Achillion Pharmaceuticals, Inc. (the “Company”) was incorporated on August 17, 1998 in Delaware. The Company is a clinical-stage biopharmaceutical company focused on advancing its oral factor D inhibitors into late-stage development and commercialization. Each of the product candidates in the Company’s factor D portfolio was discovered in the Company’s laboratories and is wholly owned by the Company. The Company is focusing its product development activities on complement-mediated diseases where there are no approved therapies or significant unmet medical needs persist despite existing therapies.

The Company is currently advancing novel orally administered small molecules from its platform that target complement factor D, an essential protein of the alternative pathway. The Company believes that the alternative pathway plays a critical role in a number of disease conditions including the therapeutic areas of hematology, nephrology, ophthalmology and neurology. Initially the Company is targeting paroxysmal nocturnal hemoglobinuria (“PNH”), a blood disorder, and C3 glomerulopathy (“C3G”) and immune complex membranoproliferative glomerulonephritis (“IC-MPGN”), two related rare diseases affecting the kidney. The Company plans to expand its drug development efforts into additional indications where it believes an overactive alternative pathway plays an important role in disease pathogenesis.

The Company incurred net losses of $19,583 and $15,884 for the three months ended September 30, 2019 and 2018, respectively, and $57,968 and $53,671 for the nine months ended September 30, 2019 and 2018, respectively. The Company had an accumulated deficit of $730,894 at September 30, 2019. The Company has funded its operations primarily through the sale of equity securities.

On October 15, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alexion Pharmaceuticals, Inc., a Delaware corporation (“Alexion”) and Beagle Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Alexion (“Merger Sub”), pursuant to which, among other things and subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a direct wholly owned subsidiary of Alexion. The Company expects to complete the Merger in the first half of 2020. However, the exact timing of completion of the Merger is subject to closing conditions specified in the Merger Agreement, many of which are outside of the Company’s control.

Based on the Company’s current development plan, whether the proposed Merger is consummated or not, the Company believes that its existing cash, cash equivalents and marketable securities will be sufficient to meet its current projected operating requirements for at least the next 12 months from the issuance of these financial statements. However, the Company’s future capital requirements may change and will depend upon numerous factors, including but not limited to:

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changes in the likelihood or timing of the consummation of the proposed Merger;

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the scope, progress, results and costs of drug discovery, nonclinical development, laboratory testing and clinical trials for the Company’s product candidates;

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the Company’s ability to enter into and the terms and timing of any collaborations, licensing or other arrangements that it may establish;

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the number of future product candidates that the Company pursues and their development requirements;

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the outcome, timing and costs of seeking regulatory approvals;

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the costs of commercialization activities for any of the Company’s product candidates that receive marketing approval to the extent such costs are not the responsibility of any collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;

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subject to receipt of marketing approval, revenue, if any, received from commercial sales of the Company’s product candidates;

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the Company’s headcount growth and associated costs as, and when, it seeks to expand its clinical development capabilities and establish a commercial infrastructure;

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the costs involved in preparing, filing, prosecuting, maintaining, enforcing and defending patent and other intellectual property rights and defending against intellectual property-related claims;

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the Company’s ability to raise debt or equity capital, including any changes in the credit or equity markets that may impact its ability to obtain capital in the future;

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the costs associated with, and the outcome of, lawsuits against the Company, if any;

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the Company’s acquisition and development of new technologies and product candidates; and

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competing technological and market developments, including those currently unknown to the Company.