Alnylam Pharmaceuticals, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Unaudited results; amounts below are in millions of dollars unless stated otherwise. Alnylam is a commercial-stage RNAi biopharmaceutical company. It marketed ONPATTRO, GIVLAARI and OXLUMO; partnered product Leqvio was commercialized by Novartis.
Financial performance
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Total revenue | $220.6 | $104.0 | $398.1 | $203.4 |
| Net product revenue | $160.8 | $77.5 | $296.6 | $149.5 |
| Collaboration revenue | $59.4 | $26.4 | $101.2 | $54.0 |
| Operating costs and expenses | $366.7 | $302.8 | $730.5 | $612.5 |
| Operating loss | $(146.2) | $(198.9) | $(332.4) | $(409.0) |
| Net loss | $(189.6) | $(179.2) | $(389.9) | $(361.5) |
| Basic and diluted loss per share | $(1.61) | $(1.56) | $(3.32) | $(3.18) |
Q2 product revenue comprised ONPATTRO $113.8, GIVLAARI $30.6 and OXLUMO $16.3. Leqvio royalty revenue was $0.3. No consolidated gross-margin figure is provided. Cost of goods sold was $30.3 in Q2 and $53.3 for the first half.
Liquidity, cash flow and debt
- At June 30, cash and cash equivalents were $745.8; marketable debt and equity securities were $1,101.8 and $52.5. Cash, cash equivalents and marketable securities totaled approximately $1.90 billion.
- For the first half, operating cash outflow was $357.5, investing cash inflow was $228.4 and financing cash inflow was $381.0. Cash, cash equivalents and restricted cash ended at $748.1, up $249.0 from year-end.
- Long-term debt was $433.2, including the $250.0 second draw under the Blackstone credit facility. The facility’s stated interest rate was 8%; loans mature in December 2027. The company reported compliance with its covenants, including a $100.0 minimum quarterly liquidity requirement.
- The liability from the sale of future Leqvio royalties was $1.13 billion at carrying value. The company had sold 50% of royalties and 75% of commercial milestones to a Blackstone affiliate; future interest expense depends in part on estimated Leqvio sales and payments.
Changes versus prior period
- Q2 revenue rose 112% year over year; first-half revenue rose 96%. Growth reflected broader product launches and more patients on therapy, new OXLUMO sales, and higher collaboration revenue, particularly from Regeneron.
- Operating losses narrowed, but net losses increased year over year. Q2 other income in 2020 included substantial investment gains; Q2 2021 instead recorded investment losses. First-half other expense also reflected higher royalty-sale interest and a $22.8 loss from remeasuring a development derivative liability.
- First-half operating cash use decreased from $381.5 to $357.5, primarily reflecting higher cash receipts from product sales, partly offset by higher operating costs and debt interest.
- Research and development expense increased 14% for the first half, and selling, general and administrative expense increased 15%, reflecting pipeline advancement, hiring and commercial expansion.
Outlook, developments and risks
- Management expects 2021 product revenue and collaboration revenue to increase year over year, and expects research and development plus selling, general and administrative expense, cost of goods sold, collaboration costs and other expense to rise. No numerical revenue or profit guidance is provided in the supplied filing text.
- Management expects continued annual operating losses for the foreseeable future. It believes available cash, securities, expected product and alliance receipts, and Blackstone financing will fund its current plan for at least 12 months from filing. Its Alnylam P5x25 strategy targets becoming a top-five biotech by market capitalization by year-end 2025 and achieving financial self-sustainability; these are goals, not assurances.
- Vutrisiran’s U.S. NDA was accepted, with an FDA action date of April 14, 2022; EU filing was planned after further HELIOS-A results. The company reported positive topline ILLUMINATE-C results for lumasiran and expected APOLLO-B topline results in mid-2022. Novartis resubmitted the inclisiran NDA, with an FDA action date of January 1, 2022.
- In July 2021, Alnylam discontinued its COVID-19 RNAi research and development activities with Vir. It also entered a PeptiDream collaboration, including a $10.0 upfront payment and potential milestone payments of up to $247.0 per qualifying product, plus royalties.
- Risks include COVID-19 effects on diagnoses, treatment, trials and supply; commercial adoption, reimbursement and pricing; clinical, regulatory and manufacturing execution; dependence on collaborators; substantial continuing losses and financing needs; and competition and intellectual-property challenges.
- The company received an April 2021 U.S. Department of Justice subpoena concerning U.S. marketing and promotion of ONPATTRO and said it was cooperating. At the filing date, no loss was considered probable or reasonably estimable. A separate securities action related to the 2017 offering remained pending; the company disputed its allegations.
Important facts for investors to verify
- Whether product growth and collaboration receipts continue, and how much revenue growth converts to improved operating cash flow.
- Progress and regulatory outcomes for vutrisiran, inclisiran and other late-stage programs, including stated FDA action dates.
- Leqvio’s U.S. approval and commercial performance, and the resulting royalties, milestones, royalty-sale liability and interest expense.
- Debt draws, interest, covenants and liquidity relative to the company’s continued cash burn and stated funding horizon.
- Developments in the ONPATTRO government investigation and securities litigation, as well as COVID-19, supply, reimbursement and competitive risks.