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Alnylam Posts Higher Revenues and Lower Losses for the Fourth Quarter, Full-Year 2004


Alnylam Pharmaceuticals reported this week its fourth-quarter and year-end financial results, posting higher revenues and shrinking losses as the company benefited from its collaboration with drug giant Merck.

Executives from Alnylam also provided updates on the company’s research and development and partnering activities during a conference call (see article in this issue, Alnylam Updates R&D, Partnering Activities).

For the fourth quarter, Alnylam’s revenues climbed to $2.6 million, up from $100,000 in the year-ago quarter. The company attributed the growth to a $7 million milestone payment from Merck, $2 million of which was in cash with the remainder in the form of an equity investment in connection with the companies’ September 2003 collaboration to develop RNAi therapeutics and technologies (see RNAi News, 9/12/2003).

Revenues in the quarter also included $600,000 of net cost reimbursement revenues related to Alnylam’s partnership with Merck to co-develop ocular disease therapies (see RNAi News, 7/2/2004).

Alnylam’s net loss for the quarter shrank to $5.7 million, or $0.29 per share, from a loss of $9.7 million, or $6.18 per share, in the fourth quarter of 2003, before the company went public last summer (see RNAi News, 6/4/2004).

Meanwhile, R&D spending in the fourth quarter 2004 was $5.2 million, compared with R&D costs of $5.8 million in the fourth quarter 2003. Alnylam attributed the drop in R&D costs to lower non-cash, stock-based compensation, which was $700,000 in the fourth quarter of 2004 and $1.8 million in the same period the year before.

Offsetting the lower compensation were higher facilities-related expenses resulting from Alnylam’s move to new facilities, as well as research costs associated with its ocular disease deal with Merck, and its new respiratory syncytial virus program unveiled in January (see RNAi News, 1/7/2005).

For the full-year 2004, Alnylam’s revenues jumped to $4.3 million from $200,000 in 2003. As with the fourth quarter, the increase was due to the Merck milestone payment, as well as $1.5 million in net cost reimbursement revenues from the pharmaceutical firm related to the companies’ ocular disease alliance.

Revenues for 2004 also increased as a result of the amortization of $2 million in upfront payments and $1 million in maintenance payments, received from Merck in 2003 and 2004, respectively, under the companies’ 2003 partnership. Additionally, Alnylam’s 2004 revenue numbers benefited from the amortization of $3 million in upfront fees paid by Merck under the companies’ ocular disease collaboration.

Alnylam’s net loss for 2004 increased to $35.4 million or $2.98 per share, from $27.9 million, or $29.64 per share, in 2003. The company’s 2004 net loss includes the accretion of $2.7 million in redeemable convertible preferred stock, while its 2003 net loss includes $2.9 million of accretion of redeemable convertible preferred stock and $4.6 million of in-process R&D expenses related to Alnylam’s July 2003 acquisition of German biotech firm Ribopharma, now known as Alnylam Europe (see RNAi News, 3/5/2004).

R&D spending in 2004 nearly doubled year over year, as Alnylam spent $24.6 million, including $2.1 million of non-cash, stock-based compensation, compared with $13.1 million it spent on R&D in 2003, including $2.8 million in non-cash, stock-based compensation.

Alnylam said R&D costs in 2004 grew because of $5.5 million in licensing fees resulting from the company’s March 2004 deal with Isis Pharmaceuticals (see RNAi News, 3/19/2004); a full year of R&D work conducted at Alnylam Europe; costs associated with the ocular disease and RSV programs; higher costs associated with new facilities; and increased compensation and related expenses following the addition of new R&D personnel in 2004.

As of Dec. 31, 2004, Alnylam had cash, cash equivalents, and marketable securities totaling $46 million, compared with $44.9 million at the end of 2003. However, the company expects that it could burn through almost half that balance this year.

“We believe [our cash position as of the end of 2004], with our current alliances, will provide us with sufficient [funding] for over two years,” Patricia Allen, vice president of finance at Alnylam, said during a conference call this week. “We anticipate that our cash and marketable securities balance ending 2005 will be greater than $25 million.”

Alnylam said that through Dec. 31, 2004, it has financed $7.2 million of its capital expenditures through its $10 million equipment line of credit with Lighthouse Capital Partners. Alnylam may draw down the remaining $2.8 million under the line of credit through June 30, 2005, after which the credit will be repaid over four years.

— DM


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