Alnylam Pharmaceuticals, Inc. — 2020 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2020; it also presents unaudited fourth-quarter results. Alnylam is a commercial-stage biopharmaceutical company developing RNA interference (RNAi) therapeutics. At year-end, it had three company-commercialized products—ONPATTRO, GIVLAARI and OXLUMO—and a partnered product, Leqvio (inclisiran), approved in the EU. The company reported four marketed products overall, 12 clinical programs and six late-stage programs.
Financial performance and liquidity
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Total revenue | $492.9 million | $219.8 million | +124% |
| Net product revenue | $361.5 million | $166.5 million | +117% |
| Collaboration revenue | $131.3 million | $53.2 million | +147% |
| Operating costs and expenses | $1,321.3 million | $1,159.2 million | +14% |
| Loss from operations | $(828.4) million | $(939.4) million | Loss narrowed |
| Net loss | $(858.3) million | $(886.1) million | Loss narrowed |
| Basic and diluted loss per share | $(7.46) | $(8.11) | — |
| Net cash used in operating activities | $(615.0) million | $(278.4) million | Cash use increased |
Product revenue comprised ONPATTRO $306.1 million, GIVLAARI $55.1 million and OXLUMO $0.3 million. ONPATTRO revenue rose 84%; GIVLAARI generated its first full year of sales after its late-2019 launch. OXLUMO was approved in November 2020, with initial European sales in the fourth quarter.
Cost of goods sold was $78.1 million, implying an approximate 78% gross margin on product revenue; the filing notes that cost of goods sold was affected by royalties, capitalized inventory and the depletion of zero-cost inventory. Research and development expense was $654.8 million, essentially flat year over year; selling, general and administrative expense increased 23% to $588.4 million.
At December 31, cash, cash equivalents and marketable securities totaled $1.874 billion, versus $1.536 billion a year earlier; working capital was $2.030 billion. Total assets were $3.407 billion and total liabilities were $2.391 billion. The company had an accumulated deficit of $4.585 billion. Cash used in investing activities was $435.5 million and cash provided by financing activities was $995.0 million.
Debt and financing included a $200 million first draw under a Blackstone-affiliated senior secured delayed-draw facility, reported as $191.3 million of long-term debt net of related costs. The facility provides up to $700 million in three tranches, subject to conditions, and carries variable-rate interest; the reported rate at year-end was 8%. Separately, Alnylam sold Blackstone 50% of specified Leqvio royalties and 75% of specified commercial milestones for $500 million received in 2020 and an unconditional additional $500 million due September 30, 2021. The royalty-sale liability was $1.072 billion at year-end; related 2020 interest expense was $84.5 million.
Fourth-quarter 2020 revenue was $163.6 million, operating costs and expenses were $357.8 million, and net loss was $243.5 million, or $2.09 per share.
Material changes versus the prior year
- Revenue more than doubled, driven by expanding ONPATTRO and GIVLAARI sales, collaboration activity and milestones. Product revenue increased by $195.0 million and collaboration revenue by $78.1 million.
- Operating loss narrowed by $111.0 million, although operating expenses rose. Net loss narrowed by $27.8 million; lower collaboration-related deferred-revenue recognition and other factors contributed to the substantial increase in operating cash use.
- Alnylam entered a strategic financing collaboration with Blackstone, including the royalty sale, secured loan facility, up to $150 million of development funding and a $100 million equity investment. The company also issued shares through employee equity exercises and plans.
- Other expense included $84.5 million of interest on the royalty-sale liability and a $17.2 million loss from remeasuring a development derivative liability; these were partly offset by $54.0 million of realized and unrealized gains on marketable equity securities.
Outlook, commentary and principal risks
Management expected 2021 product revenue and collaboration revenue to increase, citing continued patient additions, launches in additional markets, reimbursable collaboration activity, potential milestones and possible Leqvio royalties. It expected combined R&D and SG&A expense and cost of goods sold to increase in 2021. Based on its operating plan, Alnylam said available resources, expected product and alliance cash flows, and Blackstone financing should fund its plans for at least 12 months from the filing date.
In early 2021, the company introduced its Alnylam P5x25 goals: more than 500,000 patients on RNAi medicines, at least six marketed products, more than 20 clinical programs, at least 40% revenue CAGR through year-end 2025, and sustainable non-GAAP profitability within the period. These are targets, not assurances; Alnylam cautioned that it expects continued operating losses and that the strategy depends on commercial, clinical, regulatory and financing execution.
- COVID-19: The pandemic affected patient demand, diagnosis, site visits and clinical enrollment; ONPATTRO sales in the second quarter were below initial expectations. Further effects on operations, trials and supply were uncertain.
- Regulatory and clinical execution: FDA issued a complete response letter for Novartis’ inclisiran application in December 2020 due to unresolved third-party facility inspection conditions. Novartis expected to resubmit in Q2–Q3 2021. Fitusiran dosing had been paused after thrombotic events and resumed in certain countries under amended protocols, with submission timing expected to be delayed.
- Commercial and reimbursement risk: The company is an early-stage commercial business and depends on successful launches, patient identification, payer access and acceptable pricing in small or uncertain patient populations. Competition and government or payer price controls may constrain uptake and returns.
- Manufacturing and collaboration dependence: Alnylam relies on third-party manufacturers, including Agilent as the sole active pharmaceutical ingredient supplier for ONPATTRO and GIVLAARI, and on partners for development or commercialization of certain programs. Supply or partner execution failures could delay revenue and development.
- Financing and contingent items: The company has substantial ongoing cash requirements, secured debt and covenants, and a royalty-sale obligation whose carrying value and interest expense depend on estimated inclisiran sales. It accrued $41.2 million for an Ionis arbitration award and paid that amount in January 2021. Two securities cases remained pending; the company disputed the claims.
PricewaterhouseCoopers LLP gave an unqualified opinion on the consolidated financial statements and concluded internal control over financial reporting was effective as of December 31, 2020.
Important facts for investors to verify
- Whether 2021 product and collaboration revenue growth materialized, particularly for ONPATTRO and GIVLAARI, and whether OXLUMO launches expanded beyond initial European demand.
- The timing and outcome of the FDA review of Leqvio, the resulting royalty and milestone cash flows, and the effect of the Blackstone royalty sale on Alnylam’s retained economics.
- Actual cash burn, operating-expense growth, access to remaining loan tranches and progress toward sustainable profitability; compare non-GAAP targets with GAAP results.
- Clinical and regulatory progress for vutrisiran, cardiomyopathy programs and other late-stage candidates; monitor fitusiran safety data and revised development timelines.
- Manufacturing continuity, payer coverage and pricing, COVID-related impacts, and the status or financial effects of pending litigation and other contingencies.