Alnylam Pharmaceuticals, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Financial statements are unaudited. Alnylam is a commercial-stage biopharmaceutical company developing RNAi therapeutics. It reports revenue from four marketed products—ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO—and collaboration and royalty arrangements, including its partner’s Leqvio sales.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Total revenue | $319.3 million | $213.3 million | Up 50% |
| Net product revenue | $276.3 million | $186.9 million | Up 48% |
| Collaboration revenue | $36.5 million | $25.9 million | Up 41% |
| Royalty revenue | $6.5 million | $0.4 million | Up $6.1 million |
| Operating costs and expenses | $469.1 million | $360.0 million | Up 30% |
| Operating loss | $149.8 million | $146.7 million | Loss widened $3.1 million |
| Net loss | $174.1 million | $240.3 million | Loss narrowed $66.2 million |
| Basic and diluted net loss per share | $1.40 | $2.00 | Improved $0.60 |
| Net cash used in operating activities | $166.5 million | $171.2 million | Cash use down $4.7 million |
- Product revenue growth reflected AMVUTTRA’s U.S. launch in Q3 2022 and growth in GIVLAARI and OXLUMO, partly offset by lower ONPATTRO sales as patients switched to AMVUTTRA. ONPATTRO revenue fell 25% to $102.5 million; AMVUTTRA generated $101.8 million.
- Cost of goods sold was 15.0% of product revenue, versus 12.6% a year earlier. Research and development expense increased 36% to $230.6 million, and selling, general and administrative expense increased 19% to $183.7 million.
- Net loss improved mainly because total other expense declined to $22.6 million from $92.6 million. Lower marketable-equity-security losses, lower interest expense and higher interest income contributed; the operating loss itself widened slightly.
- At March 31, 2023, cash and cash equivalents were $672.2 million and marketable debt and equity securities totaled $1.398 billion. Together these were approximately $2.07 billion, excluding restricted investments. Cash, cash equivalents and restricted cash were $674.4 million.
- Total assets were $3.392 billion and total liabilities were $3.651 billion; stockholders’ deficit was $259.2 million. Current assets were $2.541 billion and current liabilities were $673.4 million.
- Convertible debt was carried at $1.018 billion, with $1.04 billion principal outstanding, bearing 1% interest and due in 2027. The separate liability for the sale of future royalties was $1.309 billion; its estimated effective annual interest rate was 8%.
Material changes and management commentary
- Total revenue rose $106.0 million year over year, while operating expenses rose $109.1 million. Thus, higher sales and collaboration revenue did not reduce the operating loss.
- Collaboration revenue growth was primarily associated with Regeneron, including increased reimbursable research activity. Leqvio royalty revenue increased with global sales by Novartis; Alnylam sold part of its future Leqvio royalty stream to Blackstone.
- Management expects net product revenue to increase in 2023 versus 2022 as it adds patients and launches products in additional markets, subject to regulatory approvals. Collaboration and royalty revenue is expected to vary with manufacturing activity, milestones and Leqvio sales.
- Management expects combined R&D and SG&A expense to increase in 2023 as pipeline development, clinical programs and global commercial and compliance infrastructure expand. Management’s stated strategy is to reach a self-sustainable financial profile without future equity financing and become a top-tier biotech company by the end of 2025; these are goals, not assurances.
- Based on its current operating plan, Alnylam believes cash, cash equivalents and marketable securities, together with expected product and alliance cash generation, will fund operations for at least 12 months from the filing. It cautions that it may need additional funds earlier if assumptions or business conditions change. The filing does not provide a specific numerical full-year revenue or expense guidance range.
Risks, contingencies and unusual items
- The FDA accepted the ONPATTRO supplemental application for ATTR cardiomyopathy and set an October 8, 2023 action date; the FDA planned an advisory committee meeting. Approval and label expansion were uncertain.
- The Department of Justice investigation concerning ONPATTRO marketing and promotion remained ongoing. The company was cooperating; it stated that no loss was determined probable or reasonably estimable.
- Alnylam’s patent-infringement cases against Pfizer/BioNTech and Moderna sought damages relating to COVID-19 vaccine lipid patents. On April 26, 2023, after quarter-end, the court denied specified motions, including Alnylam’s motion to add another patent; trials were set for November 2024.
- In November 2022, Regeneron opted out of further development and commercialization of cemdisiran monotherapy. Alnylam became solely responsible for associated development and commercialization costs and may owe tiered royalties on future sales.
- Important operating risks include clinical and regulatory failure or delay, product uptake and reimbursement, competition, reliance on collaborators and contract manufacturers, supply constraints, intellectual-property disputes, and ongoing government scrutiny. The company also noted that Ukraine-related disruption had affected clinical-trial sites and that non-human-primate supply was constrained.
- Convertible-note conversion conditions were not met during the quarter. If conversion or a fundamental change triggers cash settlement or repurchase obligations, liquidity and dilution could be affected.
Key facts for investors to verify
- Whether AMVUTTRA growth continues to offset declining ONPATTRO revenue, and the pace of GIVLAARI and OXLUMO growth.
- The ONPATTRO cardiomyopathy review outcome, including the advisory committee process and October 8, 2023 FDA action date.
- Whether Leqvio sales and royalties develop as expected, given the royalty-sale terms and Blackstone’s potential increased royalty share from 2030 if specified receipts are not reached.
- Operating cash use, expense growth and progress toward management’s self-sustainability objective; the 12-month liquidity statement depends on the current operating plan and expected cash generation.
- Developments in the DOJ investigation, patent litigation, and clinical and manufacturing risks that could affect costs, timelines or commercialization.