on the call is on the revenue line. The one thing of note is related to our Roche revenue, which we amortized straight-line over 5 years, and that 5-year period ends in August of 2012.
So that revenue will go through the mid-third quarter of 2012.
Charles Duncan
Then one last question in terms of patenting in China. I understand your sensitivity around getting into details here, but I appreciated the answer you gave to the previous question regarding your patent considering all of the kind of the state-of-the-art at that time.
I guess Tekmira got a couple of patents here issued recently and that includes some -- certain ratios of lipids in terms the LNP formulations. I'm wondering if you think those ratios could be different than what you're doing, as well as from the standpoint of the chemical modification of the siRNA sequences, some of the claims that they have.
Or is something that we have to wait and see come out in the courts or some other way in the future?
John Maraganore
Yes, Charles, I think it's a real simple answer. We have licenses to those patents.
So we are happy that they have been issued, and it's just part of the broad IP estate that we've licensed into the company from companies like Tekmira, Isis, Max Planck Institute, AlCana, many companies out there. So we have access to all those patents and therefore we are delighted to see them issue in the U.S.
PTO.
John Maraganore
Good. So thanks, everyone.
We very much look forward to sharing with you our continued progress through this year. It's going to be an exciting year for sure.
And it's certainly a very exciting time for RNAi therapeutics. And by all accounts, we appreciate your commitment to our efforts.
Thanks, everybody.
Operator
Ladies and gentlemen, that concludes today's conference call. You may now disconnect your lines and have a nice day.