“2012 was a remarkable year of clinical achievement for Alnylam and for the advancement of RNAi therapeutics. Importantly, we believe that data from our ALN-TTR02 program showing up to a 94% knockdown of a disease-causing protein and data from our PCSK9 program showing up to a 50% decrease in LDL cholesterol served as unambiguous proof points that RNAi works in man. Moreover, we have executed on a clear product strategy we call ‘Alnylam 5x15,’ where we are advancing RNAi therapeutics toward genetically defined targets for diseases with high unmet need and where we intend to directly commercialize certain core programs from this effort in major parts of the world,” said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. “Specifically, in this past quarter and recent period we continued to execute on our pipeline efforts by enrolling patients in our Phase II trial for ALN-TTR02 and obtaining approval to initiate a Phase I study with ALN-TTRsc, a subcutaneously administered RNAi therapeutic for the treatment of ATTR. In addition, we presented key pre-clinical proof-of-concept data for several other programs, including ALN-AT3 for hemophilia, ALN-TMP for hemoglobinopathies, and ALN-AAT for liver disease associated with alpha-1 antitrypsin deficiency. We have also advanced a new program, ALN-AS1 for the treatment of acute intermittent porphyria, an ultra-rare orphan disease. These important accomplishments give us great confidence in the continued execution of our ‘Alnylam 5x15’ product strategy, where we believe we can make a difference in the lives of patients and deliver value to our shareholders.”
“In addition to the scientific and clinical progress we have made in the past quarter, we have also made important progress in our business and corporate development efforts. Over the past year, our new collaborations have resulted in over $75 million in realized funding,” said Barry Greene, President and Chief Operating Officer of Alnylam. “Recently, we formed a strategic alliance with Genzyme to advance ALN-TTR in Japan and the broader Asian-Pacific region, and earlier this week we announced a worldwide strategic alliance with The Medicines Company to advance ALN-PCS for the treatment of hypercholesterolemia. Both Genzyme and The Medicines Company are excellent partners for Alnylam with shared commitments to develop innovative medicines. Related to our partnered program efforts, Cubist has elected not to opt-in to continued development of our respiratory syncytial virus program; we plan to seek another partner to advance the program into a Phase III trial. In sum, we believe our corporate development progress enables our continued focus and execution on our ‘Alnylam 5x15’ product development and commercialization strategy with retention of value in our core programs in major markets.”
Cash, Cash Equivalents and Total Marketable Securities
At December 31, 2012, Alnylam had cash, cash equivalents and total marketable securities of $226.2 million, as compared to $260.8 million at December 31, 2011.
The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the fourth quarter of 2012 was $62.2 million, or $1.20 per share on both a basic and diluted basis (including $2.7 million, or $0.05 per share of non-cash stock-based compensation expense), as compared to a net loss of $14.3 million, or $0.33 per share on both a basic and diluted basis (including $4.1 million, or $0.10 per share of non-cash stock-based compensation expense), for the same period in the previous year. For the year ended December 31, 2012, the net loss was $106.0 million, or $2.11 per share (including $12.4 million, or $0.25 per share of non-cash stock-based compensation expense), as compared to a net loss of $57.6 million, or $1.36 per share (including $16.7 million, or $0.39 per share of non-cash stock-based compensation expense), for the same period in the previous year. The increase in net loss for the quarter and year ended December 31, 2012 compared to the prior periods was due primarily to a one-time charge of $65.0 million related to the restructuring of the company’s licensing agreement with Tekmira Pharmaceuticals Corporation.
Revenues were $8.5 million for the fourth quarter of 2012, as compared to $20.5 million for the same period last year. Revenues for the fourth quarter of 2012 included $5.5 million of revenues from the company’s alliance with Takeda Pharmaceuticals Company Limited, $1.4 million in revenues from the company’s alliance with Monsanto Company and $1.6 million of expense reimbursement, amortization, and/or license fee revenues from Cubist Pharmaceuticals, Inc., InterfeRx™, research reagent and services licensees, and other sources. The decrease in revenues in the fourth quarter of 2012 compared to the prior period was due to the completion of the amortization period for the company’s alliance with Roche (which assigned its rights and obligations to Arrowhead Research Corporation during 2011), which ended in the third quarter of 2012. Revenues were $66.7 million for the year ended December 31, 2012, as compared to $82.8 million for the prior year. Revenues for the year ended December 31, 2012 included $37.3 million of collaboration revenues related to the company’s alliance with Roche/Arrowhead, $22.0 million of revenues related to the company’s collaboration with Takeda, and $7.4 million of revenues related to the company’s collaborations with Monsanto, Novartis, Cubist, research reagent licenses, and other sources.
Research and Development Expenses
Research and development (R&D) expenses were $21.7 million in the fourth quarter of 2012, which included $1.7 million of non-cash stock-based compensation, as compared to $23.4 million in the fourth quarter of 2011, which included $2.6 million of non-cash stock-based compensation. The decrease in R&D expense for the fourth quarter of 2012 compared to the fourth quarter of the prior year was due to the decrease in compensation expenses due to the company’s corporate restructuring in January of 2012. R&D expenses were $86.6 million for the year ended December 31, 2012, which included $8.0 million of non-cash stock-based compensation, as compared to $99.3 million for the prior year, which included $10.9 million of non-cash stock-based compensation. The decrease in R&D expenses for the year ended December 31, 2012 as compared to the prior year was due primarily to lower clinical trial and manufacturing expenses related to the company’s ALN-RSV, ALN-PCS and ALN-VSP programs, partially offset by additional expenses related to the advancement of the company’s ALN-TTR program. Non-cash stock-based compensation expenses also decreased due primarily to the reduction in workforce in connection with the company’s January 2012 corporate restructuring. Partially offsetting these decreases were license fees due to certain entities, primarily fees due to Isis Pharmaceuticals, Inc. as a result of the Monsanto alliance.
General and Administrative Expenses
General and administrative (G&A) expenses were $10.2 million in the fourth quarter of 2012, which included $1.0 million of non-cash stock-based compensation, as compared to $10.7 million in the fourth quarter of 2011, which included $1.4 million of non-cash stock-based compensation. The decrease in G&A expense for the fourth quarter of 2012 compared to the fourth quarter of the prior year was due to lower consulting and professional services expenses. G&A expenses were $44.6 million for the year ended December 31, 2012, which included $4.3 million of non-cash stock-based compensation, as compared to $38.3 million in 2011, which included $5.8 million of non-cash stock-based compensation. The G&A expenses for the year ended December 31, 2012 as compared to the prior year increased primarily due to higher consulting and professional services expenses related to business activities, primarily legal activities. Looking ahead, G&A expenses are expected to decrease significantly in 2013.
Restructuring of Tekmira License Agreement
For the quarter and year ended December 31, 2012, the company incurred a $65.0 million charge to operating expenses in connection with the restructuring of its license agreement with Tekmira.
Equity in loss of joint venture was $0.9 million and $1.0 million for the fourth quarter of 2012 and 2011, respectively, related to the company’s share of the net losses incurred by Regulus. The company incurred $4.5 million and $3.5 million equity in loss of joint venture for the years ended December 31, 2012 and 2011, respectively. Based on the completion of the Regulus initial public offering and concurrent private placement, the company’s percentage ownership in Regulus decreased from approximately 44% to 17%. As a result of this issuance of stock by Regulus, the company recognized a gain of $16.1 million to other income. In addition, beginning in the fourth quarter, the company no longer uses the equity method to account for its investment in Regulus because it no longer has significant influence over the operating and financial policies of Regulus. The company now accounts for its investment in Regulus at fair value by adjusting the value to reflect fluctuations in Regulus’ stock price each reporting period.
Interest income was $0.2 million for the fourth quarter of 2012 and 2011. Interest income was $1.0 million for the year ended December 31, 2012, as compared to $1.2 million in 2011. The decrease in interest income was due primarily to lower average interest rates as well as lower average cash, cash equivalent and marketable securities balances.
Benefit from Income Taxes
The company had a benefit from income taxes of $10.6 million for the fourth quarter and year ended December, 31 2012 as compared to zero for the respective periods in 2011. The income tax benefit is associated with the corresponding increase in value of the company’s investment in Regulus that the company recorded in other comprehensive income, net of tax.
2013 Financial Guidance
Alnylam expects that its cash, cash equivalents and total marketable securities balance will be greater than $320 million at December 31, 2013.
“Alnylam continues to maintain a solid balance sheet, with approximately $226 million in cash for year-end 2012,” said Michael Mason, Vice President, Finance and Treasurer of Alnylam. “We also further strengthened our balance sheet earlier this year with a public offering that resulted in net proceeds of approximately $174 million. This financing results in a balance sheet and operating plan that we believe will enable us to advance our ‘Alnylam 5x15’ product development and commercialization strategy. As for guidance this year, we expect to end 2013 with greater than $320 million.”
Fourth Quarter 2012 and Recent Significant Corporate Highlights
Key “Alnylam 5x15” Program Highlights
Key Partnered Program Highlights
Business and Organizational Highlights
Conference Call Information
Management will provide an update on the company, discuss fourth quarter and 2012 results, and discuss expectations for the future via conference call on Thursday, February 7, 2013 at 4:30 p.m. ET. A corporate slide presentation will also be available on the News & Investors page of the company’s website, www.alnylam.com, to accompany the conference call. To access the call, please dial 877-312-7507 (domestic) or 631-813-4828 (international) five minutes prior to the start time and refer to conference ID 91074947. A replay of the call will be available beginning at 7:30 p.m. ET on Thursday, February 7, 2013. To access the replay, please dial 855- 859-2056 (domestic) or 404-537-3406 (international) and refer to conference ID 91074947.
About RNA Interference (RNAi)
RNAi (RNA interference) is a revolution in biology, representing a breakthrough in understanding how genes are turned on and off in cells, and a completely new approach to drug discovery and development. Its discovery has been heralded as “a major scientific breakthrough that happens once every decade or so,” and represents one of the most promising and rapidly advancing frontiers in biology and drug discovery today which was awarded the 2006 Nobel Prize for Physiology or Medicine. RNAi is a natural process of gene silencing that occurs in organisms ranging from plants to mammals. By harnessing the natural biological process of RNAi occurring in our cells, the creation of a major new class of medicines, known as RNAi therapeutics, is on the horizon. Small interfering RNA (siRNA), the molecules that mediate RNAi and comprise Alnylam’s RNAi therapeutic platform, target the cause of diseases by potently silencing specific mRNAs, thereby preventing disease-causing proteins from being made. RNAi therapeutics have the potential to treat disease and help patients in a fundamentally new way.
About Alnylam Pharmaceuticals
Alnylam is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. The company is leading the translation of RNAi as a new class of innovative medicines with a core focus on RNAi therapeutics for the treatment of genetically defined diseases, including ALN-TTR for the treatment of transthyretin-mediated amyloidosis (ATTR), ALN-AT3 for the treatment of hemophilia and rare bleeding disorders (RBD), ALN-AS1 for the treatment of acute intermittent porphyria, ALN-PCS for the treatment of hypercholesterolemia, and ALN-TMP for the treatment of hemoglobinopathies. As part of its “Alnylam 5x15TM” strategy, the company expects to have five RNAi therapeutic products for genetically defined diseases in clinical development, including programs in advanced stages, on its own or with a partner by the end of 2015. Alnylam has additional partnered programs in clinical or development stages, including ALN-RSV01 for the treatment of respiratory syncytial virus (RSV) infection and ALN-VSP for the treatment of liver cancers. The company’s leadership position on RNAi therapeutics and intellectual property have enabled it to form major alliances with leading companies including Merck, Medtronic, Novartis, Biogen Idec, Roche, Takeda, Kyowa Hakko Kirin, Cubist, Ascletis, Monsanto, Genzyme, and The Medicines Company. In addition, Alnylam holds a significant equity position in Regulus Therapeutics Inc., a company focused on discovery, development, and commercialization of microRNA therapeutics. Alnylam has also formed Alnylam Biotherapeutics, a division of the company focused on the development of RNAi technologies for applications in biologics manufacturing, including recombinant proteins and monoclonal antibodies. Alnylam’s VaxiRNA™ platform applies RNAi technology to improve the manufacturing processes for vaccines; GlaxoSmithKline is a collaborator in this effort. Alnylam scientists and collaborators have published their research on RNAi therapeutics in over 100 peer-reviewed papers, including many in the world’s top scientific journals such as Nature, Nature Medicine, Nature Biotechnology, and Cell. Founded in 2002, Alnylam maintains headquarters in Cambridge, Massachusetts. For more information, please visit www.alnylam.com.
About “Alnylam 5x15™”
The “Alnylam 5x15” strategy, launched in January 2011, establishes a path for development and commercialization of novel RNAi therapeutics to address genetically defined diseases with high unmet medical need. Products arising from this initiative share several key characteristics including: a genetically defined target and disease; the potential to have a major impact in a high unmet need population; the ability to leverage the existing Alnylam RNAi delivery platform; the opportunity to monitor an early biomarker in Phase I clinical trials for human proof of concept; and the existence of clinically relevant endpoints for the filing of a new drug application (NDA) with a focused patient database and possible accelerated paths for commercialization. By the end of 2015, the company expects to have five such RNAi therapeutic programs in clinical development, including programs in advanced stages, on its own or with a partner. The “Alnylam 5x15” programs include ALN-TTR for the treatment of transthyretin-mediated amyloidosis (ATTR), ALN-AT3 for the treatment of hemophilia and rare bleeding disorders (RBD), ALN-AS1 for the treatment of acute intermittent porphyria (AIP), ALN-PCS for the treatment of hypercholesterolemia, ALN-TMP for the treatment of hemoglobinopathies, and other programs. Alnylam intends to focus on developing and commercializing certain programs from this product strategy itself in North and South America, Europe, and other parts of the world; these include ALN-TTR, ALN-AT3, and ALN-AS1; the company will seek global development and commercial alliances for other programs.
About LNP Technology
Alnylam has licenses to Tekmira LNP intellectual property for use in RNAi therapeutic products using LNP technology.
Alnylam Forward-Looking Statements
Various statements in this release concerning Alnylam’s future expectations, plans and prospects, including without limitation, Alnylam’s expectations regarding its “Alnylam 5x15” product strategy, Alnylam’s views with respect to the potential for RNAi therapeutics, including ALN-TTR02 and ALN-TTRsc, ALN-AT3, ALN-AS1, ALN-TMP, ALN-AAT, ALN-VSP, ALN-RSV01, ALN-PCS02, and ALN-PCSsc, its expectations with respect to the timing and success of its clinical and pre-clinical trials, the expected timing of regulatory filings, including its plan to file IND or IND equivalent applications and initiate clinical trials for ALN-TTRsc, ALN-AT3 and ALN-AS1, its expectations regarding reporting data from its clinical studies, including its ALN-TTR02 and ALN-TTRsc studies, its plans to seek a partner for its ALN-TMP and ALN-ATT programs, and other ‘Alnylam 5x15’ programs, its expectations regarding the receipt of upfront and potential milestone and royalty payments under its agreements with Genzyme and The Medicines Company, its expectations regarding the market opportunity for ALN-TTR, including in Japan, and ALN-AS1, its views with regard to the strength, enforceability, and validity of its intellectual property estate, its plans with respect to its ALN-RSV program, and its expected cash position as of December 31, 2013, constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, Alnylam’s ability to manage operating expenses, Alnylam’s ability to discover and develop novel drug candidates and delivery approaches, successfully demonstrate the efficacy and safety of its drug candidates, the pre-clinical and clinical results for its product candidates, which may not support further development of product candidates, actions of regulatory agencies, which may affect the initiation, timing and progress of clinical trials, obtaining, maintaining and protecting intellectual property, Alnylam’s ability to enforce its patents against infringers and defend its patent portfolio against challenges from third parties, obtaining regulatory approval for products, competition from others using technology similar to Alnylam’s and others developing products for similar uses, Alnylam’s ability to obtain additional funding to support its business activities and establish and maintain strategic business alliances and new business initiatives, Alnylam’s dependence on third parties for development, manufacture, marketing, sales and distribution of products, the outcome of litigation, and unexpected expenditures, as well as those risks more fully discussed in the “Risk Factors” filed with Alnylam’s current report on Form 8-K filed with the Securities and Exchange Commission (SEC) on January 14, 2013 and in other filings that Alnylam makes with the SEC. In addition, any forward-looking statements represent Alnylam’s views only as of today and should not be relied upon as representing its views as of any subsequent date. Alnylam explicitly disclaims any obligation to update any forward-looking statements.
|Alnylam Pharmaceuticals, Inc.|
|Unaudited Condensed Consolidated Statements of Comprehensive Loss|
|(In thousands, except per share amounts)|
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|Net revenues from research collaborators||$||8,495||$||20,455||$||66,725||$||82,757|
|Research and development (1)||21,678||23,369||86,569||99,295|
|General and administrative (1)||10,166||10,672||44,612||38,280|
|Restructuring of Tekmira license agreement||65,000||—||65,000||—|
|Total operating expenses||96,844||34,041||196,181||137,575|
|Loss from operations||(88,349||)||(13,586||)||(129,456||)||(54,818||)|
|Other income (expense):|
|Equity in loss of joint venture (Regulus Therapeutics Inc.)||(881||)||(954||)||(4,522||)||(3,505||)|
|Gain on issuance of stock by Regulus Therapeutics Inc.||16,084||—||16,084||—|
|Other income (expense)||164||1||331||(531||)|
|Total other income (expense)||15,589||(717||)||12,870||(2,831||)|
|Loss before income taxes||(72,760||)||($14,303||)||(116,586||)||($57,649||)|
|Benefit from income taxes||10,572||—||10,572||—|
|Net loss per common share - basic and diluted||$||(1.20||)||$||(0.33||)||$||(2.11||)||$||(1.36||)|
|Weighted average common shares used to compute basic and diluted net loss per common share||51,821||42,715||50,286||42,410|
|Unrealized gain (loss) on marketable securities, net of tax||$||15,554||$||(14||)||$||15,827||$||(879||)|
|(1) Non-cash stock-based compensation expenses included in operating expenses are as follows:|
|Research and development||$||1,684||$||2,637||$||8,041||$||10,921|
|General and administrative||$||1,038||$||1,445||$||4,319||$||5,755|
|Alnylam Pharmaceuticals, Inc.|
|Unaudited Condensed Consolidated Balance Sheets|
|(In thousands, except share amounts)|
|December 31,||December 31,|
|Cash, cash equivalents and total marketable securities||$||226,228||$||260,809|
|Billed and unbilled collaboration receivables||104||1,468|
|Prepaid expenses and other current assets||2,641||4,997|
|Property and equipment, net||19,799||14,643|
|Investment in equity securities of Regulus Therapeutics Inc.||38,748||—|
|Accounts payable and accrued expenses||$||15,978||$||18,140|
|Total deferred revenue||132,291||140,853|
|Total deferred rent||5,198||4,211|
|Total stockholders’ equity (52.5 million and 42.7 million common shares issued and outstanding and at December 31, 2012 and December 31, 2011, respectively)||134,053||117,997|
|Total liabilities and stockholders' equity||$||287,520||$||281,917|
This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in Alnylam’s Annual Report on Form 10-K which includes the audited financial statements for the year ended December 31, 2011.