Alnylam Pharmaceuticals, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited. Alnylam is a commercial-stage biotechnology company developing RNAi medicines. It reported sales from ONPATTRO, GIVLAARI and OXLUMO; partnered Leqvio is commercialized by Novartis.
Financial performance
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Total revenue | $177.6 million | $99.5 million | +79% |
| Net product revenue | $135.8 million | $71.9 million | +89% |
| Collaboration revenue | $41.8 million | $27.5 million | +52% |
| Operating expenses | $363.8 million | $309.6 million | +18% |
| Operating loss | $(186.3) million | $(210.2) million | Loss narrowed |
| Net loss | $(200.3) million | $(182.2) million | Loss increased |
| Basic and diluted loss per share | $(1.71) | $(1.62) | Loss per share increased |
| Operating cash flow | $(235.7) million | $(246.2) million | Cash use decreased |
Product revenue growth reflected broader launches and more patients on therapy: ONPATTRO revenue was $102.0 million (+53%), GIVLAARI $24.7 million (+368%) and OXLUMO $9.1 million (launched after the comparable 2020 period). Collaboration revenue was led by Regeneron ($30.3 million) and Novartis ($8.1 million).
Operating expenses rose mainly from clinical trial and manufacturing costs, higher stock-based compensation, and increased compensation and infrastructure spending. Net loss increased despite a narrower operating loss, chiefly because Q1 2021 included $32.5 million of interest expense, including $28.2 million accretion on the future-royalty liability, and an $18.3 million loss from remeasurement of a development derivative. Higher gains on marketable equity securities partly offset these expenses.
Cost of goods sold was $23.0 million. Product gross profit, calculated as product revenue less cost of goods sold, was approximately $112.7 million, or 83% of product revenue; the filing notes cost of goods sold is affected by royalties, manufacturing timing and zero-cost inventory.
Liquidity, debt and cash flow
- Cash and cash equivalents were $379.5 million at March 31, 2021; marketable debt and equity securities were $1,273.0 million and $57.0 million. Combined cash, cash equivalents and marketable securities were approximately $1.71 billion, down from $1.87 billion at December 31, 2020.
- Cash, cash equivalents and restricted cash decreased $117.0 million during the quarter, ending at $382.0 million. Investing activities provided $71.4 million and financing activities provided $51.2 million.
- Long-term debt was $191.6 million. The company had drawn a $200 million first tranche of a Blackstone-affiliated delayed-draw term loan; further tranches are conditional and may be requested in 2021. The loan bears an 8% rate at quarter-end, matures in December 2027, is secured by specified assets and requires at least $100 million of quarterly consolidated liquidity. Alnylam reported compliance with covenants.
- The future-royalty liability was $1.10 billion. Alnylam sold Blackstone a portion of future inclisiran royalties and milestones and recorded a further $500 million payment due September 30, 2021 as a receivable.
- Management said available liquidity, expected product and alliance cash flows, and Blackstone strategic financing were expected to fund its operating plan for at least 12 months from the filing date. The company nevertheless expected continued annual operating losses for the foreseeable future.
Changes, outlook and material developments
- Management expected 2021 product revenue and collaboration revenue to increase compared with 2020, while research and development plus selling, general and administrative expenses, cost of goods sold, and total other expense were also expected to rise. No specific numerical revenue or expense guidance is provided in the filing text.
- Alnylam launched its P5x25 strategy, targeting a top-five biotech company by market capitalization by 2025 and aiming for profitability and financial self-sustainability. These are goals, not assured outcomes.
- In April 2021, Alnylam submitted an FDA application for vutrisiran following positive topline HELIOS-A results; an EU filing was planned after the 18-month analysis, expected in late 2021. HELIOS-B enrollment was expected to finish in late 2021. The company also expected mid-2021 topline results from the ILLUMINATE-C lumasiran study.
- Novartis’s U.S. inclisiran application had received an FDA complete response letter over unresolved manufacturing-facility inspection conditions; Novartis guided to resubmission in Q2–Q3 2021. This could delay U.S. launch and affect Alnylam’s retained royalty and milestone receipts.
- COVID-19 remained a risk to patient diagnosis and treatment, clinical-trial enrollment and conduct, regulatory inspections, and supply chains. The filing describes prior sales and trial disruptions and says future effects remain uncertain.
- On or about April 9, 2021, Alnylam received a U.S. Department of Justice subpoena seeking documents about U.S. marketing and promotion of ONPATTRO. The company was cooperating; it said no loss was yet determined probable or reasonably estimable.
- A New York securities class action concerning statements about the APOLLO trial remained pending; defendants’ appeal was pending after oral argument in April 2021. Another securities complaint had been dismissed, with plaintiffs’ request to amend denied in March 2021.
- In January 2021, Alnylam paid Ionis $41.2 million under an arbitration award. The filing also notes potential clinical, regulatory, pricing, reimbursement, patent, manufacturing, collaboration and commercialization risks.
Important facts for investors to verify
- Whether commercial growth in ONPATTRO, GIVLAARI and OXLUMO continues and converts to improved operating cash flow as the company expands launches.
- Progress and regulatory review of vutrisiran, including the FDA application and planned EU submission, and results from other late-stage programs.
- Timing and outcome of Novartis’s inclisiran U.S. resubmission, launch and resulting royalty and milestone economics after the Blackstone royalty sale.
- Cash burn, access to conditional debt tranches, debt service and the substantial secured obligations and royalty liability.
- Developments in the ONPATTRO government investigation and securities litigation, for which outcomes and potential financial consequences were not clear or estimable in this filing.
- Effects of COVID-19, manufacturing capacity, clinical-trial execution, reimbursement and competition on sales and pipeline timelines.