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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
____________________________________________
FORM 10-Q
____________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-36407
__________________________________________
ALNYLAM PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
__________________________________________
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
77-0602661
(I.R.S. Employer
Identification No.)
675 West Kendall Street,
Henri A. Termeer Square
Cambridge, MA
(Address of Principal Executive Offices)
02142
(Zip Code)
(617) 551-8200
(Registrant’s Telephone Number, Including Area Code)
__________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per shareALNYThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x   No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  x   No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerxAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐   No  x
At October 22, 2021, the registrant had 119,601,177 shares of Common Stock, $0.01 par value per share, outstanding.




ALNYLAM PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS
PAGE
NUMBER

“Alnylam,” ONPATTRO®, GIVLAARI®, OXLUMO® and Alnylam Act® are registered trademarks of Alnylam Pharmaceuticals, Inc. Our logo, trademarks and service marks are property of Alnylam. All other trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
risks related to the direct or indirect impact of the COVID-19 global pandemic, emerging or future variants of COVID-19 or any future pandemic, such as the scope and duration of the pandemic, government actions and restrictive measures implemented in response, the effectiveness of vaccination campaigns, the necessity for and availability of booster vaccines, material delays in diagnoses of rare diseases, initiation or continuation of treatment for diseases addressed by our products, or in patient enrollment in clinical trials, potential clinical trial, regulatory review and inspection or supply chain disruptions, and other potential impacts to our business, the effectiveness or timeliness of steps taken by us to mitigate the impact of the pandemic, our ability to execute business continuity plans to address disruptions caused by the COVID-19 or any future pandemic, and the success and effectiveness of our return to office initiatives;
our views with respect to the potential for approved and investigational RNAi therapeutics, including ONPATTRO, GIVLAARI, OXLUMO, Leqvio® (inclisiran), vutrisiran and fitusiran;
our plans for additional global regulatory filings and the continuing product launches of ONPATTRO, GIVLAARI, OXLUMO and our partner's plans with respect to Leqvio;
our expectations regarding the regulatory review of vutrisiran and the advancement by our partner of inclisiran through United States, or U.S., regulatory review and toward the market;
our expectations regarding potential market size for, and the successful commercialization of, ONPATTRO, GIVLAARI, OXLUMO, Leqvio or any future products, including vutrisiran;
our ability to obtain and maintain regulatory approvals and pricing and reimbursement for ONPATTRO, GIVLAARI, OXLUMO or any future products, including vutrisiran, and our partners' ability with respect to Leqvio and fitusiran;
the progress of our research and development programs;
our current and anticipated clinical trials and expectations regarding the reporting of data from these trials;
the timing of regulatory filings and interactions with or actions or advice of regulatory authorities, which may affect the design, initiation, timing, continuation and/or progress of clinical trials or result in the need for additional pre-clinical and/or clinical testing or the timing or likelihood of regulatory approvals;
the status of our manufacturing operations and any delays, interruptions or failures in the manufacture and supply of ONPATTRO, GIVLAARI, OXLUMO, or any of our product candidates (or other products or product candidates being developed and commercialized by our partners) by our or their contract manufacturers or by us or our partners;
our progress continuing to build and leverage global commercial infrastructure;
our ability to successfully expand the indication for ONPATTRO in the future;
the possible impact of any competing products on the commercial success of ONPATTRO, GIVLAARI, OXLUMO and Leqvio, as well as our product candidates, including vutrisiran, and, our, or with respect to Leqvio or fitusiran, our partners', ability to compete against such products;
our ability to manage our growth and operating expenses;
our views and plans with respect to our 5-year Alnylam P5x25 strategy and our intentions to achieve the metrics associated with this strategy, including to become a top five biotech company in market capitalization by the end of 2025;
our belief that the funding provided by our strategic financing collaboration with The Blackstone Group Inc., or Blackstone, and certain of its affiliates should enable us to achieve a self-sustainable profile without the need for future equity financing;
our expectations regarding the length of time our current cash, cash equivalents and marketable securities will support our operations based on our current operating plan;
3

our dependence on third parties for development, manufacture and distribution of products;
our expectations regarding our corporate collaborations, including potential future licensing fees and milestone and royalty payments under existing or future agreements;
obtaining, maintaining and protecting our intellectual property;
our ability to attract and retain qualified key management and scientists, development, medical and commercial staff, consultants and advisors;
the outcome of litigation or other legal proceedings or of any current or future government investigation, including any investigation related to the subpoena received on or about April 9, 2021 pertaining to our marketing and promotion of ONPATTRO (patisiran) in the U.S.;
regulatory developments in the U.S. and foreign countries;
the impact of laws and regulations;
developments relating to our competitors and our industry; and
other risks and uncertainties, including those listed under the caption Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q.
The risks set forth above are not exhaustive. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events and with respect to our business and future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.
This Quarterly Report on Form 10-Q may include data that we obtained from industry publications and third-party research, surveys and studies. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. This Quarterly Report on Form 10-Q also may include data based on our own internal estimates and research, including estimates regarding the impact of the COVID-19 pandemic (or related pandemic caused by coronavirus variants) on our financial statements and business operations. Our internal estimates have not been verified by any independent source and, while we believe any data obtained from industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Such third-party data, as well as our internal estimates and research, are subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Part II, Item 1A, "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. These and other factors could cause our results to differ materially from those expressed in this Quarterly Report on Form 10-Q.

4

SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled "Risk Factors." These risks include, but are not limited to, the following:
Business Related Risks – Risks Related to Our Financial Results
The current pandemic of the novel coronavirus, or COVID-19, and the future outbreak of other highly infectious or contagious diseases, could continue to have an adverse impact on our business, financial condition and results of operations, including our commercial operations and sales, clinical trials and pre-clinical studies.
We are a young commercial company and the marketing and sale of ONPATTRO, GIVLAARI, OXLUMO or any future products, including vutrisiran, may be unsuccessful or less successful than anticipated.
We have a history of losses and may never become and remain consistently profitable.
We will require substantial funds to continue our research, development and commercialization activities.
Although we sold a portion of the expected royalty stream and commercial milestones related to global sales of Leqvio by Novartis AG, or Novartis, we are entitled to retain the remaining portion of such future royalties and, if certain specified thresholds are met, to the remaining portion of commercial milestone payments, and any negative developments related to Leqvio could have a material adverse effect on the timing or amount of those payments.
Risks Related to Our Dependence on Third Parties
We may not be able to execute our business strategy if we are unable to maintain existing or enter into new alliances with other companies that can provide business and scientific capabilities and funds for the development and commercialization of certain of our product candidates.
If any collaborator materially amends, terminates or fails to perform its obligations under agreements with us, the development and commercialization of certain of our product candidates could be delayed or terminated and we could suffer other economic harm.
We have limited manufacturing experience and resources and we must incur significant costs to develop this expertise and/or rely on third parties to manufacture our products.
We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, our development plans may be adversely affected.
Risks Related to Managing Our Operations
If we are unable to attract and retain qualified key management and scientists, development, medical and commercial staff, consultants and advisors, our ability to implement our business plan may be adversely affected.
We are currently embarking on our first CEO succession as a publicly traded company with commercial operations. Any leadership transition carries with it disruption risks that could have a negative impact on the execution of our Alnylam P5x25 strategy. These risks include our ability to attract and retain qualified employees.
We may have difficulty expanding our operations successfully as we continue our evolution from a U.S.- and Europe-based company primarily involved in discovery, pre-clinical testing and clinical development into a global company that develops and commercializes multiple drugs in multiple geographies including Asia, Latin America and the Middle East.
We may experience computer system failures or unauthorized or inappropriate use of or access to our information systems or those of our contractors or collaborators, potentially resulting in substantial loss of data, business interruption or other harm.
Industry Related Risks – Risks Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates and the Commercialization of Our Approved Products
Any product candidates we or our partners develop may fail in development or be delayed to a point where they do not become commercially viable.
We or our partners may be unable to obtain U.S. or foreign regulatory approval for our or our partnered product candidates.
Even if we or our partners obtain regulatory approvals, our marketed drugs will be subject to ongoing regulatory oversight.
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Even if we receive regulatory approval to market our product candidates, and our collaborators receive regulatory approval to market product candidates discovered by us or developed with our technology, the market may not be receptive to such product candidates upon their commercial introduction, which could prevent us from becoming profitable.
We are a multi-product commercial company and expect to continue to invest significant financial and management resources to continue to build our marketing, sales, market access and distribution capabilities and further establish our global commercial infrastructure, and our commercial efforts may not be successful.
The patient populations suffering from hereditary transthyretin-mediated amyloidosis with polyneuropathy, acute hepatic porphyria and primary hyperoxaluria type 1 are small and have not been established with precision.
We may incur significant liability if enforcement authorities allege or determine that we are engaging in commercial activities or promoting our commercially approved products in a way that violates applicable regulations.
Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business.
Governments outside the U.S. may impose strict price controls, and the U.S. government may impose price controls or reference pricing, which may adversely affect our revenues.
Risks Related to Patents, Licenses and Trade Secrets
If we are not able to obtain and enforce patent protection for our discoveries, our ability to develop and commercialize our product candidates will be harmed.
We license patent rights from third-party owners. If such owners do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, our competitive position and business prospects may be harmed.
Other companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing our products.
If we become involved in patent litigation or other proceedings related to a determination of rights, we could incur substantial costs and expenses, substantial liability for damages or be required to stop our product development and commercialization efforts.
If we fail to comply with our obligations under any licenses or related agreements, we may be required to pay damages and could lose license or other rights that are necessary for developing, commercializing and protecting our RNAi technology.
Risks Related to Competition
The pharmaceutical market is intensely competitive. If we are unable to compete effectively with existing drugs, new treatment methods and new technologies, we may be unable to commercialize successfully any drugs that we or our collaborators develop.
We face competition from other companies that are working to develop novel drugs and technology platforms using technology similar to ours, as well as from companies utilizing emerging technologies, including gene therapy and gene editing.
Risks Related to Our Common Stock
If our stock price fluctuates, purchasers of our common stock could incur substantial losses.
We may incur significant costs from class action litigation.
Future sales of shares of our common stock, including by our significant stockholders, us or our directors and officers, could cause the price of our common stock to decline.
Regeneron’s ownership of our common stock could delay or prevent a change in corporate control.
The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled "Risk Factors" and the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.
6


PART I. FINANCIAL INFORMATION

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)


September 30, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$1,093,991 $496,580 
Marketable debt securities1,161,324 1,333,182 
Marketable equity securities72,550 44,633 
Accounts receivable, net141,064 102,413 
Inventory97,899 75,202 
Prepaid expenses and other current assets108,534 62,767 
Receivable related to the sale of future royalties 500,000 
Total current assets2,675,362 2,614,777 
Property, plant and equipment, net484,941 465,029 
Operating lease right-of-use assets235,853 241,485 
Restricted investments40,890 40,725 
Other assets35,267 45,045 
Total assets$3,472,313 $3,407,061 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$40,048 $51,966 
Accrued expenses388,576 355,909 
Operating lease liability40,612 36,872 
Deferred revenue115,044 127,207 
Liability related to the sale of future royalties26,376 13,316 
Total current liabilities610,656 585,270 
Operating lease liability, net of current portion286,030 293,039 
Deferred revenue, net of current portion177,123 225,094 
Long-term debt433,799 191,278 
Liability related to the sale of future royalties, net of current portion1,132,362 1,058,225 
Other liabilities76,450 37,908 
Total liabilities2,716,420 2,390,814 
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 5,000 shares authorized and no shares issued and outstanding as of September 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value per share, 250,000 shares authorized; 119,480 shares issued and outstanding as of September 30, 2021; 116,427 shares issued and outstanding as of December 31, 2020
1,195 1,164 
Additional paid-in capital5,968,661 5,644,074 
Accumulated other comprehensive loss(34,230)(43,622)
Accumulated deficit(5,179,733)(4,585,369)
Total stockholders’ equity755,893 1,016,247 
Total liabilities and stockholders’ equity$3,472,313 $3,407,061 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Statements of Operations
Revenues:
Net product revenues$167,044 $99,206 $463,624 $248,677 
Net revenues from collaborations20,136 26,647 121,328 80,614 
Royalty revenue453  800  
Total revenues187,633 125,853 585,752 329,291 
Operating costs and expenses:
Cost of goods sold28,091 20,826 81,370 52,393 
Cost of collaborations and royalties4,572 971 21,110 2,635 
Research and development194,572 161,783 563,106 486,350 
Selling, general and administrative142,075 167,472 434,257 422,129 
Total operating costs and expenses369,310 351,052 1,099,843 963,507 
Loss from operations(181,677)(225,199)(514,091)(634,216)
Other (expense) income:
Interest expense(40,274)(28,731)(106,205)(55,979)
Interest income225 2,072 1,084 10,717 
Other (expense) income, net17,490 (594)27,370 67,477 
Total other (expense) income, net(22,559)(27,253)(77,751)22,215 
Loss before income taxes(204,236)(252,452)(591,842)(612,001)
Provision for income taxes(278)(839)(2,522)(2,740)
Net loss$(204,514)$(253,291)$(594,364)$(614,741)
Net loss per common share - basic and diluted$(1.72)$(2.18)$(5.04)$(5.37)
Weighted-average common shares used to compute basic and diluted net loss per common share119,141 115,986 118,005 114,554 
Statements of Comprehensive Loss
Net loss$(204,514)$(253,291)$(594,364)$(614,741)
Other comprehensive income (loss):
Unrealized (loss) gain on marketable securities(64)(1,481)(312)768 
Foreign currency translation gain (loss)1,857 (2,576)9,530 (1,665)
Defined benefit pension plans, net of tax58 76 174 222 
Total other comprehensive income (loss)1,851 (3,981)9,392 (675)
Comprehensive loss$(202,663)$(257,272)$(584,972)$(615,416)




The accompanying notes are an integral part of these condensed consolidated financial statements.
8

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 2020116,427 $1,164 $5,644,074 $(43,622)$(4,585,369)$1,016,247 
Exercise of common stock options, net of tax withholdings614 6 47,028 — — 47,034 
Issuance of common stock under equity plans280 3 (3)— —  
Stock-based compensation expense— — 56,295 — — 56,295 
Other comprehensive income— — — 6,905 — 6,905 
Net loss— — — — (200,291)(200,291)
Balance as of March 31, 2021117,321 1,1735,747,394(36,717)(4,785,660)926,190
Exercise of common stock options, net of tax withholdings993 10 75,439 — — 75,449 
Issuance of common stock under equity plans282 3 7,715 — — 7,718 
Stock-based compensation expense— — 32,928 — — 32,928 
Other comprehensive income— — — 636 — 636 
Net loss— — — — (189,559)(189,559)
Balance as of June 30, 2021118,596 1,1865,863,476(36,081)(4,975,219)853,362
Exercise of common stock options, net of tax withholdings883 9 71,490 — — 71,499 
Issuance of common stock under equity plans1   — —  
Stock-based compensation expense— — 33,695 — — 33,695 
Other comprehensive income— — — 1,851 — 1,851 
Net loss— — — — (204,514)(204,514)
Balance as of September 30, 2021119,480 $1,195 $5,968,661 $(34,230)$(5,179,733)$755,893 



The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 2019112,188 $1,122 $5,201,176 $(36,518)$(3,727,088)$1,438,692 
Exercise of common stock options, net of tax withholdings976 9 54,212 — — 54,221 
Issuance of common stock under equity plans4 — — — —  
Stock-based compensation expense— — 34,578 — — 34,578 
Other comprehensive income— — — 4,459 — 4,459 
Net loss— — — — (182,221)(182,221)
Balance as of March 31, 2020113,168 1,131 5,289,966 (32,059)(3,909,309)1,349,729 
Exercise of common stock options, net of tax withholdings1,233 12 91,861 — — 91,873 
Issuance of common stock under equity plans283 3 5,298 — — 5,301 
Issuance of common stock to strategic partners, net of closing costs963 10 99,488 — — 99,498 
Stock-based compensation expense— — 33,707 — — 33,707 
Other comprehensive loss— — — (1,153)— (1,153)
Net loss— — — — (179,229)(179,229)
Balance as of June 30, 2020115,647 1,156 5,520,320 (33,212)(4,088,538)1,399,726 
Exercise of common stock options, net of tax withholdings494 5 32,207 — — 32,212 
Issuance of common stock under equity plans2 — 129 — — 129 
Issuance of common stock under benefit plans— — — — —  
Stock-based compensation expense— — 40,228 — — 40,228 
Other comprehensive loss— — — (3,981)— (3,981)
Net loss— — — — (253,291)(253,291)
Balance as of September 30, 2020116,143 $1,161 $5,592,884 $(37,193)$(4,341,829)$1,215,023 



The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net loss$(594,364)$(614,741)
Non-cash adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization36,192 24,386 
Amortization and interest accretion related to operating leases32,051 29,169 
Non-cash interest expense on liability related to the sale of future royalties87,197 55,979 
Stock-based compensation121,135 105,597 
Realized and unrealized gain on marketable equity securities(61,273)(66,626)
Other35,222 1,628 
Changes in operating assets and liabilities:
Accounts receivable, net(42,350)(35,070)
Inventory(15,655)(26,962)
Prepaid expenses and other assets(48,765)6,455 
Accounts payable, accrued expenses and other liabilities48,738 75,564 
Deferred revenue(60,094)(15,924)
Operating lease liability(29,586)(31,272)
Net cash used in operating activities(491,552)(491,817)
Cash flows from investing activities:
Purchases of property, plant and equipment(54,486)(48,693)
Purchases of marketable securities(973,146)(1,469,451)
Sales and maturities of marketable securities1,172,100 1,190,714 
Purchases of restricted investments(26,140)(9,900)
Proceeds from maturity of restricted investments25,975  
Other investing activities(4,198)(300)
Net cash provided by (used in) investing activities140,105 (337,630)
Cash flows from financing activities:
Proceeds from exercise of stock options and other types of equity, net201,227 181,459 
Proceeds from the sale of future royalties500,000 500,000 
Proceeds from development derivative16,100 4,200 
Proceeds from issuance of common stock to strategic partners, net of closing costs 99,498 
Proceeds from term loan facility250,000  
Payment of transaction costs related to sale of future royalties and term loan facility(12,500)(8,128)
Net cash provided by financing activities954,827 777,029 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(5,968)1,946 
Net increase (decrease) in cash, cash equivalents and restricted cash597,412 (50,472)
Cash, cash equivalents and restricted cash, beginning of period499,046 549,628 
Cash, cash equivalents and restricted cash, end of period$1,096,458 $499,156 
Supplemental disclosure of noncash investing and financing activities:
Capital expenditures included in accounts payable and accrued expenses$9,414 $7,048 
Lease liabilities arising from obtaining right-of-use assets$7,876 $34,363 
Receivable and liability related to the sale of future royalties$ $500,000 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. NATURE OF BUSINESS
Alnylam Pharmaceuticals, Inc. (also referred to as Alnylam, we, our or us) commenced operations on June 14, 2002 as a biopharmaceutical company seeking to develop and commercialize novel therapeutics based on ribonucleic acid interference, or RNAi. We are committed to the advancement of our company strategy of building a multi-product, global, commercial biopharmaceutical company with a deep and sustainable clinical pipeline of RNAi therapeutics for future growth and a robust, organic research engine for sustainable innovation and great potential for patient impact. Since inception, we have focused on discovering, developing and commercializing RNAi therapeutics by establishing and maintaining a strong intellectual property position in the RNAi field, establishing strategic alliances with leading pharmaceutical and life sciences companies, generating revenues through licensing agreements, and ultimately developing and commercializing RNAi therapeutics globally, either independently or with our strategic partners. We have devoted substantially all of our efforts to business planning, research, development, manufacturing and early commercial efforts, acquiring, filing and expanding intellectual property rights, recruiting management and technical staff, and raising capital.
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, delivering exceptional financial performance and driving profitability.
As of September 30, 2021, we have four products that have received marketing approval, including one partnered product, and six late-stage investigational programs advancing towards potential commercialization. We currently generate worldwide product revenues from three commercialized products, ONPATTRO, GIVLAARI and OXLUMO, primarily in the U.S., Europe and Japan.
2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements of Alnylam are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, applicable to interim periods and, in the opinion of management, include all normal and recurring adjustments that are necessary to state fairly the results of operations for the reported periods. Our condensed consolidated financial statements have also been prepared on a basis substantially consistent with, and should be read in conjunction with, our audited consolidated financial statements for the year ended December 31, 2020, which were included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on February 11, 2021. The year-end condensed consolidated balance sheet data was derived from our audited financial statements but does not include all disclosures required by GAAP. The results of our operations for any interim period are not necessarily indicative of the results of our operations for any other interim period or for a full fiscal year.
The accompanying condensed consolidated financial statements reflect the operations of Alnylam and our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Reclassification
Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. In our condensed consolidated financial statements, we use estimates and assumptions related to our inventory valuation and related reserves, liability related to the sale of future royalties, development derivative liability, income taxes, revenue recognition, research and development expenses, and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ from those estimates.
The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, the supply of our products and product candidates, clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and variants thereof, and the actions taken to contain or treat it or vaccinate against it, as well as the economic impact on local, regional, national and international customers and markets.
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ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Liquidity
Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of September 30, 2021, together with the cash we expect to generate from product sales and under our current alliances, in addition to our strategic financing collaboration with The Blackstone Group Inc. and certain of its affiliates, will be sufficient to enable us to advance our Alnylam P5x25 strategy for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q.
3. NET PRODUCT REVENUES
Net product revenues consist of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands)2021202020212020
ONPATTRO
United States$51,247 $39,027 $153,109 $108,491 
Europe51,019 30,478 136,576 74,664 
Rest of World (primarily Japan)18,051 13,011 46,422 32,560 
Total$120,317 $82,516 $336,107 $215,715 
GIVLAARI
United States$22,372 $12,108 $62,502 $26,043 
Europe7,568 4,582 22,461 6,919 
Rest of World (primarily Japan)1,893  2,173  
Total$31,833 $16,690 $87,136 $32,962 
OXLUMO
United States$5,236 $ $13,156 $ 
Europe9,658  27,225  
Total$14,894 $ $40,381 $ 
Total net product revenues$167,044 $99,206 $463,624 $248,677 
The following table presents the balance of our receivables related to our net product revenues:
(In thousands)As of September 30,
2021
As of December 31,
2020
Receivables included in “Accounts receivable, net”$116,872 $68,871 

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ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4. NET REVENUES FROM COLLABORATIONS
Net revenues from collaborations consist of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Regeneron Pharmaceuticals$14,161 $14,874 $90,908 $49,790 
Novartis AG4,160 1,091 21,179 6,029 
Vir Biotechnology1,233 8,512 8,033 21,476 
Other582 2,170 1,208 3,319 
Total$20,136 $26,647 $121,328 $80,614 
    
The following table presents the balance of our receivables and contract liabilities related to our collaboration agreements:
(In thousands)As of September 30, 2021As of December 31, 2020
Receivables included in “Accounts receivable, net”$23,584 $33,542 
Contract liabilities included in “Deferred revenue”$76,452 $120,021 
We recognized revenue of $12.7 million and $65.2 million in the three and nine months ended September 30, 2021, respectively, and revenue of $19.2 million and $50.7 million in the three and nine months ended September 30, 2020, respectively, that in each case was included in the contract liability balance at the beginning of the respective period.
In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. If additional consideration is received on those contracts in subsequent periods, we assume all revenue recognized in the reporting period first applies to the beginning contract liability as opposed to a portion applying to the new consideration for the period.
The following table provides research and development expenses incurred by type, for which we recognize net revenue, that are directly attributable to our collaboration agreements, by collaboration partner:
Three Months Ended September 30,
20212020
(In thousands)Clinical Trial and ManufacturingExternal ServicesOtherClinical Trial and ManufacturingExternal ServicesOther
Regeneron Pharmaceuticals$3,152 $285 $10,964 $3,355 $43 $9,167 
Vir Biotechnology519 37 546 1,379 277 3,247 
Other53  182 513 17 546 
Total$3,724 $322 $11,692 $5,247 $337 $12,960 

Nine Months Ended September 30,
20212020
(In thousands)Clinical Trial and ManufacturingExternal ServicesOtherClinical Trial and ManufacturingExternal ServicesOther
Regeneron Pharmaceuticals$17,343 $547 $34,082 $10,751 $67 $33,290 
Vir Biotechnology2,234 693 2,599 2,757 486 8,539 
Other742 52 1,245 1,710 46 1,486 
Total$20,319 $1,292 $37,926 $15,218 $599 $43,315 
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ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The research and development expenses incurred for each agreement listed in the table above consist of costs incurred for (i) clinical expenses, including manufacturing of clinical product, (ii) external services including consulting services and lab supplies and services, and (iii) other expenses, including professional services, facilities and overhead allocations, and a reasonable estimate of compensation and related costs as billed to our counterparties, for which we recognize net revenue from collaborations. For the three and nine months ended September 30, 2021 and 2020, we did not incur material selling, general and administrative expenses related to our collaboration agreements.
In addition, we recognized a reduction to our research and development expenses of $3.3 million and $12.7 million for the three and nine months ended September 30, 2021, respectively, and of $3.2 million and $8.4 million for the three and nine months ended September 30, 2020, respectively, from cost reimbursement due under certain of our collaboration agreements accounted for under ASC 808.
Product Alliances
Regeneron Pharmaceuticals, Inc.
In April 2019, we entered into a global, strategic collaboration with Regeneron Pharmaceuticals, Inc., or Regeneron, to discover, develop and commercialize RNAi therapeutics for a broad range of diseases by addressing therapeutic targets expressed in the eye and central nervous system, or CNS, in addition to a select number of targets expressed in the liver, which we refer to as the Regeneron Collaboration. The Regeneron Collaboration is governed by a Master Agreement, referred to as the Regeneron Master Agreement, which became effective on May 21, 2019. In connection with the Regeneron Master Agreement, we and Regeneron entered into (i) a binding co-co collaboration term sheet covering the continued development of cemdisiran, our C5 small interfering RNA, or siRNA, currently in Phase 2 development for C5 complement-mediated diseases, as a monotherapy and (ii) a binding license term sheet to evaluate anti-C5 antibody-siRNA combinations for C5 complement-mediated diseases including evaluating the combination of Regeneron’s pozelimab (REGN3918), currently in Phase 2 development, and cemdisiran. The C5 co-co collaboration and license agreements were executed in August 2019.
Under the terms of the Regeneron Collaboration, we are working exclusively with Regeneron to discover RNAi therapeutics for eye and CNS diseases for an initial five-year research period, which we refer to as the Initial Research Term. Regeneron has an option to extend the Initial Research Term (referred to as the Research Term Extension Period, and together with the Initial Research Term, the Research Term) for up to an additional five years, for a research term extension fee of up to $400.0 million. The Regeneron Collaboration also covers a select number of RNAi therapeutic programs designed to target genes expressed in the liver, including our previously announced collaboration with Regeneron to identify RNAi therapeutics for the chronic liver disease nonalcoholic steatohepatitis. We retain broad global rights to all of our other unpartnered liver-directed clinical and pre-clinical pipeline programs. The Regeneron Collaboration is governed by a joint steering committee that is comprised of an equal number of representatives from each party.
Regeneron will lead development and commercialization for all programs targeting eye diseases (subject to limited exceptions), entitling us to certain potential milestone and royalty payments pursuant to the terms of a license agreement, the form of which has been agreed upon by the parties. We and Regeneron will alternate leadership on CNS and liver programs covered by the Regeneron Collaboration, with the lead party retaining global development and commercial responsibility. For such CNS and liver programs, both we and Regeneron will have the option at lead candidate selection to enter into a co-co collaboration agreement, the form of which has been agreed upon by the parties, whereby both companies will share equally all costs of, and profits from, all development and commercialization activities under the program. If the non-lead party elects to not enter into a co-co collaboration agreement with respect to a given CNS or liver program, we and Regeneron will enter into a license agreement with respect to such program and the lead party will be the “Licensee” for the purposes of the license agreement. If the lead party for a CNS or liver program elects to not enter into the co-co collaboration agreement, then we and Regeneron will enter into a license agreement with respect to such program and leadership of the program will transfer to the other party and the former non-lead party will be the “Licensee” for the purposes of the license agreement.
With respect to the programs directed to C5 complement-mediated diseases, we retain control of cemdisiran monotherapy development, and Regeneron is leading combination product development. Under the C5 co-co collaboration agreement, we and Regeneron equally share costs and potential future profits on any monotherapy program. Under the C5 license agreement, for cemdisiran to be used as part of a combination product, Regeneron is solely responsible for all development and commercialization costs and we will receive low double-digit royalties and commercial milestones of up to $325.0 million on any potential combination product sales. The C5 co-co collaboration agreement, the C5 license agreement, and the Master Agreement have been combined for accounting purposes and treated as a single agreement.
In connection with the Regeneron Master Agreement, Regeneron made an upfront payment of $400.0 million. We are also eligible to receive up to an additional $200.0 million in milestone payments upon achievement of certain criteria during early clinical development for eye and CNS programs. We and Regeneron plan to advance programs directed to up to 30 targets under the Regeneron Collaboration during the Initial Research Term. For each program, Regeneron will provide us with $2.5
15

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
million in funding at program initiation and an additional $2.5 million at lead candidate identification, with the potential for approximately $30.0 million in annual discovery funding to us as the Regeneron Collaboration reaches steady state.
Regeneron has the right to terminate the Regeneron Master Agreement for convenience upon ninety days’ notice. The termination of the Regeneron Master Agreement does not affect the term of any license agreement or co-co collaboration agreement then in effect. In addition, either party may terminate the Regeneron Master Agreement for a material breach by, or insolvency of, the other party. Unless earlier terminated pursuant to its terms, the Regeneron Master Agreement will remain in effect with respect to each program until (a) such program becomes a terminated program or (b) the parties enter into a license agreement or co-co collaboration agreement with respect to such program. The Regeneron Master Agreement includes various representations, warranties, covenants, dispute escalation and resolution mechanisms, indemnities and other provisions customary for transactions of this nature.
For any license agreement subsequently entered into, the licensee will generally be responsible for its own costs and expenses incurred in connection with the development and commercialization of the collaboration products. The licensee will pay to the licensor certain development and/or commercialization milestone payments totaling up to $150.0 million for each collaboration product. In addition, following the first commercial sale of the applicable collaboration product under a license agreement, the licensee is required to make certain tiered royalty payments, ranging from low double-digits up to 20%, to the licensor based on the aggregate annual net sales of the collaboration product, subject to customary reductions.
For any co-co collaboration agreement subsequently entered into, we and Regeneron will share equally all costs of, and profits from, development and commercialization activities. Reimbursement of our share of costs will be recognized as a reduction to research and development expense in the condensed consolidated statements of operations and comprehensive loss. In the event that a party exercises its opt-out right, the lead party will be responsible for all costs and expenses incurred in connection with the development and commercialization of the collaboration products under the applicable co-co collaboration agreement, subject to continued sharing of costs through defined points. If a party exercises its opt-out right, following the first commercial sale of the applicable collaboration product under a co-co collaboration agreement, the lead party is required to make certain tiered royalty payments, ranging from low double-digits up to 20%, to the other party based on the aggregate annual net sales of the collaboration product and the timing of the exercise of the opt-out right, subject to customary reductions and a reduction for opt-out transition costs.
Due to the uncertainty of pharmaceutical development and the high historical f