Alnylam Pharmaceuticals, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Unaudited results are prepared under U.S. GAAP. Alnylam is a commercial-stage RNAi therapeutics company; it reported four company-commercialized products by July 2022 and a partnered product, Leqvio.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $224.8 million | $220.6 million | $438.1 million | $398.1 million |
| Net product revenue | $213.5 million | $160.8 million | $400.4 million | $296.6 million |
| Operating expenses | $416.5 million | $366.7 million | $776.5 million | $730.5 million |
| Operating loss | $(191.7) million | $(146.2) million | $(338.4) million | $(332.4) million |
| Net loss | $(277.4) million | $(189.6) million | $(517.7) million | $(389.9) million |
| Net loss per share, diluted | $(2.29) | $(1.61) | $(4.29) | $(3.32) |
Q2 product revenue comprised ONPATTRO $153.4 million, GIVLAARI $45.2 million and OXLUMO $14.9 million. Q2 cost of goods sold was 15.9% of product revenue; for the first half it was 14.4%.
For the six months, operating cash flow was $(294.0) million, investing cash flow $(4.6) million and financing cash flow $65.3 million. Cash, cash equivalents and restricted cash ended at $577.7 million. Cash, cash equivalents and marketable securities totaled approximately $2.11 billion, including marketable equity securities.
At June 30, 2022, current assets were $2.47 billion and current liabilities $657.7 million. Long-term debt carrying value was $677.7 million; the liability for sold future royalties was $1.24 billion. Stockholders’ equity was $176.0 million and accumulated deficit $5.96 billion.
Changes versus prior comparable periods
- Q2 revenue increased 2% year over year and first-half revenue increased 10%. Product revenue rose 33% and 35%, respectively, primarily with more patients receiving ONPATTRO, GIVLAARI and OXLUMO.
- Collaboration revenue fell 85% in Q2 and 65% in the first half, mainly because of lower Regeneron revenue related to research and manufacturing activity and reimbursement timing. Leqvio royalty revenue was $2.3 million in Q2 versus $0.3 million a year earlier.
- Operating expenses rose 14% in Q2 and 6% in the first half. Higher R&D and SG&A spending reflected development activity, staffing and commercial infrastructure costs.
- Net loss widened by $87.8 million in Q2 and $127.9 million for the first half. Higher interest expense and other expense contributed; first-half other expense included a $32.3 million loss on marketable equity securities and a $45.7 million loss from remeasurement of the development derivative liability.
Outlook, risks and notable items
- Management expected 2022 product revenue to increase versus 2021 as patient numbers grew and products launched in additional markets. The filing notes that 2022 combined net product revenue guidance was reduced in April; the guidance range is not stated in the provided filing text.
- Management expected combined R&D and SG&A expenses to increase in 2022 as the company advanced its pipeline and expanded commercial and compliance capabilities. It said current resources and expected receipts should fund its operating plan for at least 12 months from the filing date, while warning that additional funding could be needed sooner than expected.
- Alnylam’s Alnylam P5x25 strategy targets becoming a top-five biotech by market capitalization by the end of 2025 and achieving a self-sustainable financial profile. Management cautioned that it expects continued losses and that results may fluctuate.
- AMVUTTRA received U.S. approval in June 2022 for adults with hATTR amyloidosis polyneuropathy; additional filings were pending. The filing also reported positive Phase 2 topline results for cemdisiran in IgA nephropathy and positive Phase 3 fitusiran data announced by partner Sanofi.
- Material risks include clinical and regulatory uncertainty, competition, pricing and reimbursement pressures, reliance on collaborators and contract manufacturers, COVID-19 and Ukraine-related trial or supply disruptions, and foreign-exchange exposure. Management reported an expected delay in zilebesiran KARDIA-1 enrollment completion to mid-2023, partly due to Ukraine and COVID-19 impacts.
- The DOJ investigation concerning U.S. marketing and promotion of ONPATTRO remained ongoing; the company said no loss was determined probable or reasonably estimable. Alnylam also pursued patent-infringement lawsuits against Pfizer and Moderna over mRNA vaccine lipid technology; outcomes and potential recoveries remain uncertain.
- The Blackstone term loans mature in December 2027, bear a reported 9% interest rate at June 30, 2022, and are subject to a $100 million minimum quarterly liquidity covenant. The company reported compliance at quarter-end. The royalty-sale liability and derivative liability are sensitive to estimates, future product sales and development outcomes.
Important facts for investors to verify
- Check the complete 2022 product revenue guidance range and assumptions, including the impact of the April reduction and AMVUTTRA’s launch.
- Track product growth, Leqvio royalties and collaboration revenue, which can vary with partner activity, sales and milestone timing.
- Assess the pace of cash use, funding needs, debt service and the effect of future Leqvio royalties on the royalty-sale liability.
- Monitor clinical, regulatory and launch milestones, manufacturing capacity, and COVID-19 or geopolitical disruptions.
- Follow developments in the ONPATTRO DOJ investigation and the Pfizer/Moderna patent litigation; the filing does not quantify a probable loss or litigation recovery.