Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, today reported its consolidated financial results for the third quarter ended September 30, 2010, and company highlights.
“We continue to maintain a strong balance sheet, with funding from our strategic alliances allowing us to invest significantly in our platform and clinical pipeline efforts”
"Alnylam made important progress in the third quarter and recent period in advancing RNAi therapeutics as a whole new class of medicines. Indeed, our progress this quarter now brings us a pipeline of three RNAi therapeutics in clinical development. Specifically, we initiated our Phase I study of ALN-TTR01 for the treatment of transthyretin-mediated amyloidosis, and we continued enrolling patients in our ALN-VSP Phase I study in liver cancer patients and our ALN-RSV01 Phase IIb study in RSV-infected adult lung transplant patients," said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. "In addition to our pipeline efforts, we also made critically important strides in the systemic delivery of RNAi therapeutics including the discovery of our novel 'MC3' family of lipids that achieve effective gene silencing at single-digit microgram per kilogram dose levels. We also demonstrated that our delivery progress goes well beyond the liver, with data reported in a number of additional cell types and tissues. We look forward to continuing our progress across these key areas of our business throughout the remainder of 2010, and leading the advancement of this innovative technology to patients."
"We made key decisions this recent period to fully transition from service-based activities to a product-focused, higher-value commitment of effort in our business. In this regard, we completed a corporate restructuring that we expect will save about $25 million in previously planned 2011 expenses and maintains our core focus in advancing our pipeline and platform," said Barry Greene, President and Chief Operating Officer of Alnylam. "During the period, Novartis affirmatively committed to their list of 31 targets for which they have exclusive rights to Alnylam intellectual property and technology. We have benefited - and expect to continue to benefit - from our large number of existing partners, including Novartis, Roche, and Takeda, as well as recent alliances that we formed such as our Regulus partnership with sanofi-aventis, and new alliances that we expect to form going forward."
Cash, Cash Equivalents and Total Marketable Securities
At September 30, 2010, Alnylam had cash, cash equivalents and total marketable securities of $371.9 million, as compared to $435.3 million at December 31, 2009.
The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the third quarter of 2010 was $9.6 million, or $0.23 per share on both a basic and diluted basis (including $4.5 million, or $0.11 per share of non-cash stock-based compensation expense), as compared to a net loss of $9.2 million, or $0.22 per share on both a basic and diluted basis (including $5.2 million, or $0.13 per share of non-cash stock-based compensation expense), for the same period in the previous year.
Revenues were $27.7 million for the third quarter of 2010, as compared to $24.2 million for the same period last year. Revenues for the third quarter of 2010 included $14.0 million of collaboration revenues related to the company's alliance with Roche, $5.6 million of revenues from the company's alliance with Takeda Pharmaceuticals Company Limited, and $8.1 million of expense reimbursement, amortization, and/or license fee revenues from Novartis, the National Institutes of Health (NIH), Cubist Pharmaceuticals, Inc., Biogen Idec Inc., InterfeRx™, research reagent and services licenses, and other sources.
Research and Development Expenses
Research and development (R&D) expenses were $27.5 million in the third quarter of 2010, which included $2.7 million of non-cash stock-based compensation, as compared to $23.2 million in the third quarter of 2009, which included $3.1 million of non-cash stock-based compensation. The increase in R&D expenses in the third quarter of 2010 as compared to the prior year period was due primarily to employee severance, benefits and related costs incurred in connection with our September 2010 corporate restructuring, which included a workforce reduction. There was also an increase in compensation and related expenses due to additional R&D headcount, and clinical trial and manufacturing costs, to support the company's product platform and expanding product pipeline.
General and Administrative Expenses
General and administrative (G&A) expenses were $8.9 million in the third quarter of 2010, which included $1.8 million of non-cash stock-based compensation, as compared to $10.7 million in the third quarter of 2009, which included $2.1 million of non-cash stock-based compensation. The decrease in G&A expenses for the third quarter of 2010 as compared to the prior year period was due primarily to a reduction in professional service fees in association with business activities, primarily legal activities.
Equity in loss of joint venture was $1.2 million and $1.1 million for the third quarter of 2010 and 2009, respectively, related to Alnylam's approximate 49% share of the net losses incurred by Regulus.
Interest income was $0.6 million for the third quarter of 2010, as compared to $1.0 million for the third quarter of 2009. The decrease in interest income was due primarily to lower average interest rates as well as lower average cash, cash equivalents and total marketable securities balances as compared to the prior year.
Provision for income taxes was $0.3 million for the third quarter of 2010, as compared to a benefit from income taxes of $0.6 million for the third quarter of 2009.
2010 Financial Guidance
Alnylam expects that its cash, cash equivalents and total marketable securities balance will be greater than $325 million at December 31, 2010.
"We continue to maintain a strong balance sheet, with funding from our strategic alliances allowing us to invest significantly in our platform and clinical pipeline efforts," said Patricia Allen, Vice President, Finance and Treasurer of Alnylam. "We are more focused than ever on maintaining this solid balance sheet and strong revenue base, and expect to end the year with greater than $325 million in cash."
Third Quarter 2010 and Recent Significant Corporate Highlights
Product Pipeline and Scientific Leadership Highlights
- Advanced ALN-TTR for Transthyretin (TTR)-Mediated Amyloidosis (ATTR) into Clinical Development. Alnylam initiated a Phase I randomized, placebo-controlled, dose escalation study of ALN-TTR01. The study is being conducted in Portugal, Sweden, and the United Kingdom, and is designed to enroll approximately 28 ATTR patients. The primary objective is to evaluate the safety and tolerability of a single dose of intravenous ALN-TTR01. Secondary objectives include characterization of plasma and urine drug pharmacokinetics and assessment of pharmacodynamic activity based on measurements of circulating TTR serum levels. This study is actively enrolling patients.
- Continued Clinical Development of ALN-VSP for Treatment of Liver Cancer. Alnylam continued to advance its Phase I multi-center, open label, dose escalation trial with ALN-VSP to evaluate safety, tolerability, and pharmacokinetics in patients with advanced solid tumors with liver involvement. A significant number of patients have been enrolled across multiple dose cohorts, with dose escalation continuing. Alnylam will present additional data from the clinical trial at the Chemotherapy Foundation Symposium being held November 9 - 13, 2010 in New York City.
- Continued Clinical Development of ALN-RSV01 for Treatment of Respiratory Syncytial Virus (RSV). Alnylam continued to enroll patients in its Phase IIb study of ALN-RSV01 in RSV-infected adult lung transplant patients. The study is being conducted in over 30 sites worldwide and aims to enroll up to 76 patients. The primary study endpoint is reduction in the incidence of new or progressive bronchiolitis obliterans syndrome (BOS), a life threatening complication of RSV infection and an irreversible disease of the transplanted lung, resulting in approximately 50% mortality within three to five years of onset.
- Formed New Collaboration Focused on Advancement of ALN-HTT for Treatment of Huntington's Disease. Alnylam, Medtronic, Inc., and CHDI Foundation, Inc. formed a collaboration to advance ALN-HTT, a novel drug-device combination for the treatment of Huntington's disease. ALN-HTT consists of an RNAi therapeutic targeting huntingtin, the gene responsible for Huntington's disease, which is delivered to the central nervous system (CNS) using an implantable pump infusion system developed by Medtronic. Under this new alliance, CHDI has agreed to initially fund up to 50% of IND-enabling activities, which represents over $10 million in potential funding. The agreement between Alnylam and Medtronic will otherwise remain as a 50-50 partnership in the United States.
- Further Advanced Delivery of RNAi Therapeutics. In collaboration with the Massachusetts Institute of Technology (MIT), The University of British Columbia (UBC), AlCana Technologies, Inc., and Tekmira Pharmaceuticals Corporation, Alnylam presented new research on the systemic delivery of RNAi therapeutics at the International Liposome Research Days and Lipids, Liposomes & Membrane Biophysics meeting held at UBC in Vancouver, Canada. Among several new research achievements presented at the meeting, Alnylam scientists described the discovery of a new lipid called "MC3" that has been formulated with siRNAs into novel lipid nanoparticles (LNPs) that achieve effective in vivo gene silencing activity at single-digit microgram per kilogram dose levels. In addition, Alnylam scientists presented new pre-clinical research data at the 8th International M. Judah Folkman Conference demonstrating effective silencing of target genes in distinct cell types and tissues beyond the liver with systemic delivery of RNAi therapeutics. In particular, novel LNPs were designed to deliver siRNAs to the vascular endothelium, the cells that line blood vessels throughout the body. RNAi-mediated target gene silencing was observed in endothelial cells across a broad range of tissues, with duration of action lasting for over two months after a single dose. Further, new results were also presented regarding delivery of RNAi therapeutics to immune cells.
- Continued Scientific Leadership. In addition to the publications and meetings noted above, Alnylam continued to demonstrate its scientific leadership through additional peer-reviewed publications and presentations, and has published 31 papers year to date, including the following papers during this period:
- new data describing the discovery and validation of the role of the gene Sort1 in cardiovascular disease (Musunuru et al., Nature, 466: 714-721, 2010);
- new research demonstrating in vivo quantification of formulated and chemically modified siRNAs (Landesman et al., Silence, 1:16, doi:10.1186/1758-907X-1-16, 2010);
- results from the company's Phase IIa study with ALN-RSV01 in lung transplant patients infected with RSV (Zamora et al., Am. J. Respir. Crit. Care Med., doi:10.1164/ rccm.201003-0422OC, 2010);
- data showing that tumor heterogeneity is an active process maintained by a mutant EGFR-induced cytokine circuit in glioblastoma (Inda et al., Genes & Development, 24: 1731-1745, 2010);
- new research findings showing effective silencing of the alpha-synuclein gene in vivo with an RNAi therapeutic (McCormack et al., PLoS, Volume 5 Issue 8, 2010);
- new data demonstrating a combinatorial approach to determine functional group effects on lipidoid-mediated siRNA delivery (Mahon et al., Bioconjugate Chemistry 21, 1448-1454, 2010);
- new data highlighting the effect of chemical modifications on modulation of gene expression by duplex anti-gene RNAs (agRNAs) that are complementary to non-coding transcripts at gene promoters (Watts et al., Nucl. Acids Res., 38: 5242-5259, 2010);
- new research by Regulus scientists on the function of miR-146a in controlling Treg cell-mediated regulation of Th1 responses (Lu et al., Cell, 142(6):914-29, 2010);
- new data by Regulus scientists demonstrating that miR-380-5p represses p53 to control cellular survival and is associated with poor outcome in MYCN-amplified neuroblastoma (Swarbick et al., Nature Medicine, doi:10.1038/nm.2227, 2010);
- new data by Regulus scientists on an integrative multi-network and multi-classifier approach to predict genetic interactions (Pandey et al., PLoS Computational Biology, 2010); and,
- research by Regulus scientists showing a solution-state structure of a fully alternating 20-F/20-O-Me modified 42-nt dimeric siRNA construct (Podbevsek et al., Nucl. Acids Res. doi: 10.1093/nar/gkq621, 2010).
Business Execution Highlights
- Provided Update on Novartis Collaboration. Novartis notified Alnylam that they have formally selected their full and final list of 31 targets, for which they have exclusive rights to discover, develop, and commercialize RNAi therapeutics using Alnylam intellectual property and technology. In return, for any RNAi therapeutic products Novartis develops against these targets, Alnylam is entitled to receive significant milestone payments and royalties. In addition, Novartis notified Alnylam that they have declined their option to execute an Adoption License per the terms of the original 2005 agreement.
- Announced Corporate Restructuring. Alnylam announced a corporate restructuring with an approximate 25% reduction in overall workforce. The workforce reduction was generally consistent with a decreased need for service-based activities, such as the historical resource allocation of research services to Novartis.
- Obtained Equity Investment in Regulus. As part of their landmark alliance with Regulus, sanofi-aventis completed their $10 million equity investment in return for a less than 10% equity ownership position. The remaining ownership of Regulus is held equally by Alnylam and Isis.
- Awarded $2.5 Million in Grants from U.S. Government. Alnylam announced today that it has been granted approximately $2 million under the U.S. Government's Therapeutics Discovery Project. Alnylam was awarded eight grants for advancement of its RNAi therapeutic programs, as well as for its efforts with the systemic delivery of RNAi therapeutics. In addition, Regulus also announced that they were awarded two grants totaling approximately $0.5 million under the Project, which will support pre-clinical development of Regulus' microRNA therapeutic approaches to treat hepatitis C virus infection and fibrosis.
Intellectual Property (IP) Highlights
- Strengthened Management Team with New Key Appointments. Alnylam announced today that it has expanded its management team with the promotion of Kenneth Koblan, Ph.D., to Chief Scientific Officer, and the appointments of Steven Bossone, Ph.D., J.D. as Vice President, Intellectual Property, and Garvin Warner, Ph.D. as Vice President, Pre-clinical Development.
- Provided Update on Alnylam Board of Directors. Alnylam expanded its Board of Directors with the election of Steven M. Paul, M.D. Dr. Paul is the former President of the Lilly Research Laboratories of Eli Lilly and Company. Alnylam also announced the retirement of James L. Vincent from Alnylam's Board of Directors. Mr. Vincent is the former Chief Executive Officer and Chairman of Biogen Idec, Inc.
- Expanded Alnylam Biotherapeutics Scientific Advisory Board. Alnylam announced today that Alnylam Biotherapeutics expanded its Scientific Advisory Board with the appointment of Randal Kaufman, Ph.D. Dr. Kaufman is Professor of Biological Chemistry and Internal Medicine at the University of Michigan Medical School.