Alnylam Pharmaceuticals(ALNY) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements and management's discussion and analysis for the six months ended June 30, 2021 Financial Statements (Unaudited) For the six months ended June 30, 2021, Alnylam reported a significant 96% year-over-year increase in total revenues to $398.1 million, driven by strong growth in net product revenues which nearly doubled to $296.6 million; despite this revenue growth, the company's net loss widened to $389.9 million from $361.5 million in the prior-year period, primarily due to increased operating expenses and other expenses related to its financing activities; the balance sheet shows total assets increased to $3.51 billion, while total liabilities also grew to $2.66 billion, reflecting new debt and royalty-related liabilities Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $745,767 | $496,580 | | Marketable debt securities | $1,101,782 | $1,333,182 | | Total current assets | $2,725,163 | $2,614,777 | | Total assets | $3,509,429 | $3,407,061 | | Liabilities & Equity | | | | Long-term debt | $433,151 | $191,278 | | Liability related to the sale of future royalties, net | $1,128,561 | $1,071,541 | | Total liabilities | $2,656,067 | $2,390,814 | | Accumulated deficit | $(4,975,219) | $(4,585,369) | | Total stockholders' equity | $853,362 | $1,016,247 | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2021 and 2020 Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net product revenues | $160,811 | $77,533 | $296,580 | $149,471 | | Total revenues | $220,553 | $103,962 | $398,119 | $203,438 | | Research and development | $182,635 | $154,996 | $368,534 | $324,567 | | Selling, general and administrative | $145,323 | $127,896 | $292,182 | $254,657 | | Loss from operations | $(146,160) | $(198,859) | $(332,414) | $(409,017) | | Net loss | $(189,559) | $(179,229) | $(389,850) | $(361,450) | | Net loss per share | $(1.61) | $(1.56) | $(3.32) | $(3.18) | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(357,516) | $(381,491) | | Net cash provided by (used in) investing activities | $228,376 | $(327,542) | | Net cash provided by financing activities | $380,988 | $742,882 | | Net increase in cash | $249,019 | $33,653 | - Financing activities in H1 2021 included $250.0 million from a term loan facility, which compares to H1 2020 which included $500.0 million from the sale of future royalties and $99.5 million from issuance of common stock to strategic partners[31] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information regarding the figures presented in the condensed consolidated financial statements Net Product Revenues by Product and Region (in thousands) | Product/Region | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | ONPATTRO | $113,839 | $66,535 | $215,790 | $133,199 | | U.S. | $52,391 | $32,268 | $101,862 | $69,464 | | Europe | $44,904 | $23,020 | $85,557 | $44,186 | | GIVLAARI | $30,630 | $10,998 | $55,303 | $16,272 | | U.S. | $22,368 | $8,661 | $40,130 | $13,935 | | Europe | $8,020 | $2,337 | $14,893 | $2,337 | | OXLUMO | $16,342 | $— | $25,487 | $— | | Total Net Product Revenues | $160,811 | $77,533 | $296,580 | $149,471 | - Net revenues from collaborations in H1 2021 were $101.2 million, primarily driven by the collaboration with Regeneron ($76.7 million)[42] - The company received a subpoena from the U.S. Department of Justice in April 2021 regarding the marketing and promotion of ONPATTRO in the U.S., and is cooperating with the government, but the outcome and potential loss, if any, are not yet determinable[94] - The company entered into a credit agreement in April 2020 for up to $700.0 million in term loans, with $450.0 million drawn as of June 30, 2021 ($200.0 million in 2020 and $250.0 million in June 2021)[79][80] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 98% growth in H1 2021 net product revenues to the global expansion of ONPATTRO and GIVLAARI, and the successful launch of OXLUMO; net revenues from collaborations increased 88%, mainly due to increased activity with Regeneron and Novartis; operating expenses rose 19% to $730.5 million, driven by clinical trial and manufacturing activities for late-stage programs and commercial support costs; the company highlights its 'Alnylam P5x25' strategy to become a top-five biotech by 2025 and believes its current capital, including financing from Blackstone, is sufficient for at least the next 12 months - The company launched its 'Alnylam P5x25' strategy in early 2021, aiming to become a top-five biotech company by market capitalization by the end of 2025 through sustainable innovation and driving profitability[98] - The FDA accepted the New Drug Application (NDA) for vutrisiran for hATTR amyloidosis with polyneuropathy, setting a PDUFA action date of April 14, 2022[100][108] - Partner Novartis resubmitted the NDA for Leqvio (inclisiran) to the FDA in July 2021 after a previous complete response letter, with a new action date of January 1, 2022[98][107] Operating Costs and Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Cost of goods sold | $53,279 | $31,567 | 69% | | Cost of collaborations and royalties | $16,538 | $1,664 | 894% | | Research and development | $368,534 | $324,567 | 14% | | Selling, general and administrative | $292,182 | $254,657 | 15% | | Total operating costs and expenses | $730,533 | $612,455 | 19% | - Management believes that cash, cash equivalents, and marketable securities of $1.90 billion as of June 30, 2021, along with expected product sales and alliance revenues, are sufficient to fund operations for at least the next 12 months[135][139] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no significant changes to its financial market risks, primarily related to interest rates, since those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no significant changes to the financial market risks related to interest rates as of June 30, 2021, compared to those described as of December 31, 2020[141] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2021; no material changes to internal control over financial reporting were identified during the quarter - The CEO and CFO concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[143] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[144] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and exhibits related to the company's operations Legal Proceedings The company is involved in a securities class action lawsuit in New York State related to its November 2017 public stock offering, which it is defending vigorously; additionally, it received a subpoena from the U.S. Department of Justice in April 2021 concerning the U.S. marketing and promotion of ONPATTRO and is cooperating with the investigation - The company is defending a securities class action lawsuit in New York related to its November 2017 public stock offering, alleging material misstatements concerning the APOLLO Phase 3 trial of patisiran[93] - On April 9, 2021, the company received a subpoena from the U.S. Department of Justice regarding its U.S. marketing and promotion of ONPATTRO, and is cooperating with the government investigation[94] Risk Factors The company outlines extensive risks, with significant emphasis on the potential impact of the COVID-19 pandemic on commercial sales and clinical trials; financial risks include a history of significant losses ($4.98 billion accumulated deficit) and reliance on future revenues to achieve profitability; operational risks involve dependence on third-party collaborators like Novartis and Regeneron, and on contract manufacturers; major industry risks include potential clinical trial failures, regulatory hurdles for new drugs like vutrisiran, pricing pressures, and intense competition from existing and emerging therapies; the company also highlights legal risks from a DOJ investigation into ONPATTRO marketing and intellectual property challenges inherent in the novel RNAi field - The COVID-19 pandemic poses a material risk, potentially impacting commercial sales, patient demand, clinical trial enrollment, and supply chains[147][148] - The company has a history of significant losses, with an accumulated deficit of $4.98 billion as of June 30, 2021, and expects to incur annual net operating losses for the foreseeable future[151] - The business is highly dependent on collaborators such as Novartis for Leqvio and Sanofi Genzyme for fitusiran, and any failure by these partners to successfully develop or commercialize these products could adversely affect future revenues[161] - The company faces intense competition for its approved products and pipeline candidates, for example, ONPATTRO competes with Pfizer's tafamidis and Ionis's inotersen for hATTR amyloidosis[197] - A significant risk is the government investigation into the marketing of ONPATTRO, which could result in substantial fines, penalties, and other sanctions if the company is found to have engaged in improper promotion[179] Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to lease and research agreements, and certifications by the principal executive and financial officers - The exhibits section includes filed documents such as a lease amendment, sponsored research agreements, and officer certifications pursuant to the Securities Exchange Act of 1934[206] Signatures This section confirms the official signing and authorization of the Quarterly Report on Form 10-Q - The Quarterly Report on Form 10-Q was duly signed and authorized on August 3, 2021[208]