ALNYLAM PHARMACEUTICALS, INC. Overview
We are a global commercial-stage biopharmaceutical company developing novel therapeutics based on ribonucleic acid interference, or RNAi. RNAi is a naturally occurring biological pathway within cells for sequence-specific silencing and regulation of gene expression. By harnessing the RNAi pathway, we have developed a new class of innovative medicines, known as RNAi therapeutics. RNAi therapeutics are comprised of small interfering RNA, or siRNA, and function upstream of conventional medicines by potently silencing messenger RNA, or mRNA, that encode for proteins implicated in the cause or pathway of disease, thus preventing them from being made. We believe this is a revolutionary approach with the potential to transform the care of patients with rare and prevalent diseases. To date, our efforts to advance this revolutionary approach have yielded the approval of five first-in-class RNAi-based medicines, ONPATTRO® (patisiran), GIVLAARI® (givosiran), OXLUMO® (lumasiran), AMVUTTRA® (vutrisiran) and Leqvio® (inclisiran). Our research and development strategy is to target genetically validated genes that have been implicated in the cause or pathway of human disease. We utilize a N-acetylgalactosamine (GalNAc) conjugate approach or lipid nanoparticle (LNP) to enable hepatic delivery of siRNAs. For delivery to the central nervous system, or CNS, and the eye (ocular delivery), we are utilizing an alternative conjugate approach based on a hexadecyl (C16) moiety as a lipophilic ligand. We are also advancing approaches for lung, muscle and adipose tissue delivery of siRNAs. Our focus is on clinical indications where there is a high unmet need, a genetically validated target, early biomarkers for the assessment of clinical activity in Phase 1 clinical studies, and a definable path for drug development, regulatory approval, patient access and commercialization.
In early 2021, we launched our Alnylam P5x25 strategy, which focuses on our planned transition to a top five biotech company, as measured by market capitalization, by the end of 2025. With Alnylam P5x25, we aim to deliver transformative rare and prevalent disease medicines for patients around the world through sustainable innovation, while delivering exceptional financial performance.
We currently have five marketed products and over a dozen clinical programs, including multiple programs in late-stage development, across four Strategic Therapeutic Areas, or "STArs:" Genetic Medicines; Cardio-Metabolic Diseases; Hepatic Infectious Diseases; and CNS/Ocular Diseases. Four of our marketed products are within the Genetic Medicines STAr, ONPATTRO, GIVLAARI, OXLUMO and AMVUTTRA. ONPATTRO is approved by theUnited States Food and Drug Administration , or the FDA, for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis, or hATTR amyloidosis, in adults and has also been approved in theEuropean Union , or EU, for the treatment of hATTR amyloidosis in adult patients with stage 1 or stage 2 polyneuropathy, inJapan for the treatment of transthyretin, or TTR, type familial amyloidosis with polyneuropathy, and in multiple additional countries, includingBrazil . InAugust 2022 , we reported positive results from the APOLLO-B Phase 3 study of patisiran (the non-branded name of ONPATTRO) in patients with ATTR amyloidosis with cardiomyopathy and announced that we plan to submit a supplemental New Drug Application, or sNDA, for ONPATTRO as a potential treatment for ATTR amyloidosis with cardiomyopathy for review by the FDA in late 2022. GIVLAARI is approved in theU.S. for the treatment of adults with acute hepatic porphyria, or AHP, in the EU for the treatment of AHP in adults and adolescents aged 12 years and older, and in several additional countries, includingBrazil ,Canada ,Switzerland andJapan . Regulatory filings for givosiran (the non-branded drug name for GIVLAARI) are pending or planned during the remainder of 2022 and beyond. InNovember 2020 , we received regulatory approval for OXLUMO in theU.S. and EU for the treatment of primary hyperoxaluria type 1, or PH1, in all age groups. InJune 2021 , we received marketing authorization approval for OXLUMO inBrazil for the treatment of PH1 in both children and adult patients. InOctober 2022 , we announced that the FDA approved our sNDA for lumasiran (the non-branded drug name for OXLUMO), for the treatment of PH1 to lower urinary oxalate and plasma oxalate levels in pediatric and adult patients. Regulatory filings in other territories are pending and additional filings are planned during the remainder of 2022 and beyond. InJune 2022 , we received regulatory approval for AMVUTTRA in theU.S. for the treatment of the polyneuropathy of hATTR amyloidosis in adults. InSeptember 2022 , theEuropean Commission , or EC, granted marketing authorization for AMVUTTRA for the treatment of hATTR amyloidosis in adult patients with stage 1 or stage 2 polyneuropathy. We have also filed for regulatory approval for vutrisiran (the non-branded name of AMVUTTRA) with theBrazilian Health Regulatory Agency and the JapanesePharmaceuticals and Medical Devices Agency , or the PMDA. Additional regulatory filings are planned during the remainder of 2022 and beyond. Our fifth product, Leqvio (inclisiran), is in the Cardio-Metabolic Diseases STAr. Leqvio is being developed and commercialized by our partner Novartis AG, or Novartis, and has received marketing authorization from the EC for the treatment of adults with hypercholesterolemia or mixed dyslipidemia and from the FDA as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia, or HeFH, or clinical atherosclerotic cardiovascular disease, or ASCVD, who require additional lowering of LDL-C. As of the end ofSeptember 2022 , Leqvio has been approved in more than 60 countries.
In addition to our marketed products, we have multiple late-stage investigational programs advancing toward potential commercialization. These programs include our wholly owned programs: lumasiran for the treatment of recurrent renal stones; patisiran for the treatment of transthyretin amyloidosis, or ATTR amyloidosis, with cardiomyopathy; vutrisiran for the
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treatment of ATTR amyloidosis with cardiomyopathy; as well as fitusiran for the treatment of hemophilia, which is being advanced by our partnerGenzyme Corporation , aSanofi Company , or Sanofi; and cemdisiran for the treatment of complement-mediated diseases, which we are advancing as a monotherapy in a Phase 2 study, and our partner Regeneron Pharmaceuticals, Inc., or Regeneron, is advancing cemdisiran in combination with pozelimab in Phase 3 studies in myasthenia gravis and paroxysmal nocturnal hemoglobinuria. As part of our Alnylam P5x25 strategy, we are focused on developing transformative prevalent disease medicines. In addition to Leqvio, we are advancing zilebesiran, an investigational, subcutaneously administered RNAi therapeutic targeting angiotensinogen, or AGT, in development for the treatment of hypertension. InNovember 2021 , we reported positive interim data from the ongoing Phase 1 study of zilebesiran, and initiated the KARDIA Phase 2 clinical studies for zilebesiran. KARDIA-1 is designed to evaluate zilebesiran as a monotherapy across different doses administered quarterly and biannually. KARDIA-2 will evaluate the safety and efficacy of zilebesiran administered biannually as a concomitant therapy in patients whose blood pressure is not adequately controlled by standard of care antihypertensive medications. In further support of our Alnylam P5x25 strategy and in view of our evolving risk profile, we remain focused on continued evolution of our global infrastructure, including key objectives such as optimizing our global structure for execution in key markets, enhancing performance consistent with our values, and continuing to strengthen our culture. We maintain focus on our global compliance program to drive its evolution and enhancement in view of theAlnylam P5x25 strategy. Building from our global Code of Business Conduct and Ethics, our compliance program is designed to empower our employees and those with whom we work to execute on our strategy consistent with our values and in compliance with applicable laws. Comprised of components such as risk assessment and monitoring; policies, procedures, and guidance; training and communications; dedicated resources; and systems and processes supporting activities such as third party relationships and investigations and remediation; our program and related controls are built to enhance our business processes, structures, and controls across our global operations. Based on our expertise in RNAi therapeutics and broad intellectual property estate, we have formed alliances with leading pharmaceutical and life sciences companies to support our development and commercialization efforts, including Regeneron, Novartis (which acquired our partner The Medicines Company, or MDCO, in 2020), Sanofi, Vir Biotechnology, Inc., or Vir, Dicerna Pharmaceuticals, Inc. (acquired by Novo Nordisk A/S, or Novo Nordisk, inDecember 2021 ), or Dicerna, and PeptiDream, Inc., or PeptiDream. We have incurred significant losses since we commenced operations in 2002 and as ofSeptember 30, 2022 , we had an accumulated deficit of$6.36 billion . Historically, we have generated losses principally from costs associated with research and development activities, acquiring, filing and expanding intellectual property rights, and selling, general and administrative costs. As a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical and commercial capabilities, including global commercial operations, continued management and growth of our patent portfolio, collaborations and general corporate activities, we expect to incur additional operating losses, however we expect 2019 represents our peak operating loss year as we transition towards a self-sustainable financial profile. We anticipate that our operating results will continue to fluctuate for the foreseeable future. Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods. We currently have programs focused on a number of therapeutic areas and, as ofSeptember 30, 2022 , we generate worldwide product revenues from four commercialized products, ONPATTRO, GIVLAARI, OXLUMO and AMVUTTRA, primarily in theU.S. ,Europe andJapan . However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products and/or successfully market and sell our approved products or any other products approved in the future. A portion of our total revenues in recent years has been derived from collaboration revenues from strategic alliances with Regeneron, Vir and Novartis. In addition to revenues from the commercial sales of our approved products and potentially from sales of future products, we expect our sources of potential funding for the next several years to continue to be derived in part from existing and new strategic alliances. Such alliances include, or may include in the future, license and other fees, funded research and development, milestone payments and royalties on product sales by our licensors, including royalties on sales of Leqvio made by our partner Novartis, as well as proceeds from the sale of equity or debt.
Convertible Senior Notes
InSeptember 2022 , we issued$1.04 billion aggregate principal amount of 1.00% Convertible Senior Notes due 2027, or Notes. The Notes will mature onSeptember 15, 2027 , unless earlier converted, redeemed or repurchased. The Notes will bear interest fromSeptember 15, 2022 at a rate of 1.00% per year payable semiannually in arrears onMarch 15 andSeptember 15 of each year, beginning onMarch 15, 2023 . BeforeJune 15, 2027 , noteholders will have the right to convert their Notes in certain circumstances and during specified periods. From and afterJune 15, 2027 , the Notes will be convertible at the option of the noteholders at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. We will settle any conversions of Notes by paying or delivering, as applicable, cash shares of our common stock, par value$0.01 per share, or Common Stock, or a combination of cash and shares of Common Stock, at our election. 30
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In connection with the issuance of the Notes, we paid$118.6 million , including expenses, to enter into privately negotiated capped call transactions with certain initial purchasers of the Notes or their respective affiliates and certain other financial institutions, or capped call transactions. The capped call transactions are expected generally to reduce the potential dilution upon conversion of the Notes in the event that the market price per share of our common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the Notes, and is subject to anti-dilution adjustments generally similar to those applicable to the conversion rate of the Notes. The cap price of the capped call transactions will initially be$424.00 per share, which represents a premium of approximately 100% based on the last reported sale price of our common stock of$212.00 per share onSeptember 12, 2022 , and is subject to certain adjustments under the terms of the capped call transactions. If, however, the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution upon conversion of the Notes to the extent that such market price exceeds the cap price of the capped call transactions. We used approximately$762.0 million of the net proceeds from the offering to repay borrowings, inclusive of prepayment premiums, under our credit agreement withBlackstone , and intend to use the remainder of the net proceeds for general corporate purposes. The COVID-19 Pandemic The ongoing COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions, and other public health safety measures. We have and will continue to closely monitor the spread of COVID-19 and its variants, and plan to continue taking steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the ongoing COVID-19 pandemic. We expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, the patients we serve and other business partners in light of COVID-19 and variants thereof. The extent to which COVID-19 ultimately impacts our business, results of operations or financial condition will depend on future developments, which, despite progress in vaccination efforts, remain highly uncertain and cannot be predicted with confidence, such as the duration of the COVID-19 pandemic, new strains of the virus, including any future variants that may emerge, which may impact rates of infection and vaccination efforts, developments or perceptions regarding the safety of vaccines, new information that may emerge concerning the severity of COVID-19, and any additional preventative and protective actions taken to contain the pandemic or treat its impact, among others. The estimates of the impact on the Company's business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or treat its impact and the economic impact on local, regional, national and international markets. For additional information related to the actual or potential impacts of COVID-19 on our business, please read Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q.
Research and Development
Since our inception, we have focused on drug discovery and development programs. Research and development expenses represent a substantial percentage of our total operating expenses, as reflected by our broad pipeline of clinical development programs, which includes multiple programs in late-stage development.
Our Product Pipeline
Our broad pipeline, including five approved products and multiple late and early-stage investigational RNAi therapeutics, is focused in four STArs: Genetic Medicines; Cardio-Metabolic Diseases; Hepatic Infectious Diseases; and CNS/Ocular Diseases.
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The chart below is a summary of our commercial products and late- and
early-stage development programs as of
[[Image Removed: alny-20220930_g1.gif]]During the third quarter of 2022 and recent period, we reported the following updates from our commercially approved products and our late-stage clinical programs:
Commercial
TTR Franchise: ONPATTRO & AMVUTTRA
•We achieved global net product revenues for ONPATTRO and AMVUTTRA for the third
quarter of 2022 of
GIVLAARI
•We achieved GIVLAARI global net product revenues for the third quarter of 2022
of
OXLUMO
•We achieved OXLUMO global net product revenues for the third quarter of 2022 of
Leqvio
•Our partner, Novartis, continued the launch of Leqvio in the
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•We continued to advance patisiran, in development for the treatment of ATTR amyloidosis:
•Reported positive results from the APOLLO-B Phase 3 study in patients with ATTR amyloidosis with cardiomyopathy, and announced that we remain on track to submit an sNDA for review by the FDA by year-end.
•We continued to advance vutrisiran, in development for the treatment of ATTR amyloidosis:
•Received marketing authorization for AMVUTTRA for the treatment of hATTR amyloidosis in adults with stage 1 or stage 2 polyneuropathy inEurope and theUK , as well as approval for TTR type familial amyloidosis with polyneuropathy inJapan ; and •Announced that we do not plan to conduct the optional interim analysis for the HELIOS-B Phase 3 study in patients with ATTR amyloidosis with cardiomyopathy, and that the study remains on track for topline results in early 2024.
•We continued to advance lumasiran for the treatment of PH1 and in development for the treatment of recurrent kidney stone disease:
•Based on the successful outcome of the ILLUMINATE-C study in children and adults with advanced PH1, received approval from the FDA of an sNDA for OXLUMO, expanding the indication for the treatment of PH1 to lower urinary oxalate and plasma oxalate levels in pediatric and adult patients, and received approval from the EMA of a Type II variation to include the ILLUMINATE-C data in the label.
•We continued to advance cemdisiran for the treatment of complement-mediated diseases, in collaboration with our partner, Regeneron:
•Reported positive results from the Phase 2 study in patients with immunoglobulin A nephropathy, or IgAN; and
•Announced that we are working with Regeneron to finalize plans for the Phase 3 clinical development of cemdisiran in IgAN.
There is a risk that any drug discovery or development program may not produce revenue for a variety of reasons, including the possibility that we will not be able to adequately demonstrate the safety and effectiveness of the product candidate or obtain approval or the desired labeling for the product candidate from regulatory authorities. Moreover, there are uncertainties specific to any new field of drug discovery, including RNAi. The success of ONPATTRO, GIVLAARI, OXLUMO, AMVUTTRA or any other product candidate we develop is highly uncertain. Due to the numerous risks associated with developing drugs, including those risks associated with the ongoing COVID-19 pandemic, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts necessary to complete the development of any potential product candidate or indication, or the period, if any, in which material net cash inflows will commence from any approved product or indication. Any failure to complete any stage of the development of any potential products or any approved product for an expanded indication in a timely manner or successfully launch, market and sell any of our commercially approved products, could have a material adverse effect on our operations, financial position and liquidity. A discussion of some of the risks and uncertainties associated with completing our research and development programs within the planned timeline, or at all, and the potential consequences of failing to do so, are set forth in Part II, Item 1A below under the heading "Risk Factors." Strategic Alliances Our business strategy is to develop and commercialize a broad pipeline of RNAi therapeutic products directed towards our four STArs. As part of this strategy, we have entered into, and expect to enter into additional, collaboration and licensing agreements as a means of obtaining resources, capabilities and funding to advance our investigational RNAi therapeutic programs. Our collaboration strategy is to form alliances that create significant value for ourselves and our collaborators in the advancement of RNAi therapeutics as a new class of innovative medicines. Specifically, with respect to our CNS/Ocular Disease pipeline, inApril 2019 , we entered into a global, strategic collaboration with Regeneron to discover, develop and commercialize RNAi therapeutics for a broad range of diseases by addressing disease targets expressed in the eye and CNS, in addition to a select number of targets expressed in the liver. InJuly 2020 , Regeneron exercised its co-development/co-commercialization option on our first CNS-targeted development candidate, ALN-APP, an investigational RNAi therapeutic in development for the treatment of hereditary cerebral amyloid angiopathy and autosomal dominant Alzheimer's Disease, which we are leading. We are also advancing multiple other programs with Regeneron. With respect to our Cardio-Metabolic pipeline, inMarch 2013 , we entered into an exclusive, worldwide license with MDCO (acquired by Novartis AG inJanuary 2020 ) pursuant to which MDCO was granted the right to develop, manufacture and commercialize RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9 for the treatment of 33
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hypercholesterolemia and other human diseases, including inclisiran. InMarch 2018 , we entered into a discovery collaboration with Regeneron to identify RNAi therapeutics for nonalcoholic steatohepatitis, or NASH, and potentially other related diseases, and inNovember 2018 , we and Regeneron entered into a separate, fifty-fifty collaboration to further research, co-develop and commercialize any therapeutic product candidates that emerge from these discovery efforts. InApril 2020 , we entered into a development and commercialization collaboration with Dicerna to advance investigational RNAi therapeutics for the treatment of alpha-1 antitrypsin deficiency-associated liver disease, or alpha-1 liver disease. With respect to our Hepatic Infectious Disease pipeline, inOctober 2017 , we announced an exclusive licensing agreement with Vir for the development and commercialization of RNAi therapeutics for infectious diseases, including chronic HBV infection. InMarch 2020 , we announced an expansion of our exclusive licensing agreement with Vir to include the development and commercialization of RNAi therapeutics targeting SARS-CoV-2, the virus that causes the disease COVID-19, which we further expanded inApril 2020 to include up to three additional targets focused on host factors for SARS-CoV-2, including angiotensin converting enzyme-2, and transmembrane protease, serine 2, and potentially a third mutually selected host factor target. InJuly 2021 , we notified Vir that we elected to discontinue ALN-COV, in development for the treatment of COVID-19, and all other COVID-19 research and development activities, based on a portfolio prioritization in view of the availability of highly effective vaccines and alternative treatment options. Following such discontinuation of COVID-19 related activities, we have no further obligations to work on the COVID-related targets and Vir has no further rights to such targets under our exclusive licensing agreement. With respect to our Genetic Medicine pipeline, we formed a broad strategic alliance with Sanofi in 2014. InJanuary 2018 , we and Sanofi amended our 2014 collaboration and entered into the Exclusive License Agreement, referred to as the Exclusive TTR License, under which we have the exclusive right to pursue the further global development and commercialization of all TTR products, including ONPATTRO, AMVUTTRA and any back-up products, and the ALN-AT3 Global License Terms, referred to as the AT3 License Terms, under which Sanofi has the exclusive right to pursue the further global development and commercialization of fitusiran and any back-up products. InApril 2019 , we and Sanofi agreed to further amend the 2014 Sanofi collaboration to conclude the research and option phase and to amend and restate the AT3 License Terms to modify certain of the business terms. We intend to continue to evaluate and explore partnership opportunities through collaboration and licensing arrangements, and may enter into new collaborations to advance certain products or disease areas. For example, inJanuary 2022 , we announced that we and Novartis agreed to collaborate on the discovery and development of an siRNA-based targeted therapy to restore functional liver cells in patients with end-stage liver diseases. We also have entered into license agreements to obtain rights to intellectual property in the field of RNAi. In addition, because delivery of RNAi therapeutics has historically been an important objective of our research activities, we have entered into various collaboration and licensing arrangements with other companies and academic institutions to gain access to delivery technologies, including various LNP delivery technologies, and we may enter into such agreements in the future to gain access to products or technologies. For example, in 2021, we entered into a license and collaboration agreement with PeptiDream to discover and develop peptide-siRNA conjugates leveraging PeptiDream's proprietary Peptide Discovery Platform System technology.
Critical Accounting Policies and Estimates
Our critical accounting policies are described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which we filed with theSEC onFebruary 10, 2022 . There have been no significant changes to our critical accounting policies since the beginning of this fiscal year.
Results of Operations
The following data summarizes the results of our operations:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Total revenues $ 264,306 $ 187,633 $ 76,673 41 % $ 702,383 $ 585,752 $ 116,631 20 %
Operating costs and expenses $ 522,346 $ 369,310 $ 153,036 41 % $ 1,298,841 $ 1,099,843 $ 198,998 18 %
Loss from operations $ (258,040) $ (181,677) $ (76,363) 42 % $ (596,458) $ (514,091) $ (82,367) 16 %
Total other expense, net $ (147,903) $ (22,559) $ (125,344) 556 % $ (323,514) $ (77,751) $ (245,763) 316 %
Net loss $ (405,920) $ (204,514) $ (201,406) 98 % $ (923,663) $ (594,364) $ (329,299) 55 %
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Discussion of Results of Operations
Revenues
Total revenues consist of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Net product revenues $ 232,267 $ 167,044 $ 65,223 39 % $ 632,654 $ 463,624 $ 169,030 36 %
Net revenues from collaborations 29,297 20,136 9,161 45 % 64,267 121,328 (57,061) (47) %
Royalty revenue 2,742 453 2,289 505 % 5,462 800 4,662 583 %
Total $ 264,306 $ 187,633 $ 76,673 41 % $ 702,383 $ 585,752 $ 116,631 20 %
Net Product Revenues
Net product revenues consist of the following, by product and region:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
ONPATTRO
United States $ 67,196 $ 51,247 $ 15,949 31 % $ 200,588 $ 153,109 $ 47,479 31 %
Europe 57,217 51,019 6,198 12 % 167,185 136,576 30,609 22 %
Rest of World 20,537 18,051 2,486 14 % 67,614 46,422 21,192 46 %
Total 144,950 120,317 24,633 20 % 435,387 336,107 99,280 30 %
AMVUTTRA
United States 25,060 - 25,060 N/A 25,060 - 25,060 N/A
Europe 169 - 169 N/A 169 - 169 N/A
Total 25,229 - 25,229 N/A 25,229 - 25,229 N/A
GIVLAARI
United States 31,169 22,372 8,797 39 % 84,505 62,502 22,003 35 %
Europe 12,477 7,568 4,909 65 % 36,059 22,461 13,598 61 %
Rest of World 2,013 1,893 120 6 % 5,522 2,173 3,349 154 %
Total 45,659 31,833 13,826 43 % 126,086 87,136 38,950 45 %
OXLUMO
United States 6,383 5,236 1,147 22 % 18,916 13,156 5,760 44 %
Europe 9,348 9,658 (310) (3) % 25,099 27,225 (2,126) (8) %
Rest of World 698 - 698 N/A 1,937 - 1,937 N/A
Total 16,429 14,894 1,535 10 % 45,952 40,381 5,571 14 %
Total net product
revenues $ 232,267 $ 167,044 $ 65,223 39 % $ 632,654 $ 463,624 $ 169,030 36 %
Net product revenues increased during the three and nine months ended
We expect net product revenues to increase during 2022, as compared to 2021, as
we continue to add new patients onto our commercial products, as well as launch
these products into additional markets, assuming regulatory approvals.
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Net Revenues from Collaborations and Royalty Revenue
Net revenues from collaborations consist of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Regeneron Pharmaceuticals $ 21,979 $ 14,161 $ 7,818 55 % $ 34,405 $ 90,908 $ (56,503) (62) %
Novartis AG 5,803 4,160 1,643 39 % 27,472 21,179 6,293 30 %
Vir Biotechnology 441 1,233 (792) (64) % 1,137 8,033 (6,896) (86) %
Other 1,074 582 492 85 % 1,253 1,208 45 4 %
Total $ 29,297 $ 20,136 $ 9,161 45 % $ 64,267 $ 121,328 $ (57,061) (47) %
Net revenues from collaborations increased during the three months ended
September 30, 2022 , as compared to the same period in 2021, primarily due to an
increase in revenue recognized in connection with our collaboration agreement
with Regeneron, attributed to an increase in reimbursable activities under our
research services arrangement in addition to an increase in revenue recognized
associated with our clinical trial activities.
Net revenues from collaborations decreased during the nine months ended
September 30, 2022 , as compared to the same periods in 2021, primarily due to a
decrease in revenue recognized in connection with our collaboration agreement
with Regeneron, attributed to reduced research and manufacturing activities and
timing of reimbursable activities.
We earn royalty revenue from global net sales of Leqvio by our partner,
Novartis. In December 2020 , Leqvio received marketing authorization from the EC
for the treatment of adults with hypercholesterolemia or mixed dyslipidemia, and
in December 2021 , Leqvio was approved by the FDA for the treatment of adults
with HeFH or ASCVD. During the quarter ended September 30, 2022 , we recorded
$2.7 million in royalty revenue.
Recognition of our combined net revenues from collaborations and royalty revenue
is dependent on a variety of factors including the level of work reimbursed by
partners, achievement of milestones under our collaboration agreements, and
royalties associated with sales of Leqvio. We expect net revenues from
collaboration and royalty revenue to decrease in 2022, as compared to 2021,
primarily due to the timing of reimbursable activities in our collaboration with
Regeneron.
Operating Costs and Expenses
Operating costs and expenses consist of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Cost of goods sold $ 36,507 $ 28,091 $ 8,416 30 % $ 94,002 $ 81,370 $ 12,632 16 %
Cost of collaborations and
royalties 4,609 4,572 37 1 % 23,549 21,110 2,439 12 %
Research and development 245,371 194,572 50,799 26 % 620,976 563,106 57,870 10 %
Selling, general and
administrative 235,859 142,075 93,784 66 % 560,314 434,257 126,057 29 %
Total $ 522,346 $ 369,310 $ 153,036 41 % $ 1,298,841 $ 1,099,843 $ 198,998 18 %
Cost of goods sold.
Cost of goods sold as a percentage of net product revenues decreased to 15.7%
and 14.9% for the three and nine months ended September 30, 2022 , respectively,
as compared to 16.8% and 17.6% for the three and nine months ended September 30,
2021 , respectively, primarily due to fully amortized intangible assets and
reduced royalties as a result of the expiry of third-party intellectual
property.
We anticipate variability in our cost of goods sold as a percentage of net
product revenues due to the timing of manufacturing runs and utilization and the
depletion of zero-cost inventories, as well as launch our approved products into
additional markets, assuming regulatory approvals. We expect cost of goods sold
will increase during 2022, as compared to 2021, primarily as a result of an
expected increase in net product sales as well as the sale of capitalized
inventory.
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Cost of collaborations and royalties.
Cost of collaborations and royalties increased during the three and nine months endedSeptember 30, 2022 , as compared to the same periods in 2021, primarily due to timing and demand of GalNAc material supply to our collaboration partners to support certain product manufacturing and ongoing clinical trials. We expect cost of collaborations and royalties to remain relatively consistent during 2022, as compared to 2021, due to consistency in planned GalNAc material to be supplied to our collaboration partners.
Research and development.
Research and development expenses consist of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021
$ Change % Change
Clinical research and
outside services $ 104,762 $ 108,851 $ (4,089) (4) % $ 288,833 $ 290,627 $ (1,794) (1) %
Compensation and
related 58,377 47,168 11,209 24 % 163,416 142,547 20,869 15 %
Stock-based
compensation 52,962 12,417 40,545 327 % 75,217 49,878 25,339 51 %
Occupancy and all other
costs 29,270 26,136 3,134 12 % 93,510 80,054 13,456 17 %
Total $ 245,371 $ 194,572 $ 50,799 26 % $ 620,976 $ 563,106 $ 57,870 10 %
For the three and nine months ended
•Increased stock-based compensation expense primarily due to the accounting for certain performance-based awards; and
•Increased compensation and related expenses as a result of increased headcount to support our R&D pipeline and development expenses associated with the KARDIA-1 and KARDIA-2 zilebesiran phase 2 studies.
Offset by:
•Decreased clinical research and outside services due to a decrease in clinical batches manufactured.
During the three and nine months ended
The following table summarizes research and development expenses incurred, for which we recognize net revenue, that are directly attributable to our collaboration agreements, by collaboration partner:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2022 2021 2022 2021
Regeneron Pharmaceuticals $ 19,948 $ 14,401 $ 43,002 $ 51,972
Other 357 1,337 1,172 7,565
Total $ 20,305 $ 15,738 $ 44,174 $ 59,537
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Selling, general and administrative.
Selling, general and administrative expenses consist of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Compensation and
related $ 70,361 $ 52,075 $ 18,286 35 % $ 197,346 $ 162,516 $ 34,830 21 %
Consulting and
professional services 59,557 45,622 13,935 31 % 155,138 129,887 25,251 19 %
Stock-based
compensation 75,156 20,950 54,206 259 % 112,665 71,257 41,408 58 %
Occupancy and all other
costs 30,785 23,428 7,357 31 % 95,165 70,597 24,568 35 %
Total $ 235,859 $ 142,075 $ 93,784 66 % $ 560,314 $ 434,257 $ 126,057 29 %
For the three and nine months ended
•Increased stock-based compensation expense primarily due to the accounting for certain performance-based awards;
•Increased compensation and related expenses as a result of increased headcount; and
•Increased consulting and professional services expenses to support our commercial portfolio.
We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2022, as compared to 2021, as we continue to advance and develop our platform and pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial and compliance infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO, and the launch of AMVUTTRA in theU.S. and EU, as well as launch these products into additional markets, assuming regulatory approvals. However, we expect that certain expenses will be variable depending on the timing of manufacturing batches, clinical trial enrollment and results, regulatory review of our product candidates and programs, and stock-based compensation expenses due to our determination regarding the probability of vesting for performance-based awards.
Other (Expense) Income.
Other (expense) income consists of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except
percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Interest expense $ (41,084) $ (40,274) $ (810) 2 % $ (126,055) $ (106,205) $ (19,850) 19 %
Other (expense) income, net
Interest income 7,820 225 7,595 3,376 % 10,731 1,084 9,647 890 %
Realized and unrealized
(losses) gains on marketable
equity securities (7,850) 18,691 (26,541) (142) % (40,108) 61,273 (101,381) (165) %
Change in fair value of
development derivative
liability (25,084) 3,188 (28,272) (887) % (70,776) (19,655) (51,121) 260 %
Other (5,119) (4,389) (730) 17 % (20,720) (14,248) (6,472) 45 %
Loss on the extinguishment of
debt (76,586) - (76,586) N/A (76,586) - (76,586) N/A
Total $ (147,903) $ (22,559) $ (125,344) 556 % $ (323,514) $ (77,751) $ (245,763) 316 %
Total other expense increased during the three and nine months ended
September 30, 2022 , as compared to the same periods in 2021, primarily due to a
$76.6 million loss on the extinguishment of the Blackstone credit agreement,
increased loss as a result of a mark-to-market adjustment related to the
development derivative liability and increased realized and unrealized losses on
our marketable equity securities holdings.
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Liquidity and Capital Resources
The following table summarizes our cash flow activities:
Nine Months Ended September 30,
(In thousands) 2022 2021
Net loss $
(923,663)
536,245 250,524
Changes in operating assets and liabilities (21,878) (147,712)
Net cash used in operating activities (409,296) (491,552)
Net cash provided by investing activities 309,265 140,105
Net cash provided by financing activities 362,316 954,827
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(9,049) (5,968)
Net increase in cash, cash equivalents and restricted cash 253,236 597,412
Cash, cash equivalents and restricted cash, beginning of period
822,153 499,046
Cash, cash equivalents and restricted cash, end of period
Operating activities
Net cash used in operating activities decreased during the nine months ended
Investing activities
Net cash used in investing activities increased during the nine months ended
Financing activities
Net cash provided by financing activities decreased during the nine months endedSeptember 30, 2022 , compared to the nine months endedSeptember 30, 2021 , primarily due to greater cash received in 2021, including$500.0 million received from our sale of one-half of our royalty interest under the Novartis agreement inSeptember 2021 and$250.0 million received in connection with the second drawdown on our credit agreement inJune 2021 , offset by$136.2 million received from the issuance of convertible debt, net of repayment of credit facility and purchase of capped call transactions inSeptember 2022 .
Additional Capital Requirements
We currently have programs focused on a number of therapeutic areas and, as ofSeptember 30, 2022 , have received regulatory approval and commercially launched four products. However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products or successfully expand the indications for our approved products, including ONPATTRO, AMVUTTRA and OXLUMO in the future. In addition, we anticipate that we will continue to generate losses as a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical, manufacturing, commercial and compliance capabilities, including global operations, continued management and growth of our intellectual property including our patent portfolio, collaborations and general corporate activities Our expected working and other capital requirements are described in our 2021 Annual Report on Form 10-K in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." As ofSeptember 30, 2022 , other than the changes disclosed in the "Notes to Condensed Consolidated Financial Statements" and "Liquidity and Capital Resources" section in this Quarterly Report on Form 10-Q, there have been no other material changes to our expected working and other capital requirements as described in our 2021 Annual Report on Form 10-K. Based on our current operating plan, we believe that our cash, cash equivalents and marketable equity and debt securities as ofSeptember 30, 2022 , together with the cash we expect to generate from product sales and under our current alliances, including milestones and royalties on Leqvio sales, will be sufficient to enable us to advance our long-term strategic goals for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q. However, due to numerous factors described in more detail under the caption Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q, we may require significant additional funds earlier than we currently expect in order to continue to commercialize our approved products, and to develop, conduct clinical trials for, manufacture and, if approved, commercialize additional product candidates. 39
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