Alnylam Pharmaceuticals(US:ALNY)2024-08-01 12:22PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Alnylam Pharmaceuticals' unaudited financial statements for Q2 2024 show increased assets and revenues, a narrowed net loss, and positive operating cash flow Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2024, reflects an increase in total assets and a significant improvement in stockholders' deficit Balance Sheet Items (In thousands) | Balance Sheet Items (In thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $968,492 | $812,688 | | Total current assets | $3,172,856 | $2,982,697 | | Total assets | $4,009,634 | $3,829,880 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $1,055,251 | $967,786 | | Total liabilities | $4,012,701 | $4,050,524 | | Total stockholders' deficit | $(3,067) | $(220,644) | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations show a substantial increase in revenues and a significant reduction in net loss for both the quarter and six-month periods ended June 30, 2024 Statement of Operations (In thousands) | Statement of Operations (In thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $659,825 | $318,754 | $1,154,158 | $638,044 | | Net product revenues | $410,088 | $305,705 | $775,251 | $582,033 | | Net revenues from collaborations | $227,338 | $5,844 | $345,886 | $42,306 | | Income (loss) from operations | $48,614 | $(229,831) | $5,179 | $(379,638) | | Net loss | $(16,889) | $(276,024) | $(82,824) | $(450,125) | | Net loss per common share | $(0.13) | $(2.21) | $(0.66) | $(3.62) | Condensed Consolidated Statements of Cash Flows Cash flow statements for the first half of 2024 indicate a positive shift in operating cash flow and an overall net increase in cash and equivalents Cash Flow Activities (In thousands) | Cash Flow Activities (In thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $42,643 | $(225,461) | | Net cash used in investing activities | $(33,680) | $(84,930) | | Net cash provided by financing activities | $160,407 | $99,765 | | Net increase (decrease) in cash | $156,309 | $(208,580) | | Cash, cash equivalents and restricted cash, end of period | $971,193 | $659,976 | Notes to Condensed Consolidated Financial Statements The notes provide detailed insights into revenue drivers, significant liabilities, and ongoing patent infringement litigation - The company's strategy, Alnylam Px25, aims to transition it to a top-tier biotech company by the end of 2025 by delivering transformative medicines and achieving strong financial performance29 Net Product Revenues (Six Months Ended June 30, In thousands) | Net Product Revenues (Six Months Ended June 30, In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | ONPATTRO | $146,461 | $193,951 | | AMVUTTRA | $425,350 | $233,904 | | GIVLAARI | $120,183 | $105,805 | | OXLUMO | $83,257 | $48,373 | | Total | $775,251 | $582,033 | Net Revenues from Collaborations (Six Months Ended June 30, In thousands) | Net Revenues from Collaborations (Six Months Ended June 30, In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Roche | $91,186 | $— | | Regeneron Pharmaceuticals | $234,193 | $17,153 | | Novartis AG | $16,820 | $23,560 | | Total | $345,886 | $42,306 | - In June 2024, the company amended its agreement with Regeneron, granting a worldwide license for cemdisiran as a monotherapy, which resulted in the immediate recognition of $191.5 million in revenue5661 - The company has filed patent infringement lawsuits against Pfizer/BioNTech and Moderna related to their mRNA COVID-19 vaccines, seeking damages, and these cases are ongoing105106 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant revenue growth, controlled expense increases, narrowed net loss, and strong liquidity position for the first half of 2024 Overview This section provides an overview of Alnylam's focus on RNAi therapeutics, its strategic goals, commercialized products, and recent positive clinical trial results - The company's Alnylam Px25 strategy, launched in 2021, focuses on transitioning to a top-tier biotech company by the end of 2025 through sustainable innovation and strong financial performance110 - Positive topline results from the HELIOS-B trial of vutrisiran in patients with ATTR amyloidosis with cardiomyopathy were reported in June 2024, with plans for global regulatory filings later in the year110 Our Product Pipeline The company maintains a robust product pipeline spanning commercial products and numerous clinical programs, with recent positive data readouts and regulatory advancements - The pipeline features five commercial products and a broad range of clinical programs across rare, specialty, and prevalent diseases115 - Recent positive data readouts include the HELIOS-B Phase 3 study for vutrisiran and the KARDIA-2 Phase 2 study for zilebesiran122 - Collaboration partner Sanofi has submitted regulatory filings for fitusiran in China, Brazil, and the U.S., with a U.S. FDA target action date of March 28, 2025122 Results of Operations Operating results for the first half of 2024 show substantial revenue growth, particularly from collaborations, alongside increased operating expenses and a significantly reduced net loss Financial Performance (Six Months Ended June 30, in thousands) | Financial Performance (Six Months Ended June 30) | 2024 (in thousands) | 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $1,154,158 | $638,044 | 81% | | Net product revenues | $775,251 | $582,033 | 33% | | Net revenues from collaborations | $345,886 | $42,306 | >500% | | Total operating costs and expenses | $1,148,979 | $1,017,682 | 13% | | Research and development | $555,137 | $479,095 | 16% | | Selling, general and administrative | $459,194 | $398,348 | 15% | | Net loss | $(82,824) | $(450,125) | (82)% | - The increase in collaboration revenue was primarily driven by the modification of the Regeneron agreement, which resulted in the immediate recognition of $191.5 million for the cemdisiran monotherapy license134 - R&D expenses increased due to costs for preclinical activities, clinical trials for zilebesiran (KARDIA-3) and mivelsiran (cAPPRicorn-1), and expenses related to the HELIOS-B trial data readout141 Liquidity and Capital Resources The company's liquidity position is strong, with sufficient cash to fund operations and achieve self-sustainability without future equity financing, supported by positive operating cash flow - The company believes its current cash position will be sufficient to achieve a self-sustainable profile without the need for future equity financing151 Cash Flow Summary (Six Months Ended June 30, In thousands) | Cash Flow Summary (Six Months Ended June 30, In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $42,643 | $(225,461) | | Net cash used in investing activities | $(33,680) | $(84,930) | | Net cash provided by financing activities | $160,407 | $99,765 | Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no significant changes to the company's financial market risk exposures, primarily related to interest rates, since the prior fiscal year-end - There have been no significant changes to the company's financial market risk exposures, which are mainly related to interest rates, since December 31, 2023152 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - As of June 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective153 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2024154 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 13 for details on material pending legal proceedings, primarily patent infringement lawsuits against Pfizer and Moderna - For details on legal proceedings, the report refers to Note 13, which discusses ongoing patent infringement lawsuits against Pfizer and Moderna156 Item 1A. Risk Factors The company faces diverse risks including financial performance, operational dependencies, clinical and regulatory challenges, intellectual property disputes, and market competition - Key business risks include the unsuccessful marketing of approved products, a history of financial losses ($7.09 billion accumulated deficit as of June 30, 2024), and the need for substantial future funding158169 - The company is highly dependent on third parties for collaborations (e.g., Roche, Regeneron, Novartis), manufacturing, and conducting clinical trials, and failure by these parties could delay or terminate programs158178 - Significant industry risks include potential clinical trial failures, inability to obtain regulatory approval (as exemplified by the FDA's CRL for patisiran for cardiomyopathy), ongoing regulatory oversight, and unfavorable pricing regulations or healthcare reforms like the Inflation Reduction Act159190199 - Intellectual property is a major risk area, with potential for patent challenges, litigation costs (including ongoing lawsuits against Pfizer and Moderna), and the need to license third-party patents163221 - The company faces intense competition from existing drugs and new technologies, including other RNAi and antisense therapies, which could render its products obsolete or noncompetitive164226 Item 5. Other Information This section discloses executive Rule 10b5-1 trading plans and corrects the deadlines for stockholder proposals for the 2025 annual meeting - Executive Vice President Kevin Fitzgerald and Director Dennis A. Ausiello entered into Rule 10b5-1 trading plans in May 2024 for the potential sale of company stock239240241 - The company corrected the deadlines for stockholder proposals for the 2025 annual meeting: proposals for inclusion in proxy materials are due by December 2, 2024, and other business must be noticed between January 16, 2025, and February 15, 2025242243 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including stock award agreements and required officer certifications - Exhibits filed include forms of Performance Stock Unit, Restricted Stock Unit, and Nonstatutory Stock Option agreements, as well as required CEO and CFO certifications245