10-QPeriod: Q3 FY2014

ALNYLAM PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 6, 2014For Securities:ALNY

Summary

Alnylam Pharmaceuticals, Inc. reported a strong increase in cash and cash equivalents, reaching $82.7 million by September 30, 2014, up from $53.2 million at the end of 2013. This financial strengthening is largely attributed to a significant $700 million cash infusion from Genzyme in February 2014 as part of a strategic collaboration, alongside an additional $23 million Genzyme investment later in March. Despite this robust financing, the company continued to operate at a loss, with a net loss of $44.0 million for the third quarter and $339.0 million for the first nine months of 2014, reflecting substantial ongoing investment in research and development. The company's R&D expenses increased significantly, particularly due to a $220.8 million charge for in-process R&D related to the acquisition of Sirna Therapeutics' RNAi assets. Alnylam is advancing its core product strategy, the "Alnylam 5x15," with several candidates in clinical development, including patisiran (ALN-TTR02) in Phase 3 trials and revusiran (ALN-TTRsc) in Phase 2. The Genzyme collaboration, a key strategic alliance, is central to the company's global commercialization efforts for its genetic medicine programs.

Financial Highlights

37 data points
Beta

Net Income

-$43.99M

EPS (Diluted)

$-0.58

Total Assets

$986.36M

Cash & Equivalents

$82.72M

Free Cash Flow

-$43.90M

Financial Statements
Beta
R&D Expenses$46.27M
Operating Expenses$56.17M
Operating Income-$45.20M
Net Income-$43.99M
EPS (Basic)$-0.58
Shares Outstanding (Basic)76.41M

Key Highlights

  • 1Significant cash increase to $82.7 million driven by a $700 million Genzyme collaboration payment, bolstering financial position.
  • 2Continued substantial net loss ($44.0M in Q3, $339.0M YTD) due to heavy investment in R&D and the acquisition of Sirna Therapeutics' RNAi assets ($220.8M in-process R&D charge).
  • 3Total operating expenses surged by 287% for the nine months ended Sept 30, 2014, primarily due to the Sirna acquisition's in-process R&D charge.
  • 4Net revenues from collaborators showed a year-over-year increase for Q3 ($11.0M vs $9.0M) but a decrease for the nine-month period ($26.5M vs $36.3M), impacted by the termination of the Cubist agreement.
  • 5Advancement of key RNAi therapeutics with patisiran (ALN-TTR02) in Phase 3 and revusiran (ALN-TTRsc) in Phase 2, alongside ALN-AT3 entering Phase 1 clinical trials.
  • 6Strategic Genzyme collaboration initiated in Jan 2014, including a $700 million upfront payment and a significant equity investment, is crucial for global commercialization of genetic medicine programs.
  • 7The company is actively managing its investment portfolio, with substantial holdings in marketable securities totaling $832.5 million in fair value (excluding Regulus equity).

Frequently Asked Questions

Alnylam Pharmaceuticals ended the third quarter of 2014 with $82.7 million in cash and cash equivalents, a significant increase from $53.2 million at the end of 2013. This improvement was primarily driven by a $700 million cash infusion from Genzyme in February 2014 as part of their strategic collaboration, along with an additional $23 million investment from Genzyme in March. The company also held substantial marketable securities valued at approximately $832.5 million, indicating a strong liquidity position despite ongoing operational losses.

Alnylam continues to invest heavily in R&D, with expenses increasing significantly. For the nine months ended September 30, 2014, R&D expenses were $134.7 million, up from $80.9 million in the prior year. A substantial portion of this increase is due to a $220.8 million charge for in-process R&D related to the acquisition of Sirna Therapeutics' RNAi assets. The company is advancing several key programs, including patisiran (ALN-TTR02) in Phase 3 trials and revusiran (ALN-TTRsc) in Phase 2. ALN-AT3 has entered Phase 1 trials, utilizing the company's ESC-GalNAc conjugate technology for subcutaneous dosing.

Alnylam's primary strategic partnership is with Genzyme, established in January 2014, which provides significant funding and global commercialization rights for its genetic medicine programs. This collaboration generated $700 million in upfront cash for Alnylam. Other collaborations, such as with Takeda and Monsanto, also contribute to revenue, though revenues from collaborators decreased in the nine-month period compared to the previous year, largely due to the termination of the Cubist agreement. The company expects future revenues to continue being driven by these alliances.

Alnylam reported net losses for both the third quarter ($44.0 million) and the first nine months ($339.0 million) of 2014. The company anticipates continued operating losses in the foreseeable future due to substantial planned expenditures for R&D, clinical trials, and technology platform advancements. While the strong cash position and strategic collaborations provide a solid foundation, profitability is dependent on the successful development and commercialization of its product candidates, which is a long-term prospect.