10-QPeriod: Q3 FY2018

ALNYLAM PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 7, 2018For Securities:ALNY

Summary

This filing marks a significant inflection point for Alnylam Pharmaceuticals, Inc. (ALNY) as it transitions from a development-stage company to a commercial-stage biopharmaceutical company following the FDA approval and subsequent launch of ONPATTRO™ (patisiran) in August 2018 for the treatment of hereditary transthyretin-mediated amyloidosis (hATTR amyloidosis). The company reported its first product revenues, albeit modest, in the third quarter of 2018. Despite this commercial milestone, Alnylam continues to experience substantial operating losses, which are expected to persist in the foreseeable future due to ongoing significant investments in research and development (R&D) to advance its diverse RNA interference (RNAi) therapeutics pipeline across its four Strategic Therapeutic Areas (STArs). Key operational highlights include positive interim Phase 3 results for givosiran in acute hepatic porphyria (AHP) and progress in late-stage clinical development for other promising candidates like ALN-TTRsc02 and lumasiran. The company's strategic alliances with major pharmaceutical companies, such as Sanofi Genzyme and The Medicines Company, remain crucial for funding and advancing its pipeline, although revenue from these collaborations has decreased in the short term due to the adoption of new revenue recognition standards and the substantial completion of certain performance obligations. Alnylam's strong intellectual property portfolio underpins its strategy, and the company is focused on executing its "Alnylam 2020" strategy, aiming for three marketed products and ten late-stage clinical programs by the end of 2020.

Financial Highlights

45 data points
Beta

Revenue

$2.07M

93.4% Gross Margin

Net Income

-$245.28M

-11855.1% Net Margin

EPS (Diluted)

$-2.43

Total Assets

$1.68B

Cash & Equivalents

$316.61M

Free Cash Flow

-$199.22M

Financial Statements
Beta
Revenue$2.07M
Cost of Revenue$137K
Gross Profit$1.93M
R&D Expenses$139.94M
SG&A Expenses$116.55M
Operating Expenses$256.63M
Operating Income-$254.56M
Net Income-$245.28M
EPS (Basic)$-2.43
Shares Outstanding (Basic)100.78M

Key Highlights

  • 1Achieved first product revenues from ONPATTRO™ (patisiran) following FDA approval in August 2018, generating $0.5 million in Q3 2018, with expectations for increased sales in Q4 2018 due to US and European launches.
  • 2Reported positive topline interim Phase 3 results for givosiran in acute hepatic porphyria (AHP), with plans for a rolling NDA submission in late 2018.
  • 3Advanced late-stage clinical programs including ALN-TTRsc02 (ATTR amyloidosis), lumasiran (primary hyperoxaluria type 1), and continued progress with partnered programs like inclisiran (MDCO) and fitusiran (Sanofi Genzyme).
  • 4Significant increase in operating costs and expenses, driven by higher R&D and SG&A expenses, particularly stock-based compensation, related to ONPATTRO's launch and clinical achievements.
  • 5Adopted new revenue recognition standards (ASC 606) impacting the presentation of collaboration revenues, leading to a decrease in reported collaboration revenue for the three months ended September 30, 2018.
  • 6Maintained a strong cash position of $318.7 million at the end of Q3 2018, with a stated belief that current resources are sufficient to fund operations for at least the next 12 months, though substantial future funding needs are anticipated.
  • 7Filed a class action lawsuit alleging violations of federal securities laws related to stock performance between February 15, 2018, and September 12, 2018, which the company believes to be without merit.

Frequently Asked Questions

The FDA approval and subsequent launch of ONPATTRO™ (patisiran) in August 2018 is a landmark event for Alnylam, marking its transition to a commercial-stage biopharmaceutical company. This approval generated the company's first product revenues, moving it closer to potential profitability, although significant R&D investments continue to result in net losses.

Alnylam funds its operations through a combination of sources. While it has generated its first product revenues from ONPATTRO, its ongoing development efforts are largely supported by strategic alliances with pharmaceutical companies like Sanofi Genzyme and The Medicines Company, which provide funding through upfront payments, research funding, and potential milestone payments. The company also relies on its existing cash reserves and has historically raised capital through equity offerings.

The significant increase in operating costs and expenses, particularly in R&D and SG&A, is primarily due to increased stock-based compensation related to the ONPATTRO launch and clinical achievements, as well as expanded headcount and commercial readiness activities. Manufacturing expenses and external services costs for late-stage programs also contributed to the rise.

Alnylam anticipates continued operating losses for the foreseeable future due to substantial planned expenditures on R&D, clinical trials, and commercialization efforts. While the company believes its current cash position is sufficient for the next 12 months, it acknowledges the potential need for significant additional funding to execute its long-term strategy, which could be sourced through further collaborations or financings. Profitability is contingent on the successful commercialization of ONPATTRO and other pipeline candidates.