10-QPeriod: Q3 FY2012

ALNYLAM PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 5, 2012For Securities:ALNY

Summary

Alnylam Pharmaceuticals, Inc. reported its financial and operational results for the quarter and nine months ended September 30, 2012. The company continues to focus on its core 'Alnylam 5x15' strategy, aiming to have five RNAi therapeutic programs in clinical development by the end of 2015. During this period, Alnylam raised approximately $86.8 million in net proceeds from a public offering in February 2012, bolstering its cash position. The company is advancing its lead programs, ALN-TTR02 for transthyretin-mediated amyloidosis (ATTR) and ALN-AT3 for hemophilia, with ALN-TTR02 showing robust TTR protein knockdown in Phase I trials and a Phase II trial initiated. Significant developments also include progress in pre-clinical stages for other core programs and continued partner-based development. The company also reported progress in significant litigation matters, including the ongoing Tekmira patent infringement case. While revenues from research collaborators saw a decline due to the completion of performance obligations under the Roche/Arrowhead alliance, the company remains focused on advancing its pipeline. Operating expenses were impacted by a strategic corporate restructuring in January 2012, which reduced the workforce by approximately 33% to lower operating expenses. Despite incurring net losses, Alnylam believes its current cash and marketable securities, combined with expected alliance revenues, will be sufficient to fund operations through at least the end of 2014. Key subsequent events include Regulus Therapeutics' IPO in October 2012 and a license and collaboration agreement with Genzyme for ALN-TTR therapeutics.

Financial Highlights

40 data points
Beta

Net Income

-$19.50M

EPS (Diluted)

$-0.38

Total Assets

$322.35M

Cash & Equivalents

$75.84M

Free Cash Flow

-$517K

Financial Statements
Beta
R&D Expenses$22.09M
Operating Expenses$34.91M
Operating Income-$18.15M
Net Income-$19.50M
EPS (Basic)$-0.38
Shares Outstanding (Basic)51.54M

Key Highlights

  • 1Secured approximately $86.8 million in net proceeds from a public stock offering in February 2012 to fund pipeline advancement and general corporate purposes.
  • 2ALN-TTR02 demonstrated robust, dose-dependent, and durable knockdown of serum TTR protein levels (up to 94%) in Phase I trials, with a Phase II trial initiated.
  • 3Designated ALN-AT3 as the development candidate for its hemophilia program, utilizing a GalNAc-siRNA conjugate delivery approach for subcutaneous administration.
  • 4Completed a strategic corporate restructuring in January 2012, reducing workforce by approximately 33% to achieve an estimated $20 million savings in 2012 operating expenses.
  • 5Net revenues from research collaborators declined primarily due to the completion of performance obligations under the Roche/Arrowhead alliance.
  • 6Entered into a significant license and collaboration agreement with Genzyme in October 2012 for ALN-TTR therapeutics in Japan and the Asia-Pacific region, receiving a $22.5 million upfront payment.
  • 7Regulus Therapeutics, in which Alnylam holds a ~17% stake post-IPO, completed its initial public offering in October 2012, listing on The NASDAQ Global Market.

Frequently Asked Questions

Alnylam's core strategy, termed 'Alnylam 5x15', aims to have five RNAi therapeutic programs in clinical development, including advanced-stage programs, by the end of 2015. The company is advancing ALN-TTR02 for ATTR and ALN-AT3 for hemophilia as its lead programs, with ALN-TTR02 showing promising Phase I results and a Phase II trial underway. Other programs are in pre-clinical or partner-based development.

Alnylam raised approximately $86.8 million in net proceeds from a public offering in February 2012. As of September 30, 2012, the company held $295.8 million in cash, cash equivalents, and marketable securities. Management believes these resources, along with expected alliance revenues, are sufficient to fund operations through at least the end of 2014, though they acknowledge the need for future funding.

Alnylam faces several significant risks. As an early-stage company, its RNAi approach is unproven, and there's no guarantee of developing marketable products. The company has a history of losses and may never achieve consistent profitability. It requires substantial additional funding for research and development. There are also significant litigation risks, particularly the ongoing patent infringement case with Tekmira and a trade secret misappropriation claim from Tekmira and Protiva, with potential damages in the hundreds of millions of dollars. Dependence on collaborators for development and commercialization is another key risk.

A notable event was the October 2012 agreement with Genzyme, granting them rights to ALN-TTR therapeutics in Japan and the Asia-Pacific region for an upfront payment of $22.5 million. The company also completed its performance obligations under the Roche/Arrowhead alliance, impacting current revenues. New alliances, like the one with Monsanto for agricultural applications, were also established.