Alnylam Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. All financial figures below are in U.S. dollars; amounts are in millions unless noted. Alnylam is a commercial-stage RNAi therapeutics company. It generated product revenue from ONPATTRO, GIVLAARI and OXLUMO; Leqvio is commercialized by Novartis.
Financial results
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $187.6 | $125.9 | $585.8 | $329.3 |
| Net product revenue | $167.0 | $99.2 | $463.6 | $248.7 |
| Collaboration revenue | $20.1 | $26.6 | $121.3 | $80.6 |
| Operating expenses | $369.3 | $351.1 | $1,099.8 | $963.5 |
| Operating loss | $(181.7) | $(225.2) | $(514.1) | $(634.2) |
| Net loss | $(204.5) | $(253.3) | $(594.4) | $(614.7) |
| Basic and diluted loss per share | $(1.72) | $(2.18) | $(5.04) | $(5.37) |
- Product revenue growth reflected wider launches and more patients on treatment; OXLUMO contributed $14.9 million in Q3, compared with no product revenue in the prior-year quarter. Q3 product revenue comprised ONPATTRO $120.3 million, GIVLAARI $31.8 million and OXLUMO $14.9 million.
- Research and development expense rose 20% to $194.6 million in Q3 and 16% to $563.1 million for nine months, mainly from increased clinical, manufacturing and program advancement activity.
- Q3 SG&A fell 15% to $142.1 million, primarily reflecting a prior-year change in the estimate of contingent liabilities related to the Ionis arbitration. Nine-month SG&A increased 3% to $434.3 million.
- Interest expense was $40.3 million in Q3 and $106.2 million for nine months, up from $28.7 million and $56.0 million, respectively, largely reflecting the royalty-sale liability and term-loan borrowings. Nine-month other expense also included a $19.7 million loss from remeasurement of the development derivative liability.
- The filing does not report a single company-wide operating margin. Cost of goods sold was $28.1 million in Q3 and $81.4 million for nine months; cost of collaborations and royalties was $4.6 million and $21.1 million, respectively.
Cash, liquidity and debt
- At September 30, 2021, cash and cash equivalents were $1,094.0 million; marketable debt securities were $1,161.3 million and marketable equity securities were $72.6 million. Together, cash, cash equivalents and marketable securities totaled approximately $2.33 billion.
- Operating cash outflow for the first nine months was $491.6 million, essentially unchanged from $491.8 million in 2020. Investing activities provided $140.1 million; financing activities provided $954.8 million, including the $250 million June term-loan draw and $500 million received from the sale of future Leqvio royalties.
- Long-term debt carrying value was $433.8 million. Alnylam had drawn $450 million of its delayed-draw facility; a further $250 million tranche was available subject to conditions and was requested by December 31, 2021. The loans mature in December 2027 and carried an 8% interest rate at quarter-end.
- The liability for sold future royalties was $1.159 billion at September 30. Management stated that available liquidity, expected product and alliance cash generation, and Blackstone financing should support the operating plan for at least 12 months from filing.
- Alnylam reported compliance with its credit-agreement covenants, including the requirement to maintain at least $100 million of consolidated liquidity.
Outlook, developments and risks
- Management expected 2021 product revenue to increase from 2020 as patient numbers and geographic launches expanded. It also expected collaboration revenue to rise, principally from Regeneron and Novartis, and expected R&D plus SG&A to increase as pipeline development and global commercialization continued. No specific full-year revenue or earnings target is provided in the supplied filing text.
- 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. The company nevertheless expected continued annual operating losses for the foreseeable future.
- Vutrisiran’s FDA application had an April 14, 2022 action date; an EU application was submitted in September. The company also reported positive 18-month HELIOS-A results in October 2021, after the quarter-end. Novartis’s inclisiran U.S. application had an FDA action date of January 1, 2022 following resubmission. Sanofi moved a potential fitusiran filing date to 2024 after adding a lower-dose cohort.
- Alnylam discontinued its COVID-19 RNAi research activities with Vir in July 2021, citing portfolio prioritization and availability of vaccines and alternative treatments.
- Material risks include the ongoing DOJ subpoena investigation into U.S. marketing and promotion of ONPATTRO; the company said it was cooperating and could not estimate a probable loss. A securities class action relating to the 2017 offering had an agreement in principle to settle, subject to court approval.
- Other significant exposures include persistent losses and funding needs; clinical, regulatory and commercial uncertainty; reliance on partners and contract manufacturers; COVID-19-related disruptions; pricing and reimbursement pressure; and patent challenges. An EPO opposition resulted in revocation of an Alnylam ANGPTL3 patent; Alnylam filed an appeal.
- On October 28, 2021, after quarter-end, Alnylam announced CEO John Maraganore’s planned departure on December 31, 2021 and the transition of President and COO Yvonne Greenstreet to CEO.
Important facts for investors to verify
- Whether product growth and geographic launches continue, and whether operating cash outflow moderates as sales expand.
- Regulatory outcomes and launch timing for vutrisiran and inclisiran, and the resulting effect on revenue, royalties and the Blackstone royalty arrangement.
- Utilization and cost of the remaining term-loan tranche, ongoing interest burden, and the impact of the secured debt and royalty-sale obligations.
- Developments in the DOJ investigation and court approval of the securities-litigation settlement.
- Execution of the CEO transition and Alnylam P5x25 goals while the company continues to incur losses.