Financial Data and Key Metrics Changes - In Q2 2021, Alnylam Pharmaceuticals reported $160.8 million in total combined product sales, representing a 107% increase compared to Q2 2020 [32] - ONPATTRO generated $113.8 million in net revenue, marking a 12% growth from Q1 2021 and a 71% increase from Q2 2020 [29] - GIVLAARI achieved $30.6 million in net revenue, reflecting a 24% growth compared to Q1 2021 [31] - OXLUMO generated $16.3 million in net revenue, up from $9.1 million in Q1 2021 [31] - The company increased its full-year 2021 combined net product revenue guidance from $610 million to a range of $640 million to $665 million [34] Business Line Data and Key Metrics Changes - ONPATTRO saw a 12% quarter-on-quarter growth in demand, with over 1,725 patients on treatment [10] - GIVLAARI experienced a 24% quarter-on-quarter growth, with over 270 patients on therapy [12] - OXLUMO's performance showed continued demand strength, with approximately 100 patients on treatment as of June 30 [14] Market Data and Key Metrics Changes - International markets for ONPATTRO grew by 17% quarter-on-quarter, with strong performance in Europe and Canada [11] - GIVLAARI's market access in the US confirmed coverage for over 98% of lives, with no significant headwinds [12] - OXLUMO achieved market access with confirmed medical policy inclusions for over 80% of covered US lives [14] Company Strategy and Development Direction - Alnylam aims to build a top five biotech company by executing its P5x25 goals, focusing on sustainable innovation and organic product development [42] - The company is expanding its pipeline into prevalent diseases, including hypertension, with a commitment to maintaining profitability [44][45] - A partnership with PeptiDream aims to develop peptide-siRNA conjugates for extrahepatic delivery of RNAi therapeutics [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery of the healthcare system and its positive impact on patient diagnosis and treatment compliance [10][11] - The company is optimistic about the potential of its pipeline, particularly in addressing prevalent diseases and expanding its therapeutic offerings [22][24] - Management acknowledged the challenges posed by the Delta variant but indicated that the company has built capabilities to adapt to changing healthcare environments [67] Other Important Information - Alnylam discontinued its ALN-COV program for COVID-19 treatment due to the availability of effective vaccines [28] - The company plans to submit supplemental regulatory filings for Lumasiran based on recent positive trial results [20] Q&A Session Summary Question: Future company structure and growth ambitions - Management emphasized the commitment to remain a standalone company focused on achieving top five biotech status through organic growth and innovation [42] Question: Balancing investment in larger programs with profitability - Management highlighted the excitement around RNAi therapeutics for prevalent diseases and the ability to advance these assets independently while ensuring a sustainable business model [44][45] Question: Parallels between zilebesiran and inclisiran - Management noted the similarities in addressing prevalent diseases and the strategic advantages of having de-risked primary endpoints for both programs [52] Question: Enrollment rates in HELIOS-B study - Management indicated that the faster enrollment in HELIOS-B is due to high interest among physicians and patients, with expectations for interim analysis to be considered [64] Question: Impact of Delta variant on Q3 performance - Management expressed confidence in the company's ability to navigate challenges posed by the Delta variant, citing successful adaptations made during the pandemic [67]

[PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements and management's discussion and analysis for the six months ended June 30, 2021 [Financial Statements (Unaudited)](index=8&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) For the six months ended June 30, 2021, Alnylam reported a significant **96% year-over-year increase in total revenues to $398.1 million**, driven by strong growth in net product revenues which nearly doubled to **$296.6 million**; despite this revenue growth, the company's net loss widened to **$389.9 million** from **$361.5 million** in the prior-year period, primarily due to increased operating expenses and other expenses related to its financing activities; the balance sheet shows total assets increased to **$3.51 billion**, while total liabilities also grew to **$2.66 billion**, reflecting new debt and royalty-related liabilities [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $745,767 | $496,580 | | Marketable debt securities | $1,101,782 | $1,333,182 | | Total current assets | $2,725,163 | $2,614,777 | | **Total assets** | **$3,509,429** | **$3,407,061** | | **Liabilities & Equity** | | | | Long-term debt | $433,151 | $191,278 | | Liability related to the sale of future royalties, net | $1,128,561 | $1,071,541 | | Total liabilities | $2,656,067 | $2,390,814 | | Accumulated deficit | $(4,975,219) | $(4,585,369) | | **Total stockholders' equity** | **$853,362** | **$1,016,247** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS) This section details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2021 and 2020 Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net product revenues | $160,811 | $77,533 | $296,580 | $149,471 | | Total revenues | $220,553 | $103,962 | $398,119 | $203,438 | | Research and development | $182,635 | $154,996 | $368,534 | $324,567 | | Selling, general and administrative | $145,323 | $127,896 | $292,182 | $254,657 | | Loss from operations | $(146,160) | $(198,859) | $(332,414) | $(409,017) | | Net loss | $(189,559) | $(179,229) | $(389,850) | $(361,450) | | Net loss per share | $(1.61) | $(1.56) | $(3.32) | $(3.18) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(357,516) | $(381,491) | | Net cash provided by (used in) investing activities | $228,376 | $(327,542) | | Net cash provided by financing activities | $380,988 | $742,882 | | **Net increase in cash** | **$249,019** | **$33,653** | - Financing activities in H1 2021 included **$250.0 million** from a term loan facility, which compares to H1 2020 which included **$500.0 million** from the sale of future royalties and **$99.5 million** from issuance of common stock to strategic partners[31](index=31&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information regarding the figures presented in the condensed consolidated financial statements Net Product Revenues by Product and Region (in thousands) | Product/Region | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **ONPATTRO** | **$113,839** | **$66,535** | **$215,790** | **$133,199** | | U.S. | $52,391 | $32,268 | $101,862 | $69,464 | | Europe | $44,904 | $23,020 | $85,557 | $44,186 | | **GIVLAARI** | **$30,630** | **$10,998** | **$55,303** | **$16,272** | | U.S. | $22,368 | $8,661 | $40,130 | $13,935 | | Europe | $8,020 | $2,337 | $14,893 | $2,337 | | **OXLUMO** | **$16,342** | **$—** | **$25,487** | **$—** | | **Total Net Product Revenues** | **$160,811** | **$77,533** | **$296,580** | **$149,471** | - Net revenues from collaborations in H1 2021 were **$101.2 million**, primarily driven by the collaboration with Regeneron (**$76.7 million**)[42](index=42&type=chunk) - The company received a subpoena from the U.S. Department of Justice in April 2021 regarding the marketing and promotion of ONPATTRO in the U.S., and is cooperating with the government, but the outcome and potential loss, if any, are not yet determinable[94](index=94&type=chunk) - The company entered into a credit agreement in April 2020 for up to **$700.0 million** in term loans, with **$450.0 million** drawn as of June 30, 2021 (**$200.0 million** in 2020 and **$250.0 million** in June 2021)[79](index=79&type=chunk)[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the **98% growth** in H1 2021 net product revenues to the global expansion of ONPATTRO and GIVLAARI, and the successful launch of OXLUMO; net revenues from collaborations increased **88%**, mainly due to increased activity with Regeneron and Novartis; operating expenses rose **19% to $730.5 million**, driven by clinical trial and manufacturing activities for late-stage programs and commercial support costs; the company highlights its 'Alnylam P5x25' strategy to become a top-five biotech by 2025 and believes its current capital, including financing from Blackstone, is sufficient for at least the next 12 months - The company launched its 'Alnylam P5x25' strategy in early 2021, aiming to become a top-five biotech company by market capitalization by the end of 2025 through sustainable innovation and driving profitability[98](index=98&type=chunk) - The FDA accepted the New Drug Application (NDA) for vutrisiran for hATTR amyloidosis with polyneuropathy, setting a PDUFA action date of April 14, 2022[100](index=100&type=chunk)[108](index=108&type=chunk) - Partner Novartis resubmitted the NDA for Leqvio (inclisiran) to the FDA in July 2021 after a previous complete response letter, with a new action date of January 1, 2022[98](index=98&type=chunk)[107](index=107&type=chunk) Operating Costs and Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Cost of goods sold | $53,279 | $31,567 | 69% | | Cost of collaborations and royalties | $16,538 | $1,664 | 894% | | Research and development | $368,534 | $324,567 | 14% | | Selling, general and administrative | $292,182 | $254,657 | 15% | | **Total operating costs and expenses** | **$730,533** | **$612,455** | **19%** | - Management believes that cash, cash equivalents, and marketable securities of **$1.90 billion** as of June 30, 2021, along with expected product sales and alliance revenues, are sufficient to fund operations for at least the next 12 months[135](index=135&type=chunk)[139](index=139&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company states that there have been no significant changes to its financial market risks, primarily related to interest rates, since those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no significant changes to the financial market risks related to interest rates as of June 30, 2021, compared to those described as of December 31, 2020[141](index=141&type=chunk) [Controls and Procedures](index=40&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2021; no material changes to internal control over financial reporting were identified during the quarter - The CEO and CFO concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[143](index=143&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[144](index=144&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and exhibits related to the company's operations [Legal Proceedings](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in a securities class action lawsuit in New York State related to its November 2017 public stock offering, which it is defending vigorously; additionally, it received a subpoena from the U.S. Department of Justice in April 2021 concerning the U.S. marketing and promotion of ONPATTRO and is cooperating with the investigation - The company is defending a securities class action lawsuit in New York related to its November 2017 public stock offering, alleging material misstatements concerning the APOLLO Phase 3 trial of patisiran[93](index=93&type=chunk) - On April 9, 2021, the company received a subpoena from the U.S. Department of Justice regarding its U.S. marketing and promotion of ONPATTRO, and is cooperating with the government investigation[94](index=94&type=chunk) [Risk Factors](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company outlines extensive risks, with significant emphasis on the potential impact of the COVID-19 pandemic on commercial sales and clinical trials; financial risks include a history of significant losses (**$4.98 billion** accumulated deficit) and reliance on future revenues to achieve profitability; operational risks involve dependence on third-party collaborators like Novartis and Regeneron, and on contract manufacturers; major industry risks include potential clinical trial failures, regulatory hurdles for new drugs like vutrisiran, pricing pressures, and intense competition from existing and emerging therapies; the company also highlights legal risks from a DOJ investigation into ONPATTRO marketing and intellectual property challenges inherent in the novel RNAi field - The COVID-19 pandemic poses a material risk, potentially impacting commercial sales, patient demand, clinical trial enrollment, and supply chains[147](index=147&type=chunk)[148](index=148&type=chunk) - The company has a history of significant losses, with an accumulated deficit of **$4.98 billion** as of June 30, 2021, and expects to incur annual net operating losses for the foreseeable future[151](index=151&type=chunk) - The business is highly dependent on collaborators such as Novartis for Leqvio and Sanofi Genzyme for fitusiran, and any failure by these partners to successfully develop or commercialize these products could adversely affect future revenues[161](index=161&type=chunk) - The company faces intense competition for its approved products and pipeline candidates, for example, ONPATTRO competes with Pfizer's tafamidis and Ionis's inotersen for hATTR amyloidosis[197](index=197&type=chunk) - A significant risk is the government investigation into the marketing of ONPATTRO, which could result in substantial fines, penalties, and other sanctions if the company is found to have engaged in improper promotion[179](index=179&type=chunk) [Exhibits](index=75&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to lease and research agreements, and certifications by the principal executive and financial officers - The exhibits section includes filed documents such as a lease amendment, sponsored research agreements, and officer certifications pursuant to the Securities Exchange Act of 1934[206](index=206&type=chunk) [Signatures](index=76&type=section&id=SIGNATURES) This section confirms the official signing and authorization of the Quarterly Report on Form 10-Q - The Quarterly Report on Form 10-Q was duly signed and authorized on August 3, 2021[208](index=208&type=chunk)

Financial Data and Key Metrics Changes - Alnylam Pharmaceuticals reported $135.8 million in total combined product sales for Q1 2021, representing an 89% increase compared to Q1 2020 [31] - ONPATTRO generated $102 million in net revenue, marking a 13% growth from Q4 2020 and a 53% increase from Q1 2020 [29][30] - GIVLAARI achieved $24.7 million in net revenue, reflecting an 11% growth compared to Q4 2020 [31] - OXLUMO generated $9.1 million in net revenue in its first full quarter [31] - Gross margin on total revenues was 83% for the quarter, down from 87% in Q1 2020 [32] Business Line Data and Key Metrics Changes - ONPATTRO's patient count exceeded 1,500, with adherence to treatment stable at pre-COVID levels [10][11] - GIVLAARI had 225 patients on commercial therapy as of March 31, 2021, with strong patient compliance over 90% [12][13] - OXLUMO saw initial demand with approximately 50 patients on treatment in the US and EU [15] Market Data and Key Metrics Changes - ONPATTRO achieved market access in over 30 countries, including regulatory approval in Taiwan [11] - GIVLAARI's geographic expansion is expected to drive growth, particularly in Europe [14] - OXLUMO's market access efforts are progressing well, with over two-thirds of covered US lives confirmed for access [15] Company Strategy and Development Direction - Alnylam announced a five-year strategic plan, Alnylam P5x25, aiming for transformative medicines in both rare and common diseases, with a revenue CAGR of over 40% through 2025 [8] - The company is focused on expanding its pipeline with first and/or best-in-class product candidates and achieving sustainable non-GAAP profitability within the period [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to 2021, highlighting the positive uptake of ONPATTRO and the progress in clinical trials for vutrisiran [7][22] - The company is excited about the potential of its pipeline, particularly in addressing unmet needs in common diseases [25][26] Other Important Information - Alnylam released its first corporate responsibility summary, emphasizing its commitment to using its business as a force for good [9] - The company is advancing multiple late-stage programs, including patisiran and vutrisiran for ATTR amyloidosis, and plans to initiate a biannual dosing regimen for vutrisiran [22][24] Q&A Session Summary Question: Enrollment rate for HELIOS-B - Management attributed the faster enrollment to community enthusiasm for vutrisiran and the global reach in the TTR space [40][41] Question: Breakdown of ONPATTRO patients on concurrent use with stabilizers - Approximately 20% of patients are using ONPATTRO concurrently with stabilizers for cardiomyopathy treatment [42][44] Question: Growth trends for GIVLAARI - Management highlighted geographic expansion and new patient finding as key growth drivers for GIVLAARI [49] Question: Expectations for APOLLO-B trial - The primary endpoint is the six-minute walk distance, which is clinically meaningful for patients with cardiomyopathy [57][58] Question: Interim analysis for APOLLO-B - The interim analysis aims to potentially bring vutrisiran to market ahead of the final results, with the design still needing alignment with regulators [64][66] Question: Value-based payment implementation - The company reported modest deductions associated with value-based agreements, indicating that the products are performing well in the patient community [72][73]

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (As of March 31, 2021 and December 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | December 31, 2020 (Thousands of Dollars) | | :----------------------------------- | :--------------------- | :---------------------- | | **Assets** | | | | Cash and cash equivalents | 379,543 | 496,580 | | Marketable debt securities | 1,273,027 | 1,333,182 | | Marketable equity securities | 56,967 | 44,633 | | Accounts receivable, net | 110,626 | 102,413 | | Inventories | 73,940 | 75,202 | | Prepaid expenses and other current assets | 75,980 | 62,767 | | Receivable related to sale of future royalties | 500,000 | 500,000 | | **Total current assets** | **2,470,083** | **2,614,777** | | Property, plant and equipment, net | 464,572 | 465,029 | | Operating lease right-of-use assets | 237,213 | 241,485 | | Restricted investments | 40,725 | 40,725 | | Other assets | 42,676 | 45,045 | | **Total assets** | **3,255,269** | **3,407,061** | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | 45,381 | 51,966 | | Accrued expenses | 280,527 | 355,909 | | Operating lease liabilities | 38,917 | 36,872 | | Deferred revenue | 116,340 | 127,207 | | Liability related to sale of future royalties | 13,660 | 13,316 | | **Total current liabilities** | **494,825** | **585,270** | | Operating lease liabilities, net of current portion | 288,015 | 293,039 | | Deferred revenue, net of current portion | 208,123 | 225,094 | | Long-term debt | 191,590 | 191,278 | | Liability related to sale of future royalties, net of current portion | 1,086,065 | 1,058,225 | | Other liabilities | 60,461 | 37,908 | | **Total liabilities** | **2,329,079** | **2,390,814** | | **Stockholders' Equity** | | | | Common stock | 1,173 | 1,164 | | Additional paid-in capital | 5,747,394 | 5,644,074 | | Accumulated other comprehensive loss | (36,717) | (43,622) | | Accumulated deficit | (4,785,660) | (4,585,369) | | **Total stockholders' equity** | **926,190** | **1,016,247** | | **Total liabilities and stockholders' equity** | **3,255,269** | **3,407,061** | - As of March 31, 2021, total assets were **$3.255 billion**, a decrease from **$3.407 billion** as of December 31, 2020[21](index=21&type=chunk) - Total current assets decreased from **$2.615 billion** to **$2.470 billion**, primarily due to a reduction in cash and cash equivalents and marketable debt securities[21](index=21&type=chunk) - Total liabilities decreased from **$2.391 billion** to **$2.329 billion**, with total current liabilities decreasing from **$585 million** to **$495 million**[21](index=21&type=chunk) - Total stockholders' equity decreased from **$1.016 billion** to **$926 million**, and the accumulated deficit increased to **$4.786 billion**[21](index=21&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | For the Three Months Ended March 31, 2021 (Thousands of Dollars) | For the Three Months Ended March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :------------------------------------------------- | :----------------------------- | :----------------------------- | :------------ | :---------- | | **Statements of Operations** | | | | | | Net product revenues | 135,769 | 71,938 | 63,831 | 89% | | Net revenues from collaborations | 41,797 | 27,538 | 14,259 | 52% | | **Total revenues** | **177,566** | **99,476** | **78,090** | **79%** | | Cost of sales | 23,023 | 13,302 | 9,721 | 73% | | Cost of collaborations | 8,039 | — | 8,039 | N/A | | Research and development expenses | 185,899 | 169,571 | 16,328 | 10% | | Selling, general and administrative expenses | 146,859 | 126,761 | 20,098 | 16% | | **Total operating costs and expenses** | **363,820** | **309,634** | **54,186** | **18%** | | **Operating loss** | **(186,254)** | **(210,158)** | **23,904** | **(11%)** | | Interest expense | (32,515) | — | (32,515) | N/A | | Interest income | 450 | 5,480 | (5,030) | (92%) | | Other income, net | 19,044 | 23,032 | (3,988) | (17%) | | **Total other (expense) income** | **(13,021)** | **28,512** | **(41,533)** | **(146%)** | | **Loss before income taxes** | **(199,275)** | **(181,646)** | **(17,629)** | **10%** | | Provision for income taxes | (1,016) | (575) | (441) | 77% | | **Net loss** | **(200,291)** | **(182,221)** | **(18,070)** | **10%** | | Net loss per common share - basic and diluted | (1.71) | (1.62) | (0.09) | 6% | | **Comprehensive loss** | **(193,386)** | **(177,762)** | **(15,624)** | **9%** | - Total revenues increased by **79%** year-over-year to **$177.6 million**, driven by significant growth in net product revenues and net revenues from collaborations[24](index=24&type=chunk) - Operating loss narrowed by **11%** to **$186.3 million**, but net loss expanded by **10%** year-over-year to **$200.3 million** due to increased interest expense and reduced other income[24](index=24&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Changes (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | | :------------------------------------------------- | :--------------------- | :--------------------- | | Balance at beginning of period | 1,016,247 | 1,438,692 | | Exercise of common stock options, net of tax withholdings | 47,034 | 54,221 | | Issuance of common stock under equity plans | — | — | | Stock-based compensation expense | 56,295 | 34,578 | | Other comprehensive income | 6,905 | 4,459 | | Net loss | (200,291) | (182,221) | | Balance at end of period | 926,190 | 1,349,729 | - As of March 31, 2021, total stockholders' equity was **$926 million**, a decrease from **$1.016 billion** as of December 31, 2020, primarily due to a **$200.3 million** net loss offsetting increases from stock-based compensation and option exercises[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | For the Three Months Ended March 31, 2021 (Thousands of Dollars) | For the Three Months Ended March 31, 2020 (Thousands of Dollars) | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | (235,660) | (246,161) | | Net cash provided by investing activities | 71,352 | 113,688 | | Net cash provided by financing activities | 51,177 | 53,869 | | Effect of exchange rate changes | (3,910) | (631) | | Net decrease in cash, cash equivalents and restricted cash | (117,041) | (79,235) | | Cash, cash equivalents and restricted cash at beginning of period | 499,046 | 549,628 | | Cash, cash equivalents and restricted cash at end of period | 382,005 | 470,393 | - Net cash used in operating activities decreased to **$235.7 million** for the three months ended March 31, 2021, from **$246.2 million** in the prior-year period, primarily due to a reduced operating loss[31](index=31&type=chunk)[135](index=135&type=chunk) - Net cash provided by investing activities decreased to **$71.4 million** from **$113.7 million** in the prior-year period, mainly due to a decrease in net purchases, sales, and maturities of marketable securities[31](index=31&type=chunk)[136](index=136&type=chunk) - Net cash provided by financing activities decreased to **$51.2 million** from **$53.9 million** in the prior-year period, primarily due to lower net proceeds from equity issuances, partially offset by proceeds from the vutrisiran and ALN-AGT clinical development financing agreement[31](index=31&type=chunk)[137](index=137&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of Business](index=12&type=section&id=1.%20Nature%20of%20Business) Alnylam Pharmaceuticals, Inc. is a biopharmaceutical company focused on developing and commercializing novel RNA interference (RNAi)-based therapeutics - Alnylam Pharmaceuticals, Inc. is a biopharmaceutical company focused on developing and commercializing novel RNA interference (RNAi)-based therapeutics[33](index=33&type=chunk) - The company launched its "Alnylam P x25" strategy in early 2021, aiming to become a top-five biotechnology company by the end of 2025 through sustainable innovation, transformative medicines for rare and common diseases, and strong financial performance and profitability[33](index=33&type=chunk) - As of March 31, 2021, the company had four approved commercial products (including one collaborative product) and six clinical programs in late-stage development[33](index=33&type=chunk) [2. Basis of Presentation and Principles of Consolidation](index=12&type=section&id=2.%20Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) This section outlines the basis for preparing the unaudited condensed consolidated financial statements and the principles of consolidation - The condensed consolidated financial statements are unaudited, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim periods, and include all normal and recurring adjustments[34](index=34&type=chunk) - Management used estimates and assumptions in preparing the financial statements, particularly for inventory valuation, future royalty sales liabilities, development derivative liabilities, income taxes, revenue recognition, R&D expenses, and stock-based compensation[35](index=35&type=chunk) - The direct or indirect impact of the COVID-19 pandemic on the company's business, operating results, and financial condition remains highly uncertain, with related estimates in the financial statements subject to future changes[35](index=35&type=chunk) [Liquidity](index=13&type=section&id=Liquidity) This section discusses the company's financial resources and ability to meet its short-term and long-term obligations - The company expects its cash, cash equivalents, and marketable securities as of March 31, 2021, combined with cash from product sales, existing collaborations, and the strategic financing partnership with The Blackstone Group Inc., to support its Alnylam P x25 strategy for at least the next 12 months[38](index=38&type=chunk) [3. Net Product Revenues](index=13&type=section&id=3.%20Net%20Product%20Revenues) This section details the net revenues generated from the company's commercialized products Net Product Revenues (For the Three Months Ended March 31, 2021 and March 31, 2020) | Product | Region | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :------------ | :---------- | | **ONPATTRO** | | | | | | | | United States | 49,471 | 37,196 | 12,275 | 33% | | | Europe | 40,653 | 21,166 | 19,487 | 92% | | | Rest of World (primarily Japan) | 11,827 | 8,302 | 3,525 | 42% | | **ONPATTRO Total** | | **101,951** | **66,664** | **35,287** | **53%** | | **GIVLAARI** | | | | | | | | United States | 17,762 | 5,274 | 12,488 | 237% | | | Europe | 6,873 | — | 6,873 | N/A | | | Rest of World | 38 | — | 38 | N/A | | **GIVLAARI Total** | | **24,673** | **5,274** | **19,399** | **368%** | | **OXLUMO** | | | | | | | | United States | 1,408 | — | 1,408 | N/A | | | Europe | 7,737 | — | 7,737 | N/A | | **OXLUMO Total** | | **9,145** | **—** | **9,145** | **N/A** | | **Total Net Product Revenues** | | **135,769** | **71,938** | **63,831** | **89%** | - Net product revenues increased by **89%** year-over-year to **$135.8 million**, driven by the continued global expansion of ONPATTRO and GIVLAARI, and sales contributions from OXLUMO following its Q4 2020 approval[39](index=39&type=chunk)[118](index=118&type=chunk) [4. Net Revenues from Collaborations](index=13&type=section&id=4.%20Net%20Revenues%20from%20Collaborations) This section details the revenues generated from the company's strategic collaboration agreements Net Revenues from Collaborations (For the Three Months Ended March 31, 2021 and March 31, 2020) | Collaborator | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :----------------------- | :--------------------- | :--------------------- | :------------ | :---------- | | Regeneron Pharmaceuticals | 30,343 | 19,503 | 10,840 | 56% | | Novartis AG | 8,111 | 1,060 | 7,051 | 665% | | Vir Biotechnology | 2,822 | 6,516 | (3,694) | (57%) | | Other | 521 | 459 | 62 | 14% | | **Total** | **41,797** | **27,538** | **14,259** | **52%** | - Net revenues from collaborations increased by **52%** to **$41.8 million**, primarily due to increased collaboration activities with Regeneron and Novartis[41](index=41&type=chunk)[120](index=120&type=chunk) - Collaboration revenue with Regeneron increased by **56%** to **$30.3 million**, and with Novartis by **665%** to **$8.1 million**, while revenue from Vir Biotechnology decreased by **57%** to **$2.8 million**[41](index=41&type=chunk)[120](index=120&type=chunk) - The company's collaboration agreement with Regeneron includes research services, C5 license obligations, and C5 co-co-promotion obligations, with a total transaction price of **$530.5 million**, of which **$188.3 million** remains unrecognized[49](index=49&type=chunk)[50](index=50&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - The collaboration with Novartis involves the development and commercialization of inclisiran, entitling the company to up to **$135 million** in milestone payments and **10% to 20%** in sales royalties[55](index=55&type=chunk) - The collaboration with Vir Biotechnology focuses on infectious disease RNAi therapeutics, including ALN-HBV02 and SARS-CoV-2 targets, with the company receiving a **$10 million** upfront payment and **2.22 million** shares of Vir common stock, plus potential additional milestones and high single-digit to low double-digit percentage sales royalties[57](index=57&type=chunk)[59](index=59&type=chunk) [5. Liability Related to the Sale of Future Royalties](index=19&type=section&id=5.%20Liability%20Related%20to%20the%20Sale%20of%20Future%20Royalties) This section describes the financial liability arising from the sale of future royalty streams - In April 2020, the company entered into an agreement with Blackstone Royalties to sell **50%** of future inclisiran royalties and **75%** of commercial milestone payments, receiving **$500 million** upfront and another **$500 million** due by September 30, 2021[60](index=60&type=chunk) - As of March 31, 2021, the carrying value of the liability related to the sale of future royalties was **$1.10 billion**, net of **$13 million** in transaction costs[60](index=60&type=chunk) Changes in Liability Related to the Sale of Future Royalties (Thousands of Dollars) | Item | Amount (Thousands of Dollars) | | :------------------------------------------------- | :------------ | | Carrying value of liability as of December 31, 2020 | 1,071,541 | | Interest expense recognized | 28,184 | | Carrying value of liability as of March 31, 2021 | 1,099,725 | [6. Fair Value Measurements](index=20&type=section&id=6.%20Fair%20Value%20Measurements) This section provides details on the fair value measurements of the company's financial assets and liabilities Fair Value Measurements of Financial Assets and Liabilities (As of March 31, 2021, Thousands of Dollars) | Item | Total | Quoted Prices in Active Markets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | | :----------------------------------- | :----- | :--------------------- | :------------------- | :--------------------- | | **Financial Assets** | | | | | | Cash equivalents: Money market funds | 177,470 | 177,470 | — | — | | Marketable debt securities: U.S. government agency securities | 215,200 | — | 215,200 | — | | Marketable debt securities: U.S. Treasury bills | 1,057,827 | — | 1,057,827 | — | | Marketable equity securities | 56,967 | 56,967 | — | — | | Restricted cash (money market funds) | 1,483 | 1,483 | — | — | | **Total Financial Assets** | **1,508,947** | **235,920** | **1,273,027** | **—** | | **Financial Liabilities** | | | | | | Development derivative liability | 48,038 | — | — | 48,038 | - As of March 31, 2021, the company's total financial assets amounted to **$1.509 billion**, with the majority being Level 2 marketable debt securities (**$1.273 billion**)[65](index=65&type=chunk) - The development derivative liability was **$48 million**, classified as a Level 3 financial liability, with its valuation incorporating unobservable key inputs[65](index=65&type=chunk)[86](index=86&type=chunk) [7. Marketable Debt Securities](index=21&type=section&id=7.%20Marketable%20Debt%20Securities) This section provides a summary of the company's marketable debt securities portfolio Summary of Marketable Debt Securities (As of March 31, 2021, Thousands of Dollars) | Item | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :----------------------------------- | :------- | :------------- | :------------- | :------- | | U.S. government agency securities | 215,171 | 87 | (58) | 215,200 | | U.S. Treasury bills | 1,057,509 | 335 | (17) | 1,057,827 | | **Total** | **1,272,680** | **422** | **(75)** | **1,273,027** | - The company classifies all debt security investments as available-for-sale and current assets; as of March 31, 2021, marketable debt securities had a fair value of **$1.273 billion**, primarily comprising U.S. government agency securities and U.S. Treasury bills[69](index=69&type=chunk)[70](index=70&type=chunk) [8. Other Balance Sheet Details](index=21&type=section&id=8.%20Other%20Balance%20Sheet%20Details) This section provides additional details on various balance sheet accounts Inventory Composition (Thousands of Dollars) | Item | March 31, 2021 | December 31, 2020 | | :----------- | :------------ | :------------- | | Raw materials | 53,694 | 63,460 | | Work-in-process | 23,593 | 16,149 | | Finished goods | 13,753 | 12,693 | | **Total** | **91,040** | **92,302** | - As of March 31, 2021, total inventories amounted to **$91 million**, with **$17.1 million** of long-term inventories included in other assets[74](index=74&type=chunk) Cash, Cash Equivalents, and Restricted Cash (Thousands of Dollars) | Item | March 31, 2021 | March 31, 2020 | | :------------------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | 379,543 | 467,779 | | Total restricted cash included in prepaid expenses, other current assets, and long-term other assets | 2,462 | 2,614 | | **Total cash, cash equivalents, and restricted cash** | **382,005** | **470,393** | - As of March 31, 2021, total cash, cash equivalents, and restricted cash amounted to **$382 million**, a decrease from **$470.4 million** as of March 31, 2020[77](index=77&type=chunk) - Accumulated other comprehensive loss decreased from **$43.6 million** as of December 31, 2020, to **$36.7 million** as of March 31, 2021, primarily influenced by foreign currency translation gains and pension plan adjustments[79](index=79&type=chunk) [9. Credit Agreement](index=22&type=section&id=9.%20Credit%20Agreement) This section outlines the terms and conditions of the company's credit agreement with Blackstone Group Inc - In April 2020, the company entered into a credit agreement with an affiliate of Blackstone Group Inc., providing up to **$700 million** in senior secured delayed draw term loans across three tranches[80](index=80&type=chunk) - The first tranche of **$200 million** was drawn as of December 31, 2020; the second and third tranches (each **$250 million**) are available for request by June 30, 2021, and December 31, 2021, respectively, subject to specific conditions such as first commercial sale of inclisiran in the U.S. or **$300 million** in ONPATTRO and GIVLAARI revenues[82](index=82&type=chunk)[83](index=83&type=chunk) - The loans bear interest at LIBOR plus **7%** (with a **1%** floor) or the base rate plus **6%** (with a **2%** floor), with the company having the option to pay interest in kind at a **1%** higher rate until 2023; as of March 31, 2021, the interest rate was **8%**[83](index=83&type=chunk) - All obligations are secured by intellectual property related to ONPATTRO, GIVLAARI, and vutrisiran, equity interests in subsidiaries, remaining inclisiran royalties, and other assets[83](index=83&type=chunk) [10. Development Derivative Liability](index=23&type=section&id=10.%20Development%20Derivative%20Liability) This section details the financial liability associated with the company's co-development agreements - In August 2020, the company entered into a co-development agreement with Blackstone Life Sciences, where Blackstone Life Sciences will provide up to **$150 million** in funding for the clinical development of vutrisiran and ALN-AGT[84](index=84&type=chunk) - In return, the company agreed to pay a **1%** net sales royalty for 10 years following vutrisiran approval, and fixed payments up to **2.5 times** the investment within two years of approval in specific countries[86](index=86&type=chunk) Changes in Development Derivative Liability (Thousands of Dollars) | Item | Amount (Thousands of Dollars) | | :------------------------------------------------- | :------------ | | Development derivative liability as of December 31, 2020 | 25,585 | | Amounts received under financing agreement | 4,200 | | Loss from remeasurement of development derivative liability | 18,253 | | Development derivative liability as of March 31, 2021 | 48,038 | - As of March 31, 2021, the development derivative liability was **$48 million**, including an **$18.3 million** loss from remeasurement[87](index=87&type=chunk) [11. Stock-Based Compensation](index=25&type=section&id=11.%20Stock-Based%20Compensation) This section provides information on the company's stock-based compensation expenses Stock-Based Compensation Expense (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | | :----------------------- | :--------------------- | :--------------------- | | Research and development expenses | 24,375 | 16,049 | | Selling, general and administrative expenses | 31,315 | 18,529 | | **Total** | **55,690** | **34,578** | - Total stock-based compensation expense increased to **$55.7 million** for the three months ended March 31, 2021, from **$34.6 million** in the prior-year period, primarily due to the accounting treatment of certain performance-based equity awards[91](index=91&type=chunk)[124](index=124&type=chunk)[128](index=128&type=chunk) [12. Net Loss Per Common Share](index=25&type=section&id=12.%20Net%20Loss%20Per%20Common%20Share) This section presents the calculation of net loss per common share, both basic and diluted Net Loss Per Common Share (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 | March 31, 2020 | | :------------------------------------------------- | :------------ | :------------ | | Net loss | (200,291) | (182,221) | | Net loss per common share - basic and diluted | (1.71) | (1.62) | | Weighted-average common shares used in computing basic and diluted net loss per common share | 117,080 | 112,748 | - Diluted net loss per share is the same as basic net loss per share because the inclusion of potential common shares would be anti-dilutive[92](index=92&type=chunk) Anti-Dilutive Common Stock Equivalents (Thousands of Shares) | Item | March 31, 2021 | March 31, 2020 | | :----------------------- | :------------ | :------------ | | Options to purchase common stock | 13,859 | 13,609 | | Unvested restricted common stock | 1,538 | 1,411 | | **Total** | **15,397** | **15,020** | [13. Commitments and Contingencies](index=25&type=section&id=13.%20Commitments%20and%20Contingencies) This section outlines the company's significant commitments and contingent liabilities, including legal matters - The company faces multiple legal proceedings, including securities class action lawsuits, one of which was dismissed by the court on March 12, 2021, while another remains on appeal in the New York State Supreme Court[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - On April 9, 2021, the company received a document subpoena from the U.S. Department of Justice regarding the marketing and promotion of ONPATTRO (patisiran) in the U.S., and is preparing its response and cooperating with the government's inquiry[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of the company's financial condition and operating performance, covering its overview, R&D strategy, product pipeline, strategic alliances, key accounting policies, and changes in revenues and expenses [Overview](index=27&type=section&id=Overview) This section provides a general overview of the company's business, strategy, financial position, and the impact of external factors - Alnylam is a global commercial-stage biopharmaceutical company focused on developing novel RNA interference (RNAi)-based therapeutics, with four RNAi medicines launched: ONPATTRO, GIVLAARI, OXLUMO, and Leqvio[100](index=100&type=chunk) - The company initiated its "Alnylam P x25" strategy in early 2021, aiming to become a top-five biotechnology company by the end of 2025 through sustainable innovation, transformative medicines, and strong financial performance and profitability[100](index=100&type=chunk) - As of March 31, 2021, the company had an accumulated deficit of **$4.79 billion** and expects to incur annual net operating losses in the future, but believes its strategic financing partnership with Blackstone will enable it to achieve a self-sustainable financial position[102](index=102&type=chunk) - The COVID-19 pandemic has impacted the company's business operations, commercial sales, clinical trials, and supply chain, leading to precautionary measures like remote work and travel restrictions, with ongoing monitoring of the pandemic's evolution[103](index=103&type=chunk) [Research and Development](index=28&type=section&id=Research%20and%20Development) This section discusses the company's research and development activities and associated expenses - Research and development expenses constitute a significant portion of the company's total operating expenses, reflecting its extensive clinical development pipeline, including multiple late-stage programs[104](index=104&type=chunk) [Our Product Pipeline](index=29&type=section&id=Our%20Product%20Pipeline) This section provides an overview of the company's product candidates across various therapeutic areas and their development status - The company's product pipeline spans four strategic therapeutic areas: Genetic Medicines, Cardio-Metabolic Diseases, Hepatic Infectious Diseases, and Central Nervous System/Ocular Diseases, including four approved products and 12 clinical programs (six in late-stage development)[106](index=106&type=chunk) Q1 2021 Commercial Product Net Revenues | Product | Q1 2021 Global Net Product Revenues (Millions of Dollars) | | :--------- | :---------------------------------- | | ONPATTRO | 102.0 | | GIVLAARI | 24.7 | | OXLUMO | 9.1 | - In late-stage clinical development, vutrisiran's HELIOS-A Phase 3 study yielded positive top-line results, with an NDA submitted to the FDA; lumasiran's ILLUMINATE-C Phase 3 study is expected to report top-line results in mid-2021; Novartis' inclisiran is anticipated to submit its response to the U.S. FDA's Complete Response Letter in Q2-Q3 2021; and Sanofi Genzyme's fitusiran Phase 3 program has resumed patient dosing[100](index=100&type=chunk)[109](index=109&type=chunk) [Strategic Alliances](index=30&type=section&id=Strategic%20Alliances) This section describes the company's collaborations with other entities to advance its therapeutic programs - The company leverages strategic alliances with partners such as Regeneron, Novartis, Sanofi Genzyme, Vir Biotechnology, and Dicerna Pharmaceuticals to access resources, capabilities, and funding for its RNAi therapeutic programs[110](index=110&type=chunk) - The collaboration strategy aims to create significant value for both the company and its partners in the RNAi therapeutics field, covering multiple therapeutic areas including CNS/Ocular, Cardio-Metabolic, Hepatic Infectious Diseases, and Genetic Medicines[110](index=110&type=chunk)[111](index=111&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the key accounting policies and estimates that are significant to the company's financial reporting - There have been no significant changes to the company's critical accounting policies since the beginning of fiscal year 2020[112](index=112&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) [Revenues](index=31&type=section&id=Revenues) This section analyzes the company's revenue streams, including product sales and collaboration income Total Revenue Composition (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :----------------------- | :--------------------- | :--------------------- | :------------ | :---------- | | Net product revenues | 135,769 | 71,938 | 63,831 | 89% | | Net revenues from collaborations | 41,797 | 27,538 | 14,259 | 52% | | **Total** | **177,566** | **99,476** | **78,090** | **79%** | - Total revenues increased by **79%** to **$177.6 million**, driven by an **89%** increase in net product revenues to **$135.8 million** and a **52%** increase in net revenues from collaborations to **$41.8 million**[116](index=116&type=chunk) - The growth in net product revenues was primarily due to the continued global expansion of ONPATTRO and GIVLAARI, and sales contributions from OXLUMO following its Q4 2020 approval[118](index=118&type=chunk) - The increase in net revenues from collaborations was mainly attributable to increased collaboration activities with Regeneron and increased material shipments by Novartis to support Leqvio's European launch and potential market approvals[120](index=120&type=chunk) [Operating Costs and Expenses](index=33&type=section&id=Operating%20Costs%20and%20Expenses) This section details the various costs and expenses incurred in the company's operations Operating Costs and Expenses (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :----------------------- | :--------------------- | :--------------------- | :------------ | :---------- | | Cost of sales | 23,023 | 13,302 | 9,721 | 73% | | Cost of collaborations | 8,039 | — | 8,039 | N/A | | Research and development expenses | 185,899 | 169,571 | 16,328 | 10% | | Selling, general and administrative expenses | 146,859 | 126,761 | 20,098 | 16% | | **Total** | **363,820** | **309,634** | **54,186** | **18%** | - Total operating costs and expenses increased by **18%** to **$363.8 million**[122](index=122&type=chunk) - Cost of sales increased by **73%** to **$23 million**, primarily due to higher third-party royalties and sales of capitalized inventory[123](index=123&type=chunk) - Cost of collaborations was a new expense of **$8 million**, mainly for producing commercial drug supply for collaborators[123](index=123&type=chunk) - Research and development expenses increased by **10%** to **$185.9 million**, primarily due to increased site initiations and enrollment in the HELIOS B and APOLLO B Phase 3 clinical trials, and higher stock-based compensation expense[124](index=124&type=chunk) - Selling, general and administrative expenses increased by **16%** to **$146.9 million**, mainly due to higher stock-based compensation expense and increased headcount to support the Alnylam P x25 strategy, partially offset by reduced travel expenses due to COVID-19 restrictions[128](index=128&type=chunk)[129](index=129&type=chunk) [Total Other (Expense) Income](index=35&type=section&id=Total%20Other%20(Expense)%20Income) This section analyzes the company's non-operating income and expenses Total Other (Expense) Income (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | Change (Thousands of Dollars) | Change (%) | | :------------------------------------------------- | :--------------------- | :--------------------- | :------------ | :---------- | | Interest expense | (32,515) | — | (32,515) | N/A | | Interest income | 450 | 5,480 | (5,030) | (92%) | | Realized and unrealized gains on marketable equity securities | 47,016 | 24,111 | 22,905 | 95% | | Fair value changes in development derivative liability | (18,253) | — | (18,253) | N/A | | Other expense, net | (9,719) | (1,079) | (8,640) | 801% | | **Total** | **(13,021)** | **28,512** | **(41,533)** | **(146%)** | - Total other (expense) income shifted from **$28.5 million** income in the prior-year period to a **$13 million** expense, primarily due to **$28.2 million** in interest expense related to future royalty sales, **$4.3 million** in interest expense related to the credit agreement, and an **$18.3 million** loss from remeasurement of the development derivative liability[132](index=132&type=chunk) - Realized and unrealized gains on marketable equity securities increased by **95%** to **$47 million**, partially offsetting the increase in expenses[132](index=132&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, and its overall financial flexibility Summary of Cash Flow Activities (For the Three Months Ended March 31, 2021 and March 31, 2020) | Item | March 31, 2021 (Thousands of Dollars) | March 31, 2020 (Thousands of Dollars) | | :------------------------------------------------- | :--------------------- | :--------------------- | | Net cash used in operating activities | (235,660) | (246,161) | | Net cash provided by investing activities | 71,352 | 113,688 | | Net cash provided by financing activities | 51,177 | 53,869 | | Effect of exchange rate changes | (3,910) | (631) | | Net decrease in cash, cash equivalents and restricted cash | (117,041) | (79,235) | | Cash, cash equivalents and restricted cash at beginning of period | 499,046 | 549,628 | | Cash, cash equivalents and restricted cash at end of period | 382,005 | 470,393 | - As of March 31, 2021, the company held **$1.71 billion** in cash, cash equivalents, and marketable securities, a decrease from **$1.87 billion** as of December 31, 2020[134](index=134&type=chunk) - The company anticipates that its existing cash, cash equivalents, and marketable securities, combined with cash generated from product sales, existing collaborations, and the strategic financing partnership with Blackstone, will be sufficient to support its long-term strategic objectives for at least the next 12 months[138](index=138&type=chunk) [Contractual Obligations and Commitments](index=36&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and commitments - There have been no material changes to the company's contractual obligations and commitments since December 31, 2020[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to financial market risks, particularly those related to interest rates - As of March 31, 2021, there were no material changes to the company's financial market risk exposures, primarily related to interest rates, or its management objectives and strategies[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) This section assesses the effectiveness of the company's disclosure controls and procedures and reports on changes in internal control [Disclosure Controls and Procedures](index=36&type=section&id=Disclosure%20Controls%20and%20Procedures) This section describes the company's controls and procedures designed to ensure timely and accurate disclosure of information - As of March 31, 2021, the company's management evaluated and concluded that its disclosure controls and procedures were effective at a reasonable assurance level[141](index=141&type=chunk)[143](index=143&type=chunk) [Changes in Internal Control](index=37&type=section&id=Changes%20in%20Internal%20Control) This section reports on any changes in the company's internal control over financial reporting during the period - During the quarter ended March 31, 2021, there were no changes in the company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[144](index=144&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the discussion of the company's significant pending legal proceedings, including securities litigation and government investigations, as detailed in Note 13 to the financial statements - For a discussion of significant pending legal proceedings, refer to Note 13, "Commitments and Contingencies – Legal Matters," to the condensed consolidated financial statements in Part I, Item 1, "Financial Statements (Unaudited)," of this Quarterly Report[146](index=146&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section elaborates on various significant risks faced by the company, including those related to financial performance, reliance on third parties, operational management, industry developments, intellectual property, and common stock [Risks Related to Our Business](index=38&type=section&id=Risks%20Related%20to%20Our%20Business) [Risks Related to Our Financial Results](index=38&type=section&id=Risks%20Related%20to%20Our%20Financial%20Results) This section outlines risks that could adversely impact the company's financial performance and results - The COVID-19 pandemic could have a material adverse impact on the company's commercial operations, sales, clinical trials, and preclinical research[147](index=147&type=chunk) - The company is in an early commercialization stage, and the marketing and sales of ONPATTRO, GIVLAARI, OXLUMO, or future products may not be successful or meet expectations[150](index=150&type=chunk)[151](index=151&type=chunk) - The company has a history of losses and may not achieve or maintain profitability, with an accumulated deficit of **$4.79 billion** as of March 31, 2021[152](index=152&type=chunk) - The company requires substantial additional funding to continue its research, development, and commercialization activities, and if required funding exceeds expectations, operations may need to be significantly limited or curtailed[152](index=152&type=chunk)[154](index=154&type=chunk) - Any negative developments regarding the inclisiran royalty stream and commercial milestone payments could materially adversely affect the company's receipt of these payments[156](index=156&type=chunk) - The company's operating results may fluctuate in future periods, potentially leading to a decline in its stock price[157](index=157&type=chunk) - Inaccurate estimates or assumptions in financial statements and forecast guidance could lead to actual results differing from expectations[159](index=159&type=chunk) - Investments in cash, cash equivalents, and marketable securities are subject to risks that could result in losses and affect the liquidity of these investments[159](index=159&type=chunk) - Changes in tax laws could adversely affect the company's business and financial condition[160](index=160&type=chunk) [Risks Related to Our Dependence on Third Parties](index=43&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) This section addresses risks arising from the company's reliance on external partners for various aspects of its business - If the company fails to maintain existing or establish new alliances to access business and scientific capabilities and funding for product candidate development and commercialization, it may be unable to execute its business strategy[161](index=161&type=chunk)[163](index=163&type=chunk) - If any collaborator materially modifies, terminates, or fails to fulfill its obligations under an agreement, the development and commercialization of the company's product candidates could be delayed or terminated[165](index=165&type=chunk) - The company has limited manufacturing experience and resources and must incur significant costs to develop expertise and/or rely on third parties to manufacture its products[165](index=165&type=chunk)[167](index=167&type=chunk) - The company relies on third parties to conduct its clinical trials, and if they fail to perform their obligations, its development plans could be adversely affected[169](index=169&type=chunk) [Risks Related to Managing Our Operations](index=47&type=section&id=Risks%20Related%20to%20Managing%20Our%20Operations) This section covers risks associated with the company's internal management and operational challenges - If the company fails to attract and retain qualified key management, scientific, development, medical, and commercial personnel, advisors, and consultants, the implementation of its business plans could be adversely affected[170](index=170&type=chunk) - The company may struggle to successfully scale its operations as it evolves from a U.S. and EU company primarily engaged in discovery, preclinical testing, and clinical development to a global company developing and commercializing multiple medicines[171](index=171&type=chunk)[172](index=172&type=chunk) - The increasing use of social media could lead to liabilities, including inappropriate disclosure of sensitive information or negative/inaccurate comments, harming the company's reputation[173](index=173&type=chunk) - System failures or unauthorized or improper use or access to the company's systems could result in business and operational disruptions, including data loss, security breaches, and legal liabilities[174](index=174&type=chunk) - Brexit could negatively impact global economic conditions, financial markets, and the company's business, including regulatory changes and currency fluctuations[175](index=175&type=chunk) [Risks Related to Our Industry](index=49&type=section&id=Risks%20Related%20to%20Our%20Industry) [Risks Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates and the Commercialization of Our Approved Products](index=49&type=section&id=Risks%20Related%20to%20Development,%20Clinical%20Testing%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates%20and%20the%20Commercialization%20of%20Our%20Approved%20Products) This section addresses the inherent risks in the pharmaceutical industry concerning product development, regulatory processes, and market acceptance - Any product candidates developed by the company or its partners may fail in development or be delayed to the extent that they are not commercially viable[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The company or its partners may not obtain U.S. or foreign regulatory approval for product candidates, preventing their commercialization[180](index=180&type=chunk)[181](index=181&type=chunk) - Even with regulatory approval, marketed drugs remain subject to ongoing regulatory oversight, and non-compliance could lead to restricted or withdrawn approvals[182](index=182&type=chunk) - Even with regulatory approval, the market may not accept the commercialization of the company's product candidates, hindering its ability to generate profits[183](index=183&type=chunk)[184](index=184&type=chunk) - The company has limited commercial experience, and its marketing, sales, market access, and distribution capabilities are nascent, requiring significant ongoing resource investment, and commercial efforts may not be successful[184](index=184&type=chunk) - The patient populations for hereditary transthyretin-mediated amyloidosis, acute hepatic porphyria, and primary hyperoxaluria type 1 are small and not precisely determined, which could impact revenues and profitability if actual patient numbers are lower than estimated[184](index=184&type=chunk) - The company could incur significant liability if law enforcement agencies allege or determine that it engaged in commercial activities or promoted approved products in a manner that violates applicable regulations[184](index=184&type=chunk)[185](index=185&type=chunk) - Any drugs developed by the company may be subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform measures, harming its business[185](index=185&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk] - Governments outside the U.S. may impose stringent price controls, and the U.S. government may implement price controls or reference pricing, which could adversely affect the company's revenues[194](index=194&type=chunk) - Failure by the company or its collaborators, contract manufacturers, or service providers to comply with healthcare laws and regulations or legal obligations related to privacy, data protection, and information security could result in enforcement actions, harming the company's business and reputation[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Federal government spending and services may decrease, potentially affecting the company's ability to obtain services, reimbursement, or funding from the federal government[202](index=202&type=chunk) - The company's business is subject to significant product liability claims risk, and if it cannot obtain sufficient insurance, product liability claims could adversely affect its business[203](index=203&type=chunk) - The company's employees may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements or insider trading violations, which could severely harm its business[203](index=203&type=chunk) - If the company fails to comply with environmental, health, and human safety protection laws and regulations, its business could be adversely affected[203](index=203&type=chunk) [Risks Related to Patents, Licenses and Trade Secrets](index=64&type=section&id=Risks%20Related%20to%20Patents,%20Licenses%20and%20Trade%20Secrets) This section addresses risks concerning the company's intellectual property, including patents, licenses, and trade secrets - If the company fails to obtain and enforce patent protection for its discoveries, its ability to develop and commercialize product candidates will be impaired[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - The company licenses patent rights from third-party owners; if these owners fail to properly or successfully obtain, maintain, or enforce patents under these licenses, the company's competitive position and business prospects could be harmed[206](index=206&type=chunk) - Other companies or organizations may challenge the company's patent rights or assert patent rights that prevent the company from developing and commercializing its products[206](index=206&type=chunk)[208](index=208&type=chunk) - If the company becomes involved in patent litigation or other rights determination proceedings, it could incur substantial costs and expenses, significant damages liability, or be required to cease product development and commercialization efforts[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - If the company fails to comply with obligations under any license or related agreement, it may be required to pay damages and could lose licenses or other rights critical to developing, commercializing, and protecting its RNAi technology, approved products, and any other product candidates[210](index=210&type=chunk) - Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information[211](index=211&type=chunk) [Risks Related to Competition](index=68&type=section&id=Risks%20Related%20to%20Competition) This section discusses the competitive landscape of the pharmaceutical market and its potential impact on the company - The pharmaceutical market is highly competitive; if the company cannot effectively compete with existing drugs, new therapeutic approaches, and new technologies, it may not successfully commercialize any drugs it develops[212](index=212&type=chunk) - The company faces competition from other companies developing novel drugs and technology platforms using similar technologies; if these companies develop drugs faster than the company, or if their technologies (including delivery technologies) are more effective, the company's ability to successfully commercialize its drugs could be adversely affected[213](index=213&type=chunk) [Risks Related to Our Common Stock](index=69&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) This section addresses risks specifically related to the company's common stock, including price volatility and ownership structure - Purchasers of common stock may suffer significant losses if the company's stock price fluctuates[214](index=214&type=chunk)[216](index=216&type=chunk) - The company may incur substantial costs due to class action lawsuits[217](index=217&type=chunk) - Future sales of the company's common stock, including by significant stockholders, the company, or its directors and executive officers, could cause the price of the company's common stock to decline[218](index=218&type=chunk) - Regeneron's ownership of the company's common stock could delay or prevent a change in control of the company[218](index=218&type=chunk) - Anti-takeover provisions in the company's charter documents and Delaware law could make it more difficult to acquire the company and may prevent attempts by stockholders to replace or remove current management[219](index=219&type=chunk)[220](index=220&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) This section discloses the second amendment to the company's non-cancelable real estate lease agreement with BMR-Fresh Pond Research Park LLC, extending the lease term for its manufacturing facility at 665 Concord Avenue, Cambridge, Massachusetts, for five years until September 30, 2027 - On April 27, 2021, the company entered into the Second Amendment to its non-cancelable real estate lease agreement with BMR-Fresh Pond Research Park LLC, extending the lease term for its manufacturing facility at 665 Concord Avenue, Cambridge, Massachusetts, for five years until September 30, 2027[221](index=221&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists the various exhibits filed with the quarterly report, including XBRL taxonomy extension files and executive certifications - Exhibits include Inline XBRL Taxonomy Extension Schema Document, Calculation Linkbase Document, Label Linkbase Document, Presentation Linkbase Document, Definition Linkbase Document, and Cover Page Interactive Data File[222](index=222&type=chunk) - Also included are certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Section 13a-14(a) and 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code[223](index=223&type=chunk) [Signatures](index=72&type=section&id=Signatures) This section contains the signatures of the company's Chief Executive Officer, Dr. John M. Maraganore, and Executive Vice President and Chief Financial Officer, Jeffrey V. Poulton, confirming the report's due execution under the Securities Exchange Act of 1934 - This report was signed by Dr. John M. Maraganore, Chief Executive Officer, and Jeffrey V. Poulton, Executive Vice President and Chief Financial Officer, on April 29, 2021[225](index=225&type=chunk)

Alnylam Pharmaceuticals, Inc (NASDAQ:ALNY) Q4 2020 Earnings Conference Call February 11, 2021 8:30 AM ET Company Participants Christine Lindenboom - Senior Vice President of Investor Relations & Corporate Communications John Maraganore - Chief Executive Officer Tolga Tanguler - Chief Commercial Officer Akshay Vaishnaw - President, Resarch & Development Jeff Poulton - Chief Financial Officer Yvonne Greenstreet - President & Chief Operating Officer Andy Orth - Senior Vice President & Head of US Business Confe ...