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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, 2023
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 27, 2023, the registrant had 125,492,927 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®, AMVUTTRA®, GIVLAARI®, OXLUMO®, Alnylam Act®, GEMINI™ and IKARIA™ are trademarks and 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:
our views with respect to the potential for approved and investigational RNAi therapeutics, including ONPATTRO, AMVUTTRA, GIVLAARI, OXLUMO, Leqvio® (inclisiran), fitusiran and zilebesiran;
our plans for additional global regulatory filings and the continuing product launches of ONPATTRO, AMVUTTRA, GIVLAARI, OXLUMO and our partner's plans with respect to Leqvio;
our future ability to successfully expand the indication for AMVUTTRA;
our expectations regarding potential market size for, and the successful commercialization of, ONPATTRO, AMVUTTRA, GIVLAARI, OXLUMO, Leqvio or any future products;
our ability to obtain and maintain regulatory approvals and pricing and reimbursement for ONPATTRO, AMVUTTRA, GIVLAARI, OXLUMO or any future products, and our partners' ability with respect to Leqvio and fitusiran;
the progress of our research and development programs, including programs in both rare and prevalent diseases;
the potential for improved product profiles to emerge from our new technologies, including our IKARIA and GEMINI platforms and our ability to expand our product engine to include extrahepatic tissues;
our current and anticipated clinical trials and expectations regarding the reporting of data from these trials;
risks related to the direct or indirect impact of the novel coronavirus, or COVID-19, global pandemic, emerging or future variants of COVID-19 or any future pandemic, or public health emergency, on, among other things, our financial performance, business and operations, including manufacturing, supply chain, research and development activities and pipeline programs, and other potential impacts to our business;
any impact of the ongoing conflicts in Ukraine and Israel, including disruptions to our clinical 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, AMVUTTRA, 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 our global commercial infrastructure;
the possible impact of any competing products on the commercial success of ONPATTRO, AMVUTTRA, GIVLAARI, OXLUMO and Leqvio, as well as our product candidates, 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-tier biotech company by the end of 2025;
our belief that our current cash balance 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 equity and debt securities will support our operations based on our current operating plan;
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;
3

our ability to obtain, maintain and protect our intellectual property;
our ability to attract and retain qualified key management and scientists, development, medical and commercial staff, consultants and advisors and to successfully execute on our Alnylam P5x25 strategy;
the outcome of litigation, including our patent infringement suits against Pfizer, Inc., BioNTech SE and Moderna, Inc., or of other legal proceedings or government investigations;
regulatory developments in the United States, or U.S., and foreign countries;
the impact of laws and regulations;
developments relating to our competitors and our industry;
our ability to satisfy our payment obligations, and to service the interest on, or to refinance our indebtedness, including our convertible notes, or to make cash payments in connection with any conversion of our convertible notes, to the extent required;
our expectations regarding the effect of the capped call transactions and the anticipated market activities of the option counterparties and/or their respective affiliates; 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.

4


PART I. FINANCIAL INFORMATION

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


September 30, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$1,033,024 $866,394 
Marketable debt securities1,362,843 1,297,890 
Marketable equity securities10,411 28,122 
Accounts receivable, net325,445 237,963 
Inventory95,771 128,962 
Prepaid expenses and other current assets157,958 132,916 
Total current assets2,985,452 2,692,247 
Property, plant and equipment, net525,591 523,494 
Operating lease right-of-use assets203,485 215,136 
Restricted investments49,390 49,390 
Other assets75,155 66,092 
Total assets$3,839,073 $3,546,359 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$73,840 $98,094 
Accrued expenses713,094 545,460 
Operating lease liability41,516 41,967 
Deferred revenue77,140 42,105 
Liability related to the sale of future royalties44,195 40,289 
Total current liabilities949,785 767,915 
Operating lease liability, net of current portion
247,711 261,339 
Deferred revenue, net of current portion196,086 193,791 
Convertible debt1,019,809 1,016,942 
Liability related to the sale of future royalties, net of current portion1,310,814 1,252,015 
Other liabilities280,734 212,580 
Total liabilities4,004,939 3,704,582 
Commitments and contingencies (Note 13)
Stockholders’ deficit:
Preferred stock, $0.01 par value per share, 5,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022
  
Common stock, $0.01 par value per share, 250,000 shares authorized; 125,454 shares issued and outstanding as of September 30, 2023; 123,925 shares issued and outstanding as of December 31, 2022
1,255 1,240 
Additional paid-in capital6,736,939 6,454,540 
Accumulated other comprehensive loss(32,339)(44,654)
Accumulated deficit(6,871,721)(6,569,349)
Total stockholders’ deficit(165,866)(158,223)
Total liabilities and stockholders’ deficit$3,839,073 $3,546,359 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Statements of Operations
Revenues:
Net product revenues$313,153 $232,267 $895,186 $632,654 
Net revenues from collaborations427,472 29,297 469,778 64,267 
Royalty revenue9,905 2,742 23,610 5,462 
Total revenues750,530 264,306 1,388,574 702,383 
Operating costs and expenses:
Cost of goods sold79,473 36,507 196,241 94,002 
Cost of collaborations and royalties4,836 4,609 28,307 23,549 
Research and development253,179 245,371 732,274 620,976 
Selling, general and administrative199,175 235,859 597,523 560,314 
Total operating costs and expenses536,663 522,346 1,554,345 1,298,841 
Income (loss) from operations
213,867 (258,040)(165,771)(596,458)
Other (expense) income:
Interest expense(30,893)(41,084)(89,883)(126,055)
Interest income25,425 7,820 65,155 10,731 
Other expense, net(57,658)(38,053)(105,331)(131,604)
Loss on the extinguishment of debt (76,586) (76,586)
Total other expense, net(63,126)(147,903)(130,059)(323,514)
Income (loss) before income taxes
150,741 (405,943)(295,830)(919,972)
(Provision for) benefit from income taxes
(2,988)23 (6,542)(3,691)
Net income (loss)
$147,753 $(405,920)$(302,372)$(923,663)
Net income (loss) per common share - basic
$1.18 $(3.32)$(2.43)$(7.62)
Net income (loss) per common share - diluted
$1.15 $(3.32)$(2.43)$(7.62)
Weighted-average common shares- basic
125,220 122,166 124,667 121,158 
Weighted-average common shares- diluted
131,337 122,166 124,667 121,158 
Statements of Comprehensive Income (Loss)
Net income (loss)
$147,753 $(405,920)$(302,372)$(923,663)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities
1,878 (2,053)3,978 (11,004)
Foreign currency translation gain
2,873 460 8,356 377 
Defined benefit pension plans, net of tax(10)34 (19)103 
Total other comprehensive income (loss)4,741 (1,559)12,315 (10,524)
Comprehensive income (loss)
$152,494 $(407,479)$(290,057)$(934,187)

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Deficit
SharesAmount
Balance as of December 31, 2022123,925 $1,240 $6,454,540 $(44,654)$(6,569,349)$(158,223)
Exercise of common stock options, net of tax withholdings269 3 26,415 — — 26,418 
Issuance of common stock under equity plans47 — — — — — 
Stock-based compensation expense— — 41,136 — — 41,136 
Other comprehensive income— — — 5,530 — 5,530 
Net loss— — — — (174,101)(174,101)
Balance as of March 31, 2023124,241 1,243 6,522,091 (39,124)(6,743,450)(259,240)
Exercise of common stock options, net of tax withholdings372 4 38,111 — — 38,115 
Issuance of common stock under equity plans288 3 9,981 — — 9,984 
Stock-based compensation expense— — 76,990 — — 76,990 
Other comprehensive income— — — 2,044 — 2,044 
Net loss— — — — (276,024)(276,024)
Balance as of June 30, 2023124,901 1,250 6,647,173 (37,080)(7,019,474)(408,131)
Exercise of common stock options, net of tax withholdings246 2 24,896 — — 24,898 
Issuance of common stock under equity plans307 3 (3)— —  
Stock-based compensation expense— — 64,873 — — 64,873 
Other comprehensive income— — — 4,741 — 4,741 
Net income
— — — — 147,753 147,753 
Balance as of September 30, 2023125,454 $1,255 $6,736,939 $(32,339)$(6,871,721)$(165,866)


The accompanying notes are an integral part of these condensed consolidated financial statements.
7

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
(Deficit) Equity
SharesAmount
Balance as of December 31, 2021120,182 $1,202 $6,058,453 $(33,259)$(5,438,193)$588,203 
Exercise of common stock options, net of tax withholdings524 5 28,054 — — 28,059 
Issuance of common stock under equity plans23 — — — — — 
Stock-based compensation expense— — 30,051 — — 30,051 
Other comprehensive loss— — — (4,806)— (4,806)
Net loss— — — — (240,341)(240,341)
Balance as of March 31, 2022120,729 1,207 6,116,558 (38,065)(5,678,534)401,166 
Exercise of common stock options, net of tax withholdings192 2 13,890 — — 13,892 
Issuance of common stock under equity plans71 1 8,089 — — 8,090 
Stock-based compensation expense— — 34,453 — — 34,453 
Other comprehensive loss— — — (4,159)— (4,159)
Net loss— — — — (277,402)(277,402)
Balance as of June 30, 2022120,992 1,210 6,172,990 (42,224)(5,955,936)176,040 
Exercise of common stock options, net of tax withholdings1,657 17 153,259 — — 153,276 
Issuance of common stock under equity plans342 3 — — — 3 
Stock-based compensation expense— — 129,133 — — 129,133 
Purchase of capped calls related to convertible debt— — (118,611)— — (118,611)
Other comprehensive loss— — — (1,559)— (1,559)
Net loss— — — — (405,920)(405,920)
Balance as of September 30, 2022122,991 $1,230 $6,336,771 $(43,783)$(6,361,856)$(67,638)



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

ALNYLAM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net loss$(302,372)$(923,663)
Non-cash adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization40,572 30,157 
Amortization and interest accretion related to operating leases32,486 30,508 
Non-cash interest expense on liability related to the sale of future royalties78,918 79,621 
Stock-based compensation179,686 187,882 
Realized and unrealized loss on marketable equity securities17,711 40,108 
Loss on extinguishment of debt 76,586 
Change in fair value of development derivative liability67,895 70,776 
Other15,088 20,607 
Changes in operating assets and liabilities:
Accounts receivable, net(91,808)7,672 
Inventory6,377 (15,158)
Prepaid expenses and other assets(32,427)(47,194)
Accounts payable, accrued expenses and other liabilities119,506 89,152 
Operating lease liability(35,014)(31,718)
Deferred revenue37,333 (24,632)
Net cash provided by (used in) operating activities
133,951 (409,296)
Cash flows from investing activities:
Purchases of property, plant and equipment(46,902)(50,424)
Purchases of marketable securities(1,234,344)(1,253,584)
Sales and maturities of marketable securities1,189,990 1,626,848 
Proceeds from maturity of restricted investments58,475 89,951 
Purchases of restricted investments(58,475)(98,451)
Other investing activities(4,438)(5,075)
Net cash (used in) provided by investing activities
(95,694)309,265 
Cash flows from financing activities:
Proceeds from exercise of stock options and other types of equity, net116,570 202,646 
Proceeds from convertible debt, net 1,016,888 
Repayment of term loan (762,107)
Purchases of capped calls related to convertible debt (118,611)
Proceeds from development derivative16,333 23,500 
Net cash provided by financing activities132,903 362,316 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(4,506)(9,049)
Net increase in cash, cash equivalents and restricted cash
166,654 253,236 
Cash, cash equivalents and restricted cash, beginning of period868,556 822,153 
Cash, cash equivalents and restricted cash, end of period$1,035,210 $1,075,389 
Supplemental disclosure of cash flows:
Cash paid for interest$26,675 $43,932 
Supplemental disclosure of noncash investing activities:
Capital expenditures included in accounts payable and accrued expenses$5,154 $6,156 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

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 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-tier biotech company 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, while delivering exceptional financial performance.
As of September 30, 2023, we have five marketed products, including one partnered product, and multiple late-stage investigational programs advancing towards potential commercialization. We currently generate worldwide product revenues from four commercialized products, ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO, primarily in the United States, or 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, 2022, which were included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on February 23, 2023. 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, 2022.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or 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. Changes in estimates are reflected in reported results in the period in which they become known.
Liquidity
Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of September 30, 2023, together with the cash we expect to generate from product sales and under our current alliances, 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.
10

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. NET PRODUCT REVENUES
Net product revenues consist of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands)2023202220232022
ONPATTRO
United States$21,869 $67,196 $77,246 $200,588 
Europe50,371 57,217 166,442 167,185 
Rest of World9,349 20,537 31,852 67,614 
Total81,589 144,950 275,540 435,387 
AMVUTTRA
United States113,508 25,060 288,990 25,060 
Europe19,417 169 40,590 169 
Rest of World15,755  53,004  
Total148,680 25,229 382,584 25,229 
GIVLAARI
United States37,009 31,169 102,496 84,505 
Europe12,430 12,477 40,952 36,059 
Rest of World4,709 2,013 16,505 5,522 
Total54,148 45,659 159,953 126,086 
OXLUMO
United States9,713 6,383 27,564 18,916 
Europe15,086 9,348 40,611 25,099 
Rest of World3,937 698 8,934 1,937 
Total28,736 16,429 77,109 45,952 
Total net product revenues$313,153 $232,267 $895,186 $632,654 
The following table presents the balance of our receivables related to our net product revenues:
(In thousands)As of September 30,
2023
As of December 31,
2022
Receivables included in “Accounts receivable, net”$198,487 $203,844 

11

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)2023202220232022
Roche
$311,328 $ $311,328 $ 
Regeneron Pharmaceuticals80,254 21,979 97,407 34,405 
Novartis AG18,381 5,803 41,941 27,472 
Other17,509 1,515 19,102 2,390 
Total$427,472 $29,297 $469,778 $64,267 
    
The following table presents the balance of our receivables and contract liabilities related to our collaboration agreements:
(In thousands)As of September 30, 2023As of December 31, 2022
Receivables included in “Accounts receivable, net”$116,447 $32,342 
Contract liabilities included in “Deferred revenue”$272,770 $235,528 
We recognized revenue of $50.5 million and $42.0 million in the three and nine months ended September 30, 2023, respectively, and revenue of $11.7 million and $17.0 million in the three and nine months ended September 30, 2022, respectively, that was included in the contract liability balance at the beginning of the period.
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,
20232022
(In thousands)Clinical Trial and ManufacturingExternal ServicesOtherClinical Trial and ManufacturingExternal ServicesOther
Regeneron Pharmaceuticals$8,672 $1,954 $8,313 $9,812 $1,154 $8,982 
Other1,047 1,139 1,179  357  
Total$9,719 $3,093 $9,492 $9,812 $1,511 $8,982 
Nine Months Ended September 30,
20232022
(In thousands)Clinical Trial and ManufacturingExternal ServicesOtherClinical Trial and ManufacturingExternal ServicesOther
Regeneron Pharmaceuticals$27,144 $4,104 $27,006 $12,926 $2,141 $27,935 
Other1,444 1,323 1,944 156 679 337 
Total$28,588 $5,427 $28,950 $13,082 $2,820 $28,272 
The research and development expenses incurred for the agreements included 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 revenues from collaborations. For the three and nine months ended September 30, 2023 and 2022, we did not incur material selling, general and administrative expenses related to our collaboration agreements.
12

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In addition, we recognized a reduction to our research and development expenses of $4.5 million and $14.7 million for the three and nine months ended September 30, 2023, respectively, and $2.3 million and $9.7 million for the three and nine months ended September 30, 2022, respectively, from cost reimbursement due under certain of our collaboration agreements with Regeneron Pharmaceuticals, Inc., or Regeneron, accounted for under Accounting Standards Codification, or ASC, Topic 808, Collaborative Arrangements, or ASC 808.
Product Alliances
Roche
On July 21, 2023, or the Effective Date, we entered into a Collaboration and License Agreement, or the Roche Agreement, with F. Hoffmann-La Roche Ltd. and Genentech, Inc., or, collectively, Roche, pursuant to which we and Roche established a worldwide, strategic collaboration for the joint development of pharmaceutical products containing zilebesiran. Zilebesiran is our investigational siRNA therapeutic targeting liver-expressed angiotensinogen, which is in Phase 2 clinical trials for the treatment of hypertension.
Under the Roche Agreement, we granted to Roche (i) co-exclusive rights to develop zilebesiran worldwide and commercialize zilebesiran in the U.S., referred to as the Co-Commercialization Territory, (ii) exclusive rights to commercialize zilebesiran outside of the U.S., referred to as the Roche Territory, and (iii) non-exclusive rights to manufacture zilebesiran for the development and commercialization of zilebesiran in the Roche Territory. In connection with the Roche Agreement, Roche made an upfront, non-refundable payment of $310.0 million. In addition, we will be eligible to receive up to $1.24 billion in contingent payments based on the achievement of specified development and regulatory milestones and up to $1.28 billion in sales-based milestones.
We will lead the global clinical development for zilebesiran. We will be responsible for forty percent (40%) and Roche will be responsible for the remaining sixty percent (60%) of development costs incurred in the conduct of development activities that support regulatory approval of zilebesiran globally. We and Roche will share equally (50/50) all costs incurred in connection with development activities that are conducted to support regulatory approval of zilebesiran solely in the Co-Commercialization Territory if incremental development activities are needed. Roche will be solely responsible for all costs incurred in the conduct of development activities primarily to support regulatory approval in the Roche Territory if incremental development activities are needed. Upon regulatory approval Roche has the exclusive right to commercialize zilebesiran in the Roche Territory and will pay us tiered, low double-digit royalties based on net sales of zilebesiran on a country-by-country and product-by-product basis during the applicable royalty term. We and Roche will co-commercialize zilebesiran in the Co-Commercialization Territory and share equally (50/50) profits and losses (including commercialization costs).
Roche has the right to terminate the Roche Agreement for any or no reason at all upon prior written notice, however, if the termination notice occurs after the achievement of the first development milestone and before the achievement of the third development milestone, Roche is required to pay us a termination fee of $50.0 million. In addition, either party may terminate the Roche Agreement for a material breach by, or insolvency of, the other party, subject to a cure period. Unless earlier terminated pursuant to its terms, the Roche Agreement commences on the Effective Date and will remain in effect until expiration on a country-by-country and product-by-product basis (a) in the Roche Territory, upon expiration of the applicable royalty term for such product in the applicable country and (b) in the Co-Commercialization Territory, upon expiration of the term of the co-commercialization efforts for the applicable product.
Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any milestone, royalty or profit share payments from Roche under the Roche Agreement.
We evaluated the Roche Agreement and concluded that the Roche Agreement had elements that were within the scope of ASC 606, Revenue from Contracts with Customers and ASC 808, Collaborative Arrangements.
As of the Effective Date, we identified the following promises in the Roche Agreement that were evaluated under the scope of ASC 606: delivery of (i) a co-exclusive license to develop zilebesiran worldwide and commercialize zilebesiran within the Co-Commercialization Territory, a non-exclusive license to manufacture zilebesiran in the Roche Territory solely for purposes of developing and commercializing zilebesiran in the Roche Territory, and an exclusive license to commercialize zilebesiran in the Roche Territory, collectively referred to as Roche License Obligation, (ii) development services, including the manufacture of clinical supply, that support regulatory approval of zilebesiran, referred to as the Roche Development Services Obligation, and (iii) technology transfer of the existing manufacturing process for zilebesiran, referred to as the Roche Technology Transfer Obligation. The three performance obligations under the Roche Agreement are collectively referred to as the Roche Performance Obligations.
We also evaluated whether certain options outlined within the Roche Agreement represented material rights that would give rise to a performance obligation and concluded that none of the options convey a material right to Roche and therefore are not considered separate performance obligations within the Roche Agreement.
13

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We assessed the above promises and determined that the Roche License Obligation, Roche Development Services Obligation and Roche Technology Transfer Obligation are reflective of a vendor-customer relationship and therefore represent performance obligations within the scope of ASC 606. The Roche License Obligation is considered functional intellectual property and distinct from other promises under the contract as Roche can benefit from the licenses on its own or together with other readily available resources. As the licenses are delivered at the same time, they are considered one performance obligation at contract inception. The Roche Development Services Obligation is considered distinct as Roche can benefit from the development services together with the licenses transferred by us at the inception of the agreement. The development services are not expected to significantly modify or customize the initial intellectual property as zilebesiran is in the second phase of clinical development. The Roche Technology Transfer Obligation is distinct as Roche can benefit from the manufacturing license transferred by us at the inception of the agreement given the advancements of our RNAi platform and our utilization of third-party contract manufacturing organizations to manufacture zilebesiran. Therefore, each represents a separate performance obligation within the contract with a customer under the scope of ASC 606 at contract inception.
We consider the collaborative activities associated with the co-commercialization of zilebesiran in the U.S. to be a separate unit of account within the scope of ASC 808 as we and Roche are both active participants in the commercialization activities and are exposed to significant risks and rewards that are dependent on the commercial success of the activities in the arrangement.
We determined the transaction price under ASC 606 at the inception of the Roche Agreement to be $857.0 million, consisting of the $310.0 million up front payment and $547.0 million additional variable consideration attributed to cost reimbursement from development and manufacturing services related to the Roche Performance Obligations. Since the related revenue would be allocated to the Roche Development Services Obligation and the Roche Technology Transfer Obligation recognized only as the costs are incurred, we determined it is not probable that a significant reversal of cumulative revenue would occur. We utilized the expected value method to determine the amount of reimbursement for these activities. We determined that any variable consideration related to development and regulatory milestones is deemed to be fully constrained and therefore excluded from the transaction price due to the high degree of uncertainty and risk associated with these potential payments as we determine that we cannot assert that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We also determined that royalties and sales milestones relate solely to the licenses of intellectual property and are therefore excluded from the transaction price under the sales-or-usage based royalty exception of ASC 606.
We developed the estimated standalone selling price for each of the Roche Performance Obligations with the objective of determining the price at which we would sell such an item if it were to be sold regularly on a standalone basis. We developed the estimated standalone selling price for the Roche License Obligation primarily based on the probability-weighted present value of expected future cash flows associated with each underlying license or activity. In developing such estimates, we applied judgment in determining the forecasted revenues, taking into consideration the applicable market conditions and relevant entity-specific factors, the probability of success, the time needed to develop zilebesiran and the discount rate. We developed the estimated standalone selling price for the services and clinical supply included in the Roche Development Services Obligation and the Roche Technology Transfer Obligation primarily based on the level of effort necessary to perform the service and the costs for full-time equivalent employees and expected resources to be committed plus a reasonable margin.
We allocated the variable consideration related to the estimated reimbursements for the Roche Development Services Obligation and the Roche Technology Transfer Obligation to each performance obligation as the terms of the variable payment relate specifically to our efforts to satisfy the performance obligation and allocating the variable amount of consideration entirely to the respective performance obligation is consistent with the allocation objective of ASC 606 when considering all of the performance obligations and payment terms in the contract. We allocated the fixed up-front consideration of $310.0 million entirely to the Roche License Obligation as the value of the fixed consideration together with the expected value of the development and regulatory milestones, sales-based milestones and royalties, all of which are either currently constrained or subject to the sales-and usage-based royalty exception, approximates the standalone selling price of the Roche License Obligation. Therefore, allocating the fixed up-front consideration entirely to the Roche License Obligation is consistent with the allocation objective of ASC 606 when considering all of the performance obligations and payment terms in the contract.
The Roche License Obligation was satisfied at a point in time upon transfer of the license to Roche. Control of the licenses was transferred on the Effective Date and Roche could begin to use and benefit from the licenses. For the Roche Development Services Obligation, we measure proportional performance over time using an input method based on cost incurred relative to the total estimated cost of the obligation, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend. This ratio is applied to the transaction price allocated to the obligation. Management has applied significant judgment in the process of developing our estimates. We re-evaluate the transaction price as of the end of each reporting period.
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ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables provide a summary of the transaction price allocated to each performance obligation, in addition to revenue activity during the period, in thousands:
Transaction Price AllocatedRevenue Recognized During
Performance Obligations
As of September 30, 2023
Three Months Ended
September 30, 2023
Roche License Obligation
$310,000 $310,000 
Roche Development Services Obligation
545,000 200 
Roche Technology Transfer Obligation
2,000  
$857,000 $310,200 
As of September 30, 2023, the aggregate amount of the transaction price allocated to the Roche Performance Obligations that was unsatisfied was $546.8 million, which is expected to be recognized through the term of the Roche Agreement as the services are performed.
Regeneron Pharmaceuticals, Inc.
In April 2019, we entered into a global, strategic collaboration with 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 3 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 research period of approximately five years, 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 $300.0 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 leads 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 are alternating 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 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. Pursuant to the C5 co-co collaboration agreement, Regeneron notified us in November 2022 of its decision to exercise its right to opt-out of the further development and commercialization of cemdisiran monotherapy. As a result, Regeneron no longer shares costs and potential future profits on any monotherapy program with us. We continue to perform our obligations under the agreement, including considering other strategic alternatives, and we are solely responsible for all development and commercialization costs. Regeneron will be eligible to receive tiered double-digit royalties on net sales. 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
15

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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. In the third quarter of 2023, we earned a $100.0 million milestone as we met certain criteria during early clinical development for our CNS program, ALN-APP. We recognized a cumulative catch-up adjustment of $65.0 million in net revenues from collaborations for the satisfied portion of our performance obligation that is satisfied over time. We are also eligible to receive up to an additional $100.0 million in milestone payments upon achievement of certain criteria during early clinical development for an eye program. We and Regeneron plan to advance programs directed to up to 30 targets in the first five years under the Regeneron Collaboration during the Initial Research Term. For each program, Regeneron will provide us with $2.5 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 income (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 failure rates generally associated with drug development, we may not receive any additional milestone or royalty payments from Regeneron under the Regeneron Master Agreement, the C5 license agreement, or any future license agreement, or under any co-co collaboration agreement in the event we exercise our opt-out right.
Our obligations under the Regeneron Collaboration include: (i) a research license and research services, collectively referred to as the Research Services Obligation; (ii) a worldwide license to cemdisiran for combination therapies, and manufacturing and supply, and development service obligations, collectively referred to as the C5 License Obligation; and (iii) development, manufacturing and commercialization activities for cemdisiran monotherapies, referred to as the C5 Co-Co Obligation.
The research license is not distinct from the research services primarily as a result of Regeneron being unable to benefit on its own or with other resources reasonably available, as the license is providing access to specialized expertise, particularly as it relates to RNAi technology that is not available in the marketplace. Similarly, the worldwide license to cemdisiran for combination therapies is not distinct from the manufacturing and supply, and development service obligations, as Regeneron cannot benefit on its own from the value of the license without receipt of supply.
Separately, prior to Regeneron’s decision in November 2022 to exercise its right to opt-out of the further development and commercialization of cemdisiran monotherapy, the cemdisiran monotherapy co-co collaboration agreement was under the scope of ASC 808 as we and Regeneron were both active participants in the development and manufacturing activities and were exposed to significant risks and rewards that were dependent on commercial success of the activities of the arrangement. Regeneron’s decision to exercise its right to opt out of the arrangement caused a change in the role of Regeneron and its
16

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
exposure to significant risks and rewards under the arrangement. As a result, we determined that the arrangement no longer represents a collaborative arrangement.
The arrangement now represents a vendor-customer relationship under ASC 606 as we perform our obligation to provide development and manufacturing activities under the arrangement. The transaction price allocated to the C5 Co-Co obligation unit of account will be recognized over time using an input method based on cost incurred relative to the total estimated costs for the identified performance obligation by determining the proportion of effort incurred as a percentage of total effort we expect to expend.
The total transaction price is comprised of the $400.0 million upfront payment and additional variable consideration related to research, development, manufacturing and supply activities related to the Research Services Obligation and the C5 License Obligation. We utilized the expected value method to determine the amount of reimbursement for these activities. We determined that any variable consideration related to sales-based royalties and milestones related to the worldwide license to cemdisiran for combination therapies is deemed to be constrained and therefore has been excluded from the transaction price. In addition, we are eligible to receive a future milestone upon the achievement of certain criteria during early clinical development for an eye program. We are also eligible to receive royalties on future commercial sales for certain eye, CNS or liver targets, if any; however, these amounts are excluded from variable consideration under the Regeneron Collaboration as we are only eligible to receive such amounts if, after a drug candidate is identified, the form of license agreement is subsequently executed resulting in a license that is granted to Regeneron. Any such subsequently granted license would represent a separate transaction under ASC 606.
We allocated the initial transaction price to each unit of account based on the applicable accounting guidance as follows, in thousands:
Performance ObligationsStandalone Selling PriceTransaction Price Allocated
Research Services Obligation$130,700 $183,100 
C5 License Obligation97,600 92,500 
C5 Co-Co Obligation364,600 246,000 
$521,600 
The transaction price was allocated to the obligations based on the relative estimated standalone selling prices of each obligation, over which management has applied significant judgment. We developed the estimated standalone selling price for the licenses included in the Research Services Obligation and the C5 License Obligation primarily based on the probability-weighted present value of expected future cash flows associated with each license related to each specific program. In developing such estimate, we applied judgment in the determination of the forecasted revenues, taking into consideration the applicable market conditions and relevant entity-specific factors, the expected number of targets or indications expected to be pursued under each license, the probability of success, the time needed to develop a product candidate pursuant to the associated license and the discount rate. We developed the estimated standalone selling price for the services and/or manufacturing and supply included in each of the obligations, as applicable, primarily based on the nature of the services to be performed and/or goods to be manufactured and estimates of the associated costs. The estimated standalone selling price of the C5 Co-Co Obligation was developed by estimating the present value of expected future cash flows that Regeneron is entitled to receive. In developing such estimate, we applied judgment in determining the indications that will be pursued, the forecasted revenues for such indications, the probability of success and the discount rate.
For the Research Services Obligation, the C5 License Obligation, and the C5 Co-Co Obligation accounted for under ASC 606, we measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for each of the identified obligations, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend. This ratio is applied to the transaction price allocated to each obligation. Management has applied significant judgment in the process of developing our estimates. Any changes to these estimates will be recognized in the period in which they change as a cumulative catch up. We re-evaluate the transaction price as of the end of each reporting period and as of September 30, 2023, the total transaction price was determined to be $650.1 million, an increase of $91.2 million from December 31, 2022. As of September 30, 2023, the transaction price is comprised of the upfront payment and variable consideration related to development, manufacture, and supply activities. Revenue recognized under this agreement is accounted for as collaboration revenue.
17

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables provide a summary of the transaction price allocated to each unit of account based on the applicable accounting guidance, in addition to revenue activity during the period and deferred revenue as of the balance sheet date, in thousands:
Transaction Price AllocatedDeferred Revenue
Performance ObligationsAs of September 30,
2023
As of September 30,
2023
As of December 31,
2022
Research Services Obligation$305,680 $72,000 $26,200 
C5 License Obligation98,400 3,800 7,000 
C5 Co-Co Obligation246,000 187,400 193,600 
$650,080 $263,200 $226,800 
Revenue Recognized During
Three Months Ended September 30,Nine Months Ended September 30,
Performance Obligations2023202220232022
Research Services Obligation$73,000 $10,300 $66,700 $19,100 
C5 License Obligation700 1,400 6,000 (2,100)
C5 Co-Co Obligation2,000 5,400 6,200 9,400 
$75,700 $17,100 $78,900 $26,400 
As of September 30, 2023, the aggregate amount of the transaction price allocated to the remaining Research Services Obligation and the C5 License Obligation that was unsatisfied was $115.2 million, which is expected to be recognized through the term of the Regeneron Collaboration as the services are performed. The aggregate amount of the transaction price allocated to C5 Co-Co Obligation that was unsatisfied was $187.4 million, which is expected to be recognized as we perform our obligation to provide development and manufacturing activities under the arrangement, but could be recognized earlier after an assessment of strategic alternatives which could change the scope of our obligation. Deferred revenue related to the Regeneron Collaboration is classified as either current or non-current in the condensed consolidated balance sheets based on the period the revenue is expected to be recognized.
Novartis AG
2013 Collaboration with The Medicines Company
In February 2013, we and The Medicines Company, or MDCO, entered into a license and collaboration agreement pursuant to which we granted to MDCO an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9, or PCSK9, for the treatment of hypercholesterolemia and other human diseases, including inclisiran. We refer to this agreement, as amended through the date hereof, as the MDCO License Agreement. In 2020, Novartis AG, or Novartis, completed its acquisition of MDCO and assumed all rights and obligations under the MDCO License Agreement. Additional details regarding the terms, milestones earned upon the achievement of certain events and additional milestones we are entitled to receive upon the achievement of future events under the MDCO License Agreement are described in Note 4 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on February 23, 2023.
Novartis License Agreement
In December 2021, we and Novartis entered into a collaboration and license agreement, or the Novartis License Agreement, pursuant to which we granted to Novartis an exclusive, worldwide license to develop, manufacture and commercialize siRNAs targeting end-stage liver disease, or ESLD, potentially leading to the development of a treatment designed to promote the regrowth of functional liver cells and to provide an alternative to transplantation for patients with liver failure. Additional details regarding the terms and transaction price under the Novartis License Agreement are described in Note 4 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on February 23, 2023.
Other
In addition to the collaboration agreements discussed above, we have various other collaboration agreements that are not individually significant to our operating results or financial condition at this time. Pursuant to the terms of those agreements, we may be required to pay, or we may receive, additional amounts contingent upon the occurrence of various future events (e.g.,
18

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
upon the achievement of various development and commercial milestones) which in the aggregate could be significant. We may also incur, or be reimbursed for, significant research and development costs. In addition, if any products related to these collaborations are approved for sale, we may be required to pay, or we may receive, royalties on future sales. The payment or receipt of these amounts, however, is contingent upon the occurrence of various future events.
5. LIABILITY RELATED TO THE SALE OF FUTURE ROYALTIES
In April 2020, we entered into a purchase and sale agreement, or Purchase Agreement, with BX Bodyguard Royalties L.P. (an affiliate of The Blackstone Group Inc.), or Blackstone Royalties, under which Blackstone Royalties acquired 50% of royalties payable, or Royalty Interest, with respect to net sales by MDCO, its affiliates or sublicensees of inclisiran (or the branded drug product, Leqvio) and any other licensed products under the MDCO License Agreement, and 75% of the commercial milestone payments payable under the MDCO License Agreement, together with the Royalty Interest, the Purchased Interest. If Blackstone Royalties does not receive payments in respect of the Royalty Interest by December 31, 2029, equaling at least $1.00 billion, Blackstone Royalties will receive 55% of the Royalty Interest beginning on January 1, 2030. In consideration for the sale of the Purchased Interest, Blackstone Royalties paid us $1.00 billion.
We continue to own or control all inclisiran intellectual property rights and are responsible for certain ongoing manufacturing and supply obligations related to the generation of the Purchased Interest. Due to our continuing involvement, we will continue to account for any royalties and commercial milestones due to us under the MDCO License Agreement as revenue on our condensed consolidated statement of operations and comprehensive income (loss) and record the proceeds from this transaction as a liability, net of closing costs, on our condensed consolidated balance sheet.
In order to determine the amortization of the liability related to the sale of future royalties, we are required to estimate the total amount of future payments to Blackstone Royalties over the life of the Purchase Agreement. The $1.00 billion liability, recorded at execution of the agreement, will be accreted to the total of these royalty and commercial milestone payments as interest expense over the life of the Purchase Agreement. As of September 30, 2023, our estimate of this total interest expense resulted in an effective annual interest rate of 8%. These estimates contain assumptions that impact both the amount recorded at execution and the interest expense that will be recognized in future periods.
As payments are made to Blackstone Royalties, the balance of the liability will be effectively repaid over the life of the Purchase Agreement. The exact timing and amount of repayment is likely to change each reporting period. A significant increase or decrease in Leqvio global net revenue will materially impact the liability related to the sale of future royalties, interest expense and the time period for repayment. We will periodically assess the expected payments to Blackstone Royalties and to the extent the amount or timing of such payments is materially different than our initial estimates, we will prospectively adjust the amortization of the liability related to the sale of future royalties and the related interest expense.
As of September 30, 2023, the carrying value of the liability related to the sale of future royalties was $1.36 billion, net of closing costs of $10.2 million. The carrying value of the liability related to the sale of future royalties approximates fair value as of September 30, 2023 and is based on our current estimates of future royalties and commercial milestones expected to be paid to Blackstone Royalties over the life of the arrangement, which are considered Level 3 inputs.
The following table shows the activity with respect to the liability related to the sale of future royalties, in thousands:
Carrying value as of December 31, 2022
$1,292,304 
Interest expense recognized78,918 
Payments(16,213)
Carrying value as of September 30, 2023
$1,355,009 
19

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. FAIR VALUE MEASUREMENTS
The following tables present information about our financial assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair value:
(In thousands)As of September 30, 2023Quoted Prices in Active Markets
(Level 1)
Significant Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial assets
Cash equivalents:
Money market funds$61,799 $61,799 $ $ 
Commercial paper9,149  9,149  
U.S. treasury securities8,959  8,959  
Marketable debt securities:
U.S. treasury securities694,376  694,376  
U.S. government-sponsored enterprise securities434,257  434,257  
Corporate notes164,773  164,773  
Commercial paper65,850  65,850  
Certificates of deposit3,587  3,587  
Marketable equity securities10,411 10,411   
Restricted cash (money market funds)1,207 1,207   
Total financial assets$1,454,368 $73,417 $1,380,951 $ 
Financial liabilities
Development derivative liability$293,505 $ $ $293,505 

(In thousands)As of December 31, 2022Quoted Prices in Active Markets
(Level 1)
Significant Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial assets
Cash equivalents:
Money market funds$270,394 $270,394 $ $ 
U.S. treasury securities44,817  44,817  
U.S. government-sponsored enterprise securities41,763  41,763  
Commercial paper22,350  22,350  
Certificates of deposit3,289  3,289  
Corporate notes1,024  1,024  
Marketable debt securities:
U.S. treasury securities820,913  820,913  
U.S. government-sponsored enterprise securities230,770  230,770  
Corporate notes208,284  208,284  
Commercial paper36,793  36,793  
Certificates of deposit1,130  1,130  
Marketable equity securities28,122 28,122   
Restricted cash (money market funds)1,197 1,197   
Total financial assets$1,710,846 $299,713 $1,411,133 $ 
Financial liabilities
Development derivative liability$209,277 $ $ $209,277 
20

ALNYLAM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The carrying amounts reflected on our condensed consolidated balance sheets for cash, accounts receivable, net, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.
7. MARKETABLE DEBT SECURITIES
We invest our excess cash balances in marketable debt securities and at each balance sheet date presented, we classify all of our investments in debt securities as available-for-sale and as current assets as they represent the investment of funds available for current operations. We did not record any impairment charges related to our marketable debt securities during the nine months ended September 30, 2023 or 2022.
The following tables summarize our marketable debt securities:
As of September 30, 2023
(In thousands)Amortized
Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
U.S. treasury securities$705,415 $13 $(2,093)$703,335 
U.S. government-sponsored enterprise securities436,723 2 (2,468)434,257 
Corporate notes165,719 1 (947)164,773 
Commercial paper74,999   74,999 
Certificates of deposit3,587   3,587 
Total$1,386,443 $16 $(5,508)$1,380,951 
As of December 31, 2022
(In thousands)Amortized
Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
U.S. treasury securities$870,033 $79 $(4,382)$865,730 
U.S. government-sponsored enterprise securities275,610 24 (3,101)272,533 
Corporate notes211,398 16 (2,106)209,308 
Commercial paper59,143   59,143 
Certificates of deposit4,419   4,419 
Total$1,420,603 $119 $(9,589)$1,411,133 
The fair values of our marketable debt securities by classification in the condensed consolidated balance sheets were as follows:
(In thousands)As of September 30, 2023As of December 31, 2022
Marketable debt securities$1,362,843 $1,297,890 
Cash and cash equivalents18,108 113,243 
Total$1,380,951 $1,411,133