Alnylam Pharmaceuticals Reports First Quarter 2007 Financial Results

Business Wire, May 9, 2007

- Product Pipeline, Revenues and Cash Position Significantly Strengthened Year-Over-Year -

CAMBRIDGE, Mass. -- Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, today reported its consolidated financial results for the quarter ended March 31, 2007 and company highlights.

"We have made important advancements already this year, and anticipate continued progress on many fronts in the months to come," said John Maraganore, Ph.D., President and Chief Executive Officer of Alnylam. "In particular, we have advanced our development pipeline year to date. Our lead program, ALN-RSV01, an RNAi therapeutic for the treatment of RSV infection, is advancing towards Phase II studies that hold the potential of demonstrating human proof of concept as measured by anti-viral activity. We also advanced ALN-VSP01, a new development program for the treatment of liver cancers and potentially other solid tumors. Further, we continued to advance the science of RNAi towards its broad therapeutic applications, as evidenced by our presentations at top-tier scientific meetings and publications in peer-reviewed journals, as well as executing on our business strategies and building on our leading intellectual property position."

Cash, Cash Equivalents and Marketable Securities

At March 31, 2007, Alnylam had cash, cash equivalents and marketable securities of $204.5 million, compared to $217.3 million at December 31, 2006 and $132.3 million at March 31, 2006.

Net Loss

The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the quarter ended March 31, 2007 was $21.6 million, or $0.58 per share (including a one-time non-cash license fee of $7.9 million and a cash license fee of $0.4 million which totaled $0.22 per share, and $2.2 million, or $0.06 per share of non-cash stock-based compensation expense), compared to $8.9 million, or $0.30 per share (including $2.4 million, or $0.08 per share of non-cash stock-based compensation expense), in the first quarter of 2006. The company's increase in net loss is primarily a result of a license fee the company paid in its common stock to Tekmira Pharmaceuticals Corporation (formerly Inex Pharmaceuticals Corporation) and a related cash license fee during the first quarter of 2007, in exchange for the worldwide exclusive license to Tekmira's liposomal delivery formulation technology for the discovery, development, and commercialization of RNAi therapeutics, as well as the expansion of the technology research and manufacturing alliance on lipid-based delivery technology.

Revenues

Revenues in the first quarter of 2007 were $7.2 million, compared to $5.7 million during the first quarter of 2006. Included in revenues in the first quarter of 2007 were $4.1 million of expense reimbursement and amortization revenues related to the company's collaborations with Novartis, and $3.1 million of expense reimbursement and amortization revenues from Biogen Idec, Merck, the National Institutes of Health (NIH) for Ebola, research reagent and services licensees, and other sources. Revenues in the first quarter of 2006 were comprised of $5.2 million of expense reimbursement and amortization revenues related to the company's Novartis collaborations as well as an aggregate of $0.5 million of expense reimbursement and amortization revenue received from Merck, research reagent and services licensees, and other sources.

Research and Development Expenses

Research and development (R&D) expenses were $26.7 million in the first quarter of 2007, including $1.2 million of non-cash stock-based compensation, compared to $11.7 million in the first quarter of 2006, which included $1.5 million of non-cash stock-based compensation. The increase in R&D expenses was primarily due to a non-cash license fee of $7.9 million to Tekmira that the company paid in its common stock as well as a related cash license fee of $0.4 million, as discussed above. The increase was also due to the planned increase in clinical trial expenses in support of Alnylam's clinical program for respiratory syncytial virus (RSV) infection related to its ongoing Phase I inhalation trial, as well as its experimental infection study. Also contributing to the increase were higher manufacturing and external service costs associated with the company's pre-clinical programs for the treatment of hypercholesterolemia and liver cancer, as well as costs related to an increase in R&D headcount over the past year to support the company's expanding pipeline and alliances.

General and Administrative Expenses

General and administrative (G&A) expenses were $4.5 million in the first quarter of 2007, including $1.0 million of non-cash stock-based compensation, compared to $3.8 million in the first quarter of 2006, which included $0.8 million of non-cash stock-based compensation. The increase in G&A expenses was primarily due to higher professional service fees as a result of increased business activities.

2007 Financial Guidance

Alnylam expects that its cash, cash equivalents and marketable securities balance will be greater than $180.0 million at December 31, 2007.