Alnylam third quarter 2012 revenues decrease to $16.8 million

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Nov 6 2012Alnylam Pharmaceuticals, Inc.

Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, today reported its consolidated financial results for the third quarter 2012, and company highlights.

"The highlights of this quarter include the positive results we reported in our clinical programs and our continued execution on our 'Alnylam 5x15' product strategy. Specifically, we reported positive data from a Phase I study and continued enrollment in our Phase II study of ALN-TTR02. We also showed encouraging pre-clinical data in programs using our GalNAc conjugate delivery platform that enables subcutaneous administration of RNAi therapeutics; these include ALN-TTRsc for the treatment of ATTR and ALN-AT3 for the treatment of hemophilia. Finally, we were pleased to report complete results from a Phase IIb trial of ALN-RSV01 for the treatment of respiratory syncytial virus infection in lung transplant patients," said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. "Continued execution on our 'Alnylam 5x15' product strategy remains our core focus, and we aim to complete our Phase II trial for ALN-TTR02 in mid-2013 and initiate our Phase III trial by the end of 2013. In addition, we expect to file an IND for ALN-TTRsc by end of this year and an IND for ALN-AT3 by mid-2013. With our recent accomplishments in our pipeline efforts, we have strengthened confidence that we can advance RNAi therapeutics toward genetically defined targets for diseases that currently have limited treatment options for patients and their caregivers."

"In addition to the substantial progress in our 'Alnylam 5x15' efforts, we have also advanced our business development efforts through new collaborations with Genzyme, Monsanto, and Ascletis," said Barry Greene, President and Chief Operating Officer of Alnylam. "Notably, we formed a strategic alliance with Genzyme to advance ALN-TTR in Japan and the broader Asian-Pacific region. ATTR is an endemic disease in Japan, and we believe this new alliance promises to bring our ALN-TTR program to these patients sooner and to reach this market faster. We are also excited about the alliance we formed with Monsanto, a leader in the field of agriculture. This collaboration facilitates broad use of our intellectual property and technology in agricultural applications and enables additional value creation for Alnylam outside of our focus on human therapeutics. Finally, we formed a strategic collaboration with Ascletis to develop ALN-VSP for the treatment of liver cancers in China, while we retain rights in the rest of the world."

Cash, Cash Equivalents and Total Marketable Securities

At September 30, 2012, Alnylam had cash, cash equivalents and total marketable securities of $295.8 million, as compared to $260.8 million at December 31, 2011.

Net Loss

The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the third quarter of 2012 was $19.5 million, or $0.38 per share on both a basic and diluted basis (including $3.4 million, or $0.07 per share of non-cash stock-based compensation expense), as compared to a net loss of $13.2 million, or $0.31 per share on both a basic and diluted basis (including $4.3 million, or $0.10 per share of non-cash stock-based compensation expense), for the same period in the previous year.

Revenues

Revenues were $16.8 million for the third quarter of 2012, as compared to $20.8 million for the same period last year. Revenues for the third quarter of 2012 included $9.3 million of collaboration revenues related to the company's alliance with Roche (which assigned its rights and obligations to Arrowhead Research Corporation during 2011), $5.5 million of revenues from the company's alliance with Takeda Pharmaceuticals Company Limited, and $2.0 million of expense reimbursement, amortization, and/or license fee revenues from Cubist Pharmaceuticals, Inc., Monsanto, InterfeRx™, research reagent and services licensees, and other sources. Looking ahead, Alnylam expects revenues to decrease due to the completion of amortization of Roche/Arrowhead deferred revenue during the third quarter of 2012.

Research and Development Expenses

Research and development (R&D) expenses were $22.1 million in the third quarter of 2012, which included $2.3 million of non-cash stock-based compensation, as compared to $24.3 million in the third quarter of 2011, which included $2.8 million of non-cash stock-based compensation. The decrease in R&D expenses in the third quarter of 2012 as compared to the prior year period was due primarily to lower clinical trial and manufacturing expenses related to the company's ALN-RSV and ALN-VSP programs, partially offset by additional expenses related to the advancement of the company's ALN-TTR program. Alnylam expects R&D expenses will remain consistent for the remainder of 2012.

General and Administrative Expenses

General and administrative (G&A) expenses were $12.8 million in the third quarter of 2012, which included $1.1 million of non-cash stock-based compensation, as compared to $9.0 million in the third quarter of 2011, which included $1.5 million of non-cash stock-based compensation. The increase in G&A expenses for the third quarter of 2012 as compared to the prior year period was due primarily to an increase in consulting and professional services related to business and legal activities. Alnylam expects G&A expenses will remain consistent for the remainder of 2012.

Regulus Therapeutics

Equity in loss of joint venture was $1.6 million and $0.5 million for the third quarter of 2012 and 2011, respectively, related to our share of the net losses incurred by Regulus.

Interest Income

Interest income was $0.3 million for the third quarter of 2012 and 2011.

2012 Financial Guidance

Alnylam now expects that its cash, cash equivalents and total marketable securities balance will be greater than $280 million at December 31, 2012, as compared with its previous guidance of year-end cash of greater than $250 million. The company's increase to its year-end cash guidance is due to upfront payments from new alliances with Monsanto and Genzyme.

"Alnylam continues to maintain a solid financial profile, ending the third quarter with approximately $296 million in cash, which excludes the upfront payment of $22.5 million from our recent alliance with Genzyme which was received in the fourth quarter," said Michael Mason, Vice President, Finance and Treasurer of Alnylam. "Due to our successful business development activities, we now believe we will end 2012 with greater than $280 million in cash, which will continue to provide us with a strong balance sheet as we advance our RNAi therapeutics through clinical trials and toward the market."

Third Quarter 2012 and Recent Significant Corporate Highlights

Key "Alnylam 5x15" Program Highlights

Reported Positive Clinical Data with ALN-TTR02, an RNAi Therapeutic Targeting Transthyretin-Mediated (TTR) for the Treatment of TTR-Mediated Amyloidosis (ATTR). Results from a Phase I study of ALN-TTR02 were presented at Boston University School of Medicine, showing that administration of ALN-TTR02 results in robust knockdown of serum TTR protein levels of up to 94%; the overall results were highly significant (p<0.00001 by ANOVA). Knockdown of TTR, the disease-causing protein in ATTR, was found to be rapid, dose dependent, durable, and specific after just a single dose. ALN-TTR02 was found to be generally safe and well tolerated in this Phase I normal human volunteer study, consistent with Alnylam's broader clinical experience with lipid nanoparticle (LNP)-formulated siRNA which includes over 100 patients or subjects, over 325 total doses administered, and a length of treatment exceeding two years. In addition, Alnylam reported data at the 8^th Oligonucleotide Therapeutics Society (OTS) meeting held October 28-31 in Boston, showing that the effects of ALN-TTR02 were RNAi mediated, providing yet further molecular evidence for efficacy of RNAi therapeutics in man. Specifically, using Alnylam's circulating exosome RNA detection (cERD) method, RNAi-mediated cleavage of the TTR mRNA transcript was demonstrated by a 5'RACE analysis of serum samples from subjects receiving ALN-TTR02.
Continued Enrollment in ALN-TTR02 Phase II Trial. Alnylam continues to enroll patients in its Phase II trial with ALN-TTR02 for the treatment of ATTR. This is an open-label, multi-center, multi-dose, dose-escalation trial designed to enroll approximately 20 ATTR patients. Subjects are being enrolled into cohorts of increasing doses and are receiving ALN-TTR02 once every four weeks for two cycles. The primary objectives of the study are to evaluate the safety and tolerability of multiple doses of ALN-TTR02 and to measure clinical activity based on serial measurement of circulating serum TTR levels. Alnylam expects to complete this trial in mid-2013.
Presented Pre-clinical Data with ALN-TTRsc, a Subcutaneously Delivered RNAi Therapeutic for the Treatment of ATTR. Data presented at the XX International Roundtable on Nucleosides, Nucleotides and Nucleic Acids (IRT) held August 5-9, 2012 in Montreal, Canada, showed potent, dose-dependent, and durable knockdown of serum TTR with Alnylam's GalNAc-conjugate approach in its ALN-TTRsc pre-clinical program. In non-human primates, ALN-TTRsc was administered in a loading regimen of once a day for five days, followed by a maintenance regimen of once a week for four weeks resulting in an approximately 80% reduction of TTR at doses as low as 2.5 mg/kg. In addition, in single dose and multi-dose pre-clinical safety studies in rodents and non-human primates, ALN-TTRsc was found to be generally safe and well tolerated with a "no adverse effect level" (NOAEL) greater than or equal to 300 mg/kg and a therapeutic index exceeding 100 fold, including the absence of any injection site reactions or elevations in pro-inflammatory markers. Additional data were also presented at the OTS meeting. Alnylam expects to file an investigational new drug (IND) application for ALN-TTRsc by year's end.
Designated ALN-AT3, an RNAi Therapeutic Targeting Antithrombin (AT) for the Treatment of Hemophilia, as Development Candidate; Presented New Pre-clinical Data at Multiple Meetings. Data were presented at multiple scientific meetings including the World Federation of Hemophilia (WFH) World Congress held July 8-12, 2012 in Paris, the IRT meeting, and the OTS meeting. In aggregate, research findings show that subcutaneous administration of ALN-AT3, which employs Alnylam's GalNAc-siRNA conjugate approach, results in potent, dose-dependent, and durable silencing of AT in pre-clinical models and that AT reduction can normalize thrombin generation in an animal model of hemophilia, establishing proof of concept for this program. Specifically, ALN-AT3 demonstrated potent activity in both mice and non-human primates, with an ED₅₀ for AT plasma protein knockdown of approximately 1 mg/kg after a single subcutaneous dose; nadir knockdown levels of AT were achieved by about day 15, with effects lasting over 22 days. In multi-dose rodent studies, once weekly subcutaneous dose administration of ALN-AT3 resulted in an ED₅₀ and ED₈₀ for AT plasma protein knockdown of 0.25 mg/kg and 0.75 mg/kg, respectively. Further, in studies performed in mouse models of hemophilia, ALN-AT3 was found to achieve dose-dependent knockdown of endogenous AT and to significantly increase and normalize thrombin generation. In aggregate, these new data support a once-a-week or twice-a-month subcutaneous dosing paradigm. Alnylam expects to file an IND application for ALN-AT3 in 2013.
Advanced Additional "Alnylam 5x15" Programs. Alnylam continues to advance its additional 'Alnylam 5x15' programs, including: ALN-PCS, an RNAi therapeutic targeting PCSK9 for the treatment of severe hypercholesterolemia; ALN-HPN, an RNAi therapeutic targeting the hepcidin pathway for the treatment of refractory anemia; and ALN-TMP, an RNAi therapeutic targeting TMPRSS6 for the treatment of hemoglobinopathies, amongst other pre-clinical programs. The company aims to advance these and other programs into further development stages with partnerships it intends to form. In addition, Alnylam presented data at the OTS meeting demonstrating generation of a GalNAc-siRNA conjugate in its ALN-PCS program. Specifically, the new ALN-PCSsc drug candidate demonstrated potent knockdown of the PCSK9 target gene with an ED₅₀ <0.3 mg/kg after a single subcutaneous dose.

Key Partnered Program Highlights

Presented Complete Results From Phase IIb Clinical Trial of ALN-RSV01, an Inhaled RNAi Therapeutic for the Treatment of Respiratory Syncytial Virus (RSV) Infection in Lung Transplant Patients. The Phase IIb study was a double-blind, placebo-controlled, randomized global study of ALN-RSV01 with a primary endpoint of the incidence of new or progressive bronchiolitis obliterans syndrome (BOS) at 180 days after RSV infection. At the European Respiratory Society Annual Congress, held September 1-5, 2012 in Vienna, Alnylam presented new results from key secondary endpoints and certain post-hoc data analyses. Specifically, ALN-RSV01 treatment resulted in a statistically significant reduction in day 90 BOS as compared with placebos end.

Business and Organizational Highlights

Formed Strategic Alliance with Genzyme to Advance ALN-TTR in Japan and Broader Asian Market. Alnylam and Genzyme, a Sanofi company, entered into an exclusive alliance to develop and commercialize ALN-TTR in Japan and the broader Asian-Pacific region. Genzyme will leverage its proven regulatory and commercial capabilities in the Japanese and broader Asian market to advance the ALN-TTR program, which includes ALN-TTR02 and ALN-TTRsc. Alnylam will maintain plans to develop and commercialize ALN-TTR in the United States, Europe, and rest of the world. Under the terms of the agreement, Genzyme has made an upfront cash payment of $22.5 million to Alnylam. In addition, Alnylam is eligible to receive certain success-based development milestone payments totaling up to $50 million. Furthermore, Genzyme will make tiered royalty payments to Alnylam that are expected to yield an effective rate in the mid-teens to mid-twenties on sales of ALN-TTR in the territories covered by Genzyme.
Formed Strategic Alliance with Monsanto to Advance RNAi in the Field of Agriculture. Alnylam and Monsanto Company formed a strategic alliance to advance biological technologies in the field of agriculture. The alliance brings Alnylam's broad RNAi-based intellectual property (IP) and proprietary technologies to Monsanto's new BioDirect™, which aims to deliver innovative biological solutions for farmers. Under the terms of the agreement, Monsanto receives worldwide, exclusive rights to use Alnylam's platform technology and IP in the field of agriculture. The deal includes $29.2 million in upfront payments from Monsanto to Alnylam. Alnylam is also eligible to receive milestone payments and additional funding for collaborative research efforts. In addition, Alnylam is eligible to receive royalty payments on products utilizing Alnylam IP. Moreover, Monsanto is Alnylam's strategic partner in agriculture for a ten-year period.
Earned Milestone from GlaxoSmithKline (GSK) from VaxiRNA Collaboration. Alnylam earned a development milestone payment from GSK in the amount of $3.2 million related to progress in the companies' collaboration on the use of VaxiRNA™ technology for the production of GSK influenza vaccine. Alnylam's VaxiRNA platform uses RNAi technology for the enhanced manufacturing of vaccine products.
Formed Strategic Collaboration with Ascletis to Develop ALN-VSP. Alnylam and Ascletis Pharmaceuticals Co., Ltd.., a privately held US-China joint venture pharmaceutical company, formed a strategic collaboration for the development of ALN-VSP, a systemically delivered RNAi therapeutic for the treatment of liver cancers including hepatocellular carcinoma (HCC), a significant area of unmet need in China. Alnylam will retain all rights in the rest of the world, and is eligible to receive milestones and royalties based on product sales.
Entered into Agreement with Major Pharmaceutical Company to Evaluate Alnylam Biotherapeutics Technology. Alnylam reported today that it has formed a new agreement with a pharmaceutical partner to evaluate Alnylam's Biotherapeutics technology, which aims to use RNAi technologies to improve the manufacturing processes for biologics.
Regulus Formed Strategic Alliances and Completed Initial Public Offering (IPO). Regulus and AstraZeneca entered into a strategic alliance aimed at advancing microRNA therapeutics for three microRNA targets focused on cardiovascular and metabolic diseases and oncology, all of which are currently in pre-clinical development. AstraZeneca made a payment of $28 million, which includes an equity investment and an upfront payment to Regulus. In addition, Regulus is eligible to receive clinical and commercial milestone payments from AstraZeneca, as well as royalties. Regulus and Biogen Idec formed a collaboration to explore microRNA biomarkers for multiple sclerosis, which included an equity investment in Regulus in addition to upfront and milestone payments. In October 2012, Regulus completed an IPO, raising $50.9 million in gross proceeds of an over-allotment exercise by the underwriters. Regulus' common stock began trading on the NASDAQ Global Market on October 4, 2012 under the symbol "RGLS." As a result of the IPO, Alnylam's ownership position in Regulus now stands at 17%.
Alnylam Expects Trial with Tekmira to Begin November 14. With respect to its ongoing litigation in the Massachusetts Business Court with Tekmira Pharmaceuticals Corporation, Alnylam expects a jury trial to commence on November 14, 2012. The company's financial guidance for 2012 excludes payments, if any, that could be made in connection with the resolution of this ongoing litigation.