10-QPeriod: Q3 FY2016

ALNYLAM PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 3, 2016For Securities:ALNY

Summary

Alnylam Pharmaceuticals, Inc. reported its financial and operational results for the quarter and nine months ended September 30, 2016. The company's net revenues from collaborators showed an increase in the third quarter of 2016 compared to the prior year, driven by services under the Sanofi Genzyme agreement and a milestone payment. However, for the first nine months of 2016, revenues decreased primarily due to the completion of performance obligations with Monsanto and Takeda. Operating expenses significantly increased, with R&D expenses rising by 43% for both the three and nine-month periods, reflecting continued investment in the Genetic Medicine pipeline, including clinical trial and manufacturing costs, and increased compensation. General and administrative expenses also saw a substantial increase of 40% and 42% for the three and nine-month periods, respectively, largely due to higher compensation and stock-based compensation costs. This led to a net loss of $104.1 million for the third quarter and $297.2 million for the nine months, a considerable increase from the prior year periods. Despite the financial losses, the company ended the quarter with $168.5 million in cash and cash equivalents, supported by strong marketable securities holdings and access to financing.

Financial Highlights

37 data points
Beta

Net Income

-$104.07M

EPS (Diluted)

$-1.21

Total Assets

$1.31B

Cash & Equivalents

$168.48M

Free Cash Flow

-$95.83M

Financial Statements
Beta
R&D Expenses$97.94M
Operating Expenses$120.33M
Operating Income-$106.68M
Net Income-$104.07M
EPS (Basic)$-1.21
Shares Outstanding (Basic)85.72M

Key Highlights

  • 1Significant increase in Research and Development (R&D) expenses, up 43% for both the three and nine months ended September 30, 2016, indicating continued investment in pipeline advancement.
  • 2Third-quarter net revenues from collaborators increased by 116% year-over-year to $13.7 million, driven by the Sanofi Genzyme collaboration and a non-recurring milestone.
  • 3Net loss widened considerably, with a Q3 2016 net loss of $104.1 million compared to $76.8 million in Q3 2015, and a nine-month net loss of $297.2 million compared to $199.4 million in the prior year.
  • 4The company announced the discontinuation of the revusiran program in October 2016 due to safety concerns observed in the Phase 3 study, impacting future development plans and requiring a re-evaluation of data.
  • 5Cash, cash equivalents, and marketable securities remained substantial, totaling $1.04 billion at quarter-end, although cash and cash equivalents decreased to $168.5 million from $180.9 million at the start of the quarter.
  • 6Long-term debt increased to $150 million due to new credit agreements entered into in April 2016 to fund the build-out of a new drug substance manufacturing facility.
  • 7Despite the discontinuation of revusiran, the patisiran program, a key asset for hATTR-PN, continued Phase 3 development with positive recommendations from the Data Monitoring Committee.

Frequently Asked Questions

The substantial increase in operating expenses, especially R&D, was primarily driven by continued investment in Alnylam's pipeline, particularly its Genetic Medicine programs. This included higher clinical trial and manufacturing costs, as well as increased compensation and stock-based compensation expenses due to headcount growth and advancements in development programs.

While the discontinuation of revusiran in October 2016 was a significant event due to safety concerns, the company is still evaluating the full financial impact. The immediate impact relates to the cessation of development costs for revusiran. Management expects to recognize the remaining deferred revenue over a revised performance period, which has been adjusted due to the discontinuation. The company stated it does not expect this decision to affect other investigational programs, such as patisiran.

Alnylam is funding its operations primarily through existing cash reserves, marketable securities, and proceeds from strategic collaborations, notably with Sanofi Genzyme and The Medicines Company. Additionally, the company recently secured $150 million in term loan financing to support the construction of a new manufacturing facility. The company believes its current resources and expected collaboration revenues will be sufficient to advance its 'Alnylam 2020' objectives for several years, though it acknowledges the potential need for additional funding.

The collaboration with Sanofi Genzyme is a critical strategic alliance for Alnylam. It contributed significantly to net revenues, particularly in the third quarter of 2016, with $7.4 million in revenue from this partnership. This collaboration, which covers the development and commercialization of RNAi therapeutics for orphan diseases, provides Alnylam with funding, expertise, and potential future milestone and royalty payments, underpinning its ability to advance its Genetic Medicine pipeline.