Nov 02, 2006 Press Release for Alnylam

Alnylam Pharmaceuticals Reports Third Quarter 2006 Financial Results

Nov 02, 2006

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Nov. 2, 2006--Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, today reported its consolidated financial results for the quarter ended September 30, 2006 and company highlights.

"This was Alnylam's strongest quarter to date as measured by financial performance and revenues, where we've established a solid and sustainable foundation in R&D funding and milestone payments from pharmaceutical collaborators and licensees. In addition, we accomplished many important pipeline and business objectives during the period, as we continued to execute on our mission of building a leading biopharmaceutical company founded on RNAi," said John Maraganore, Ph.D., President and Chief Executive Officer of Alnylam. "Alnylam's scientific, pipeline, and business leadership in the field of RNAi, combined with the recognition of the potential of RNAi with the 2006 Nobel prize and other recent industry activities, highlight the considerable and rare opportunity that exists in the development of an entirely new class of drugs. We believe that our accomplishments and events of this past period uniquely position Alnylam to build significant value from the advancement of RNAi therapeutics as innovative medicines."

Cash, Cash Equivalents and Marketable Securities
At September 30, 2006, Alnylam had cash, cash equivalents and marketable securities of $120.3 million compared to $80.0 million at December 31, 2005. The increase was primarily due to $62.2 million of net proceeds from the company's public offering of common stock in January 2006 and funding from its collaborators and licensees, including a $5.0 million upfront payment from the company's Biogen Idec collaboration agreement, offset by cash used to fund the company's operations.

Revenues
Revenues in the third quarter of 2006 were $8.2 million compared to $1.4 million during the third quarter of 2005. Included in revenues in the third quarter of 2006 were $5.5 million of expense reimbursement, milestone and amortization revenues related to the company's main collaboration with Novartis, and $1.0 million of expense reimbursement revenues related to the company's flu collaboration with Novartis as well as $1.2 million in revenues from the company's InterfeRx^™ license program and reagent service license agreements.

Net Loss
The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the quarter ended September 30, 2006 was $7.4 million, or $0.23 per share (including $1.7 million, or $0.05 per share of non-cash stock-based compensation expense) as compared to $10.7 million, or $0.51 per share (including $2.2 million, or $0.10 per share of non-cash stock-based compensation expense) in the third quarter of 2005.

Research and Development Expenses
Research and development (R&D) expenses were $12.8 million in the third quarter of 2006, which included $0.9 million of non-cash stock-based compensation, as compared to $8.0 million in the third quarter of 2005, which included $1.1 million of non-cash stock-based compensation. The increase in R&D expenses was primarily due to license fees, clinical trial costs related to the company's clinical program for respiratory syncytial virus (RSV) infection as well as higher external service costs associated with the company's pre-clinical RNAi therapeutic programs. Also contributing to the increase were higher costs related to an increase in R&D headcount over the past year to support the company's alliances and expanding product pipeline.

General and Administrative Expenses
General and administrative (G&A) expenses were $4.0 million in the third quarter of 2006, which included $0.8 million of non-cash stock-based compensation, as compared with $4.1 million in the third quarter of 2005, which included $1.1 million of non-cash stock-based compensation. The decrease in G&A expenses was due primarily to lower non-cash stock-based compensation expenses partially offset by higher professional service fees due to increased business activities and higher facility related costs.

Cash Guidance for 2006
Alnylam continues to expect that its cash, cash equivalents and marketable securities balance will be greater than $115 million at December 31, 2006.

"Our financial position was further strengthened this quarter as a result of our existing and new development collaborations and licensing arrangements, and we have already exceeded our goal of receiving greater than $15 million in alliance-based funding this year," said Patricia Allen, Vice President, Finance and Treasurer at Alnylam. "Although there will be variability in revenues from quarter to quarter, we expect to maintain a solid financial profile with a strong revenue base as a result of our existing and newly formed collaborations, balanced with planned investments in advancing our pipeline. We remain on track to achieve our cash guidance for the remainder of the year as we execute on our scientific, clinical, and business objectives for 2006."

Conference Call Information
Alnylam will host a conference call at 4:30 p.m. ET on November 2, 2006 to discuss third quarter activities and recent corporate developments. The call may be accessed by dialing 866-831-6162 (domestic) or 617-213-8852 (international) five minutes prior to the start time and provide the passcode 46346183.

A replay of the call will be available from 6:30 p.m. ET on November 2, 2006 until November 9, 2006. To access the replay, please dial 888-286-8010 (domestic) or 617-801-6888 (international), and provide the passcode 73282738. A live audio webcast of the call will also be available on the "Investors" section of the company's website, www.alnylam.com. An archived webcast will be available on the company's website approximately two hours after the event, and will be archived for 14 days thereafter.

About RNA Interference (RNAi)
RNA interference, or RNAi, is a naturally occurring mechanism within cells for selectively silencing and regulating specific genes. Since many diseases are caused by the inappropriate activity of specific genes, the ability to silence genes selectively through RNAi could provide a new way to treat a wide range of human diseases. RNAi is induced by small, double-stranded RNA molecules. One method to activate RNAi is with chemically synthesized small interfering RNAs, or siRNAs, which are double-stranded RNAs that are targeted to a specific disease-associated gene. The siRNA molecules are used by the natural RNAi machinery in cells to cause highly targeted gene silencing.

About Alnylam
Alnylam is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. The company is applying its therapeutic expertise in RNAi to address significant medical needs, many of which cannot effectively be addressed with small molecules or antibodies, the current major classes of drugs. Alnylam is building a pipeline of RNAi therapeutics; its lead program is in Phase I human clinical trials for the treatment of respiratory syncytial virus (RSV) infection, which is the leading cause of hospitalization in infants in the U.S. The company's leadership position in fundamental patents, technology, and know-how relating to RNAi has enabled it to form major alliances with leading companies including Merck, Medtronic, Novartis, and Biogen Idec. The company, founded in 2002, maintains global headquarters in Cambridge, Massachusetts, and has an additional operating unit in Kulmbach, Germany. Alnylam is honored to be the "emerging/mid-cap" company recipient of the 2006 James D. Watson Helix Award, the biotechnology industry's award for outstanding achievement. For more information, visit www.alnylam.com.

Alnylam Forward-Looking Statements
Various statements in this release concerning our future expectations, plans and prospects, including, without limitation, statements related to future expectations, plans, and prospects, our clinical development plans for ALN-RSV01, ALN-FLU01 and our other product candidates, our product goals and business goals for 2006 and 2007, including without limitation, the filing of an IND for ALN-FLU01 and projections for the amount and sufficiency of cash, cash equivalents and marketable securities, 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 risks related to: our approach to discover and develop novel drugs, which is unproven and may never lead to marketable products; obtaining, maintaining and protecting intellectual property utilized by our products; our ability to enforce our patents against infringers and to defend our patent portfolio against challenges from third parties; our ability to obtain additional funding to support our business activities; our dependence on third parties for development, manufacture, marketing, sales and distribution of products; the successful development of our product candidates, all of which are in early stages of development; obtaining regulatory approval for products; competition from others using technology similar to ours and others developing products for similar uses; our dependence on collaborators; and our short operating history; as well as those risks more fully discussed in the "Risk Factors" section of our most recent report on Form 10-Q on file with the Securities and Exchange Commission. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.

SOURCE: Alnylam Pharmaceuticals, Inc.

CONTACT:
Investors:
Cynthia Clayton,
Alnylam Pharmaceuticals, Inc.,
1+617-551-8207, or
Patricia Allen,
Vice President, Finance and Treasurer,
1+617-551-8362