What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-28 compared with 2021-08-03 · 75 added, 82 removed, 212 unchanged (43% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a global commercial-stage biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi.

We are a global commercial-stage biopharmaceutical company developing novel therapeutics based on ribonucleic acid interference, or RNAi.

RNAi is a naturally occurring biological pathway within cells for sequence-specific silencing and regulation of gene expression.

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With Alnylam P 5 x25 , we aim to deliver transformative rare and prevalent disease medicines for patients around the world through sustainable innovation, delivering exceptional financial performance and driving profitability.

On October 28, 2021, we announced a leadership transition pursuant to which our current long-time Chief Executive Officer, John M.

Maraganore, Ph.D., will depart on December 31, 2021, and Yvonne L.

Greenstreet, MBChB, MBA, our current President and Chief Operating Officer, will transition to the role of Chief Executive Officer.

We currently have four marketed products and 12 clinical programs, including six in late-stage development, across four Strategic Therapeutic Areas, or “STArs:” Genetic Medicines;

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Three of our marketed products are within the Genetic Medicines STAr, ONPATTRO, GIVLAARI and OXLUMO.

ONPATTRO is approved by the United States Food and Drug Administration, or FDA, for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis, or hATTR amyloidosis, in adults and has also been approved in the European Union, or EU, for the treatment of hATTR amyloidosis in adult patients with stage 1 or stage 2 polyneuropathy, in Japan for the treatment of transthyretin, or TTR, type familial amyloidosis with polyneuropathy, and in several additional countries, including Brazil.

ONPATTRO is approved in the United States, or U.S., by the United States Food and Drug Administration, or FDA, for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis, or hATTR amyloidosis, in adults and has also been approved in the European Union, or EU, for the treatment of hATTR amyloidosis in adult patients with stage 1 or stage 2 polyneuropathy, in Japan for the treatment of transthyretin, or TTR, type familial amyloidosis with polyneuropathy, and in several additional countries, including Brazil.

Regulatory filings in other territories are pending and additional filings are planned for 2022 and beyond.

GIVLAARI is approved in the United States, or U.S., for the treatment of adults with acute hepatic porphyria, or AHP, in the EU for the treatment of AHP in adults and adolescents aged 12 years and older, and in several additional countries, including Brazil, Canada and Japan.

GIVLAARI is approved in the U.S.

by the FDA for the treatment of adults with acute hepatic porphyria, or AHP, in the EU for the treatment of AHP in adults and adolescents aged 12 years and older, and in several additional countries, including Brazil, Canada and Japan.

We have also filed for regulatory approval for givosiran (the non-branded drug name for GIVLAARI) in Switzerland and additional regulatory filings are pending or planned for 2021 and beyond.

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With respect to regulatory review by the FDA of the New Drug Application, or NDA, filed with the FDA for inclisiran, the FDA issued a complete response letter in December 2020, due to unresolved facility inspection-related conditions at a third-party manufacturing facility in Europe.

In July 2021, Novartis announced that the resubmission to the FDA for the inclisiran NDA to address the complete response letter was filed with an action date of January 1, 2022.

In July 2021, Novartis announced that the resubmission to the FDA for the inclisiran NDA to address the complete response letter was filed with an action date of January 1, 2022 under the Prescription Drug User Fee Act, or PDUFA.

Novartis listed its own site in Schaftenau, Austria, as the manufacturing location for the final finished product within its NDA resubmission.

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patisiran (the non-branded drug name for ONPATTRO) for the treatment of transthyretin amyloidosis, or ATTR amyloidosis, with cardiomyopathy;

vutrisiran for the treatment of ATTR amyloidosis;

inclisiran (the non-branded name for Leqvio) for the treatment of hypercholesterolemia and atherosclerotic cardiovascular disease, or ASCVD, is being advanced by our partner Novartis;

as well as fitusiran for the treatment of hemophilia, which is being advanced by our partner Sanofi Genzyme, the specialty care global business unit of Sanofi.

and vutrisiran for the treatment of ATTR amyloidosis.

In addition, inclisiran (the non-branded name for Leqvio) for the treatment of hypercholesterolemia and atherosclerotic cardiovascular disease, or ASCVD, is being advanced by

our partner Novartis, and fitusiran for the treatment of hemophilia, is being advanced by our partner Sanofi Genzyme, the specialty care global business unit of Sanofi.

In January 2021, we reported positive topline results from our HELIOS-A Phase 3 study of vutrisiran in patients with hATTR amyloidosis with polyneuropathy, and in April 2021, based on the positive HELIOS-A data, we submitted an NDA for vutrisiran, which was accepted by the FDA.

The FDA has set an action date of April 14, 2022 under the Prescription Drug User Fee Act, or PDUFA, and indicated that they were not currently planning an advisory committee meeting as part of the NDA review.

Upon obtaining results from the 18-month analysis of HELIOS-A, expected in late 2021, we plan to submit a marketing authorisation application, or MAA, in the EU as previously aligned with the European Medicines Agency, or EMA.

The FDA has set an action date of April 14, 2022 under the PDUFA, and indicated that they were not currently planning an advisory committee meeting as part of the NDA review.

In September 2021, we presented additional 9-month data from the HELIOS-A Phase 3 study of vutrisiran, and submitted a marketing authorisation application, or MAA, in the EU with the European Medicines Agency, or EMA.

In October 2021, we reported positive topline results for 18-month endpoints and safety from the HELIOS-A Phase 3 study of vutrisiran.

Based on our expertise in RNAi therapeutics and broad intellectual property estate, we have formed alliances with leading pharmaceutical and life sciences companies to support our development and commercialization efforts, including Regeneron Pharmaceuticals, Inc., or Regeneron, Novartis (which acquired our partner The Medicines Company, or MDCO, in 2020), Sanofi Genzyme, Vir Biotechnology, Inc., or Vir, and Dicerna Pharmaceuticals, Inc., or Dicerna.

We have incurred significant losses since we commenced operations in 2002 and expect such losses to continue for the foreseeable future.

As of June 30, 2021, we had an accumulated deficit of $4.98 billion.

As of September 30, 2021, we had an accumulated deficit of $5.18 billion.

Historically, we have generated losses principally from costs associated with the establishment of late-stage clinical and commercial capabilities, including global commercial operations, research and development activities, acquiring, filing and expanding intellectual property rights, and selling, general and administrative costs.

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Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.

We currently have programs focused on a number of therapeutic areas and as of June 30, 2021, we are generating net revenue from product sales for three marketed products, ONPATTRO, GIVLAARI and OXLUMO.

We currently have programs focused on a number of therapeutic areas and as of September 30, 2021, we are generating net revenue from product sales for three marketed products, ONPATTRO, GIVLAARI and OXLUMO.

However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products and/or successfully market and sell ONPATTRO, GIVLAARI, OXLUMO or any other approved products in the future.

A substantial portion of our total revenues in recent years has been derived from collaboration revenues from strategic alliances with Regeneron, Novartis and Vir.

In addition to revenues from the commercial sales of ONPATTRO, GIVLAARI, OXLUMO and potentially from sales of future products, we expect our sources of potential funding for the next several years to continue to be derived in part from existing and new strategic alliances, which may include license and other fees, funded research and development, milestone payments and royalties on product sales by our licensees, as well as funding due or available to us under our strategic financing collaboration with Blackstone.

In addition to revenues from the commercial sales of ONPATTRO, GIVLAARI, OXLUMO and potentially from sales of future products, including vutrisiran, we expect our sources of potential funding for the next several years to continue to be derived in part from existing and new strategic alliances, which may include license and other fees, funded research and development, milestone payments and royalties on product sales by our licensees, as well as funding due or available to us under our strategic financing collaboration with Blackstone.

The COVID-19 Pandemic

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Since the onset of the global pandemic in 2020 and throughout 2021, we have been closely monitoring the spread of COVID-19 and its variants, and plan to continue taking steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic.

The spread of COVID-19 has caused us to modify our business practices, including implementing a temporary global work from home policy for all employees who are able to perform their duties remotely and temporarily restricting all nonessential business travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, the patients we serve and other business partners in light of COVID-19 and variants thereof.

We are revisiting these precautions on a regular basis as the pandemic evolves;

however, at this time, we cannot predict when certain restrictions that are in place to protect our employees, customers and patients will no longer be needed.

The spread of COVID-19 caused us to modify our business practices, including implementing a temporary global work from home policy in March 2020 for all employees who were able to perform their duties remotely and temporarily restricting all nonessential business travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, the patients we serve and other business partners in light of COVID-19 and variants thereof.

Where and to the extent permitted to be open under local regulations, our office sites are operational with appropriate safety precautions based on COVID-19 infection rates, vaccination rates and local guidance, and in October 2021, we formally re-opened our offices in the U.S., following openings in other territories, to those employees who have been fully vaccinated.

The effects of the COVID-19 pandemic continue to evolve and, at this time, we cannot predict when certain restrictions that remain in place to protect our employees, customers and patients will no longer be needed.

Recognizing that local conditions vary for our offices around the world and that the trajectory of the virus continues to be uncertain, we may adjust our plans for employees returning to our offices as deemed necessary.

Since early 2021, global vaccination efforts have been underway to control the pandemic.

However, due to the speed and fluidity with which the COVID-19 pandemic continues to evolve, and the emergence of highly contagious variants, we do not yet know the full extent of the impact of COVID-19 on our business operations.

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, including the effectiveness of vaccination campaigns, among others.

campaigns, among others.

Accordingly, we cannot predict the extent to which our business, financial condition and results of operations will be affected.

We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to COVID-19 and variants thereof.

We will continue to work diligently with our partners and stakeholders to support patient access to our approved medicines, advance our product candidates under regulatory review as well as in our clinical studies to the extent safe to do so for patients, caregivers and healthcare practitioners, and ensure the continuity of our

manufacturing and supply chain.

For additional information related to the actual or potential impacts of COVID-19 on our business, please read Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

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and CNS/Ocular Diseases.

The chart below is a summary of our commercial products and late- and early-stage development programs as of July 31, 2021.

The chart below is a summary of our commercial products and late- and early-stage development programs as of October 2021.

It identifies those programs for which we have received marketing approval, the stage of our programs and our commercial rights to such programs:

During the second quarter of 2021 and recent period, we reported the following updates from our commercially approved products and our late-stage clinical programs:

• We achieved ONPATTRO global net product revenues for the second quarter of 2021 of $113.8 million.

• We achieved GIVLAARI global net product revenues for the second quarter of 2021 of $30.6 million, and received marketing authorization approval for GIVLAARI in Japan for the treatment of AHP in adults and adolescents.

• We achieved OXLUMO global net product revenues for the second quarter of 2021 of $16.3 million, and received marketing authorization approval for OXLUMO in Brazil for the treatment of PH1.

• We earned royalty revenues of $0.3 million from our partner, Novartis, based on Leqvio global net product revenues through the second quarter of 2021.

• Novartis announced that the resubmission to the FDA for the inclisiran NDA to address the Complete Response Letter was filed with an action date of January 1, 2022.

During the third quarter of 2021 and recent period, we reported the following updates from our commercially approved products and our late-stage clinical programs:

• We achieved ONPATTRO global net product revenues for the third quarter of 2021 of $120.3 million.

• We achieved GIVLAARI global net product revenues for the third quarter of 2021 of $31.8 million, and continued geographic expansion for GIVLAARI with pricing and reimbursement approvals in Spain, the United Kingdom, France and Japan.

• We achieved OXLUMO global net product revenues for the third quarter of 2021 of $14.9 million, and continued planned geographic expansion for OXLUMO with ongoing pricing and reimbursement discussions in many European countries.

• We earned royalty revenues of $0.5 million from our partner, Novartis, based on Leqvio global net product revenues in the third quarter of 2021.

• Novartis announced a commercial agreement with the NHS in England as part of a collaboration to pioneer a first-of-its-kind population health management approach to address elevated LDL-C in eligible patients with ASCVD across England.

Late-Stage Clinical Development

• We continued to advance patisiran, in development for the treatment of the cardiomyopathy of both hereditary and wild-type ATTR amyloidosis:

◦ Completed enrollment in the APOLLO-B Phase 3 study in ATTR amyloidosis patients with cardiomyopathy, with topline results expected in mid-2022.

• We continued to advance vutrisiran, a subcutaneously administered investigational RNAi therapeutic in development for the treatment of ATTR amyloidosis:

◦ Submitted an NDA to the FDA for hATTR-PN, and received FDA acceptance of the NDA with a PDUFA date set for April 14, 2022;

◦ Based on discussions with the EMA, we now plan to file, ahead of schedule, a Marketing Authorisation Application for vutrisiran for the treatment of hATTR amyloidosis in adult patients with polyneuropathy based on 9-month results from the HELIOS-A Phase 3 study;

◦ Initiated a clinical study of a biannual dosing regimen in hATTR amyloidosis patients with polyneuropathy, with data expected in 2022 potentially supporting regulatory submissions;

◦ Continued enrollment in the HELIOS-B Phase 3 study in ATTR amyloidosis patients with cardiomyopathy, and due to high interest from patients and physicians, we now expect to complete enrollment within the next two weeks, significantly ahead of schedule.

◦ Reported positive topline results for 18-month endpoints and safety from the HELIOS-A Phase 3 study in hATTR amyloidosis patients with polyneuropathy;

◦ Completed enrollment in the HELIOS-B Phase 3 study in ATTR amyloidosis patients with cardiomyopathy, ahead of schedule;

◦ Submitted an MAA to the EMA, ahead of schedule, and an NDA to ANVISA in Brazil for the treatment of hATTR amyloidosis in adult patients with polyneuropathy.

• We continued to advance lumasiran for the treatment of PH1:

◦ Achieved positive topline results from the ILLUMINATE-C Phase 3 study in PH1 patients with advanced renal disease.

• Our partner, Novartis, continued to advance inclisiran (the non-proprietary name for Leqvio) for the treatment of hypercholesterolemia or mixed dyslipidemia:

◦ Resubmission to the FDA for the inclisiran NDA to address the Complete Response Letter was filed with an action date of January 1, 2022.

◦ Reported positive topline results from the ILLUMINATE-C Phase 3 study in patients with advanced PH1.

• Our partner, Sanofi Genzyme, continued advancement of the ATLAS Phase 3 program for fitusiran in patients with hemophilia A or B with and without inhibitors:

◦ Announced substantial progress with fitusiran, and now expects to present data from the Phase 3 ATLAS program as early as the beginning of next year, with a potential regulatory submission later in 2022.

◦ Announced that a potential filing date for fitusiran has been moved to 2024 due to the introduction of a lower dose cohort in the ongoing phase 3 studies.

There is a risk that any drug discovery or development program may not produce revenue for a variety of reasons, including the possibility that we will not be able to adequately demonstrate the safety and effectiveness of the product candidate.

Moreover, there are uncertainties specific to any new field of drug discovery, including RNAi.

The success of ONPATTRO, GIVLAARI, OXLUMO or any other product candidate we develop is highly uncertain.

The success of ONPATTRO, GIVLAARI, OXLUMO or any other product candidate we develop, including vutrisiran, is highly uncertain.

Due to the numerous risks associated with developing drugs, including those risks associated with the COVID-19 pandemic, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts necessary to complete the development of any potential product candidate or indication, or the period, if any, in which material net cash inflows will commence from any approved product or indication.

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The following data summarizes the results of our operations:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Total revenues consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Net product revenues consist of the following, by product and region:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Europe 7,568 4,582 2,986 65 % 22,461 6,919 15,542 225 %

Rest of World 242 — 242 N/A 280 — 280 N/A

Rest of World (primarily Japan) 1,893 — 1,893 N/A 2,173 — 2,173 N/A

Total $ 31,833 $ 16,690 $ 15,143 91 % $ 87,136 $ 32,962 $ 54,174 164 %

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Total net product revenues $ 167,044 $ 99,206 $ 67,838 68 % $ 463,624 $ 248,677 $ 214,947 86 %

Net product revenues increased during the three and six months ended June 30, 2021, as compared to the same periods in the prior year, as a result of the continued, global expansion of ONPATTRO and GIVLAARI into additional major markets and increased patients on therapy, in addition to sales generated from our third commercial product, OXLUMO, following regulatory approvals in the fourth quarter of 2020.

Net product revenues increased during the three and nine months ended September 30, 2021, as compared to the same periods in the prior year, as a result of the continued, global expansion of ONPATTRO and GIVLAARI into additional major markets and increased patients on therapy, in addition to sales generated from our third commercial product, OXLUMO, following regulatory approvals in the fourth quarter of 2020.

We expect net product revenues to increase for the twelve-month period ending December 31, 2021, as compared to the same period in 2020, as we continue to add new patients onto our approved, commercial products, as well as launch our approved products into additional markets, assuming regulatory approvals.

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Net revenues from collaborations consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Total $ 20,136 $ 26,647 $ (6,511) (24) % $ 121,328 $ 80,614 $ 40,714 51 %

Net revenues from collaborations increased during the three and six months ended June 30, 2021, as compared to the same periods in the prior year, primarily due to an increase in revenue recognized in connection with our collaboration agreements with Regeneron, as a result of increased activities, and Novartis, as a result of increased shipments of material to Novartis to support the manufacture of Leqvio as Novartis executes on the product launch in Europe and prepares for other potential market approvals.

We expect net revenues from collaborations to increase for the twelve-month period ending December 31, 2021, as compared to the same period in 2020, primarily due to increased activities and anticipated achievement of milestones under our collaboration with Regeneron.

Net revenues from collaborations decreased during the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a decrease in revenue recognized in connection with our collaboration agreement with Vir.

Net revenues from collaborations increased during the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in revenue recognized in connection with our collaboration agreements with Regeneron as a result of increased activities under the C5 collaboration.

We expect net revenues from collaborations to increase for the twelve-month period ending December 31, 2021, as compared to the same period in 2020, primarily due to increased activities under our collaborations with Regeneron and Novartis.

Royalty revenue

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Operating costs and expenses consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

Cost of goods sold $ 28,091 $ 20,826 $ 7,265 35 % $ 81,370 $ 52,393 $ 28,977 55 %

Cost of collaborations and royalties 8,499 1,664 6,835 411 % 16,538 1,664 14,874 894 %

Cost of collaborations and royalties 4,572 971 3,601 N/A 21,110 2,635 18,475 N/A

Research and development 194,572 161,783 32,789 20 % 563,106 486,350 76,756 16 %

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Cost of goods sold .

Cost of goods sold increased during the three and six months ended June 30, 2021, as compared to the same periods in the prior year, due to the increase in third-party royalties and sales of capitalized inventory.

Cost of goods sold increased during the three and nine months ended September 30, 2021, as compared to the same periods in the prior year, due to the increase in third-party royalties and sales of capitalized inventory.

We anticipate variability in our cost of goods sold as a percentage of net product revenues due to the timing of manufacturing runs and utilization and the depletion of zero-cost inventories, as well as future product launches.

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Research and development expenses consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Compensation and related 47,168 47,982 (814) (2) % 142,547 145,459 (2,912) (2) %

Facilities-related 20,728 17,701 3,027 17 % 40,004 33,402 6,602 20 %

External services 27,982 17,512 10,470 60 % 58,734 53,450 5,284 10 %

Facilities-related 19,928 18,256 1,672 9 % 59,932 51,658 8,274 16 %

Stock-based compensation 12,417 13,703 (1,286) (9) % 49,878 45,542 4,336 10 %

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Total $ 194,572 $ 161,783 $ 32,789 20 % $ 563,106 $ 486,350 $ 76,756 16 %

For the three and six months ended June 30, 2021, the increase in research and development expenses, as compared to the same period in the prior year, was primarily related to increased expenses associated with activities related to the advancement of our early- and late-stage programs.

During the three and six months ended June 30, 2021 and 2020, in connection with advancing activities under our collaboration agreements, we incurred research and development expenses, primarily related to external development and clinical expenses, including manufacturing of clinical product.

For the three and nine months ended September 30, 2021, the increase in research and development expenses, as compared to the same period in the prior year, was primarily related to increased expenses associated with activities related to the advancement of our early- and late-stage programs.

During the three and nine months ended September 30, 2021 and 2020, in connection with advancing activities under our collaboration agreements, we incurred research and development expenses, primarily related to external development and clinical expenses, including manufacturing of clinical product.

The following table summarizes research and development expenses incurred, for which we recognize net revenue, that are directly attributable to our collaboration agreements, by collaboration partner:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

Regeneron Pharmaceuticals $ 14,401 $ 12,565 $ 51,972 $ 44,108

Novartis AG 730 278 733 1,542

Vir Biotechnology 1,102 4,903 5,526 11,782

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Selling, general and administrative expenses consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Total $ 142,075 $ 167,472 $ (25,397) (15) % $ 434,257 $ 422,129 $ 12,128 3 %

For the three months ended June 30, 2021, the increase in selling, general and administrative expenses, as compared to the same periods in the prior year, was primarily related to the following:

• Increased consulting and professional services expenses primarily related to the preparation for and execution of product launches in various countries;

• Increased compensation and related expenses as a result of increased headcount to support our Alnylam P 5 x25 strategy.

For the six months ended June 30, 2021, the increase in selling, general and administrative expenses, as compared to the same periods in the prior year, was primarily related to the following:

• Increased compensation and related expenses as a result of increased headcount to support our Alnylam P 5 x25 strategy;

• Increased stock-based compensation expense primarily due to the accounting for certain performance-based stock awards.

We expect that research and development expenses combined with selling, general and administrative expenses will increase for the twelve-month period ending December 31, 2021, as compared to the same period in 2020, as we continue to develop our pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and build-out of our global commercial infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO and potentially additional product launches.

For the three months ended September 30, 2021, the decrease in selling, general and administrative expenses, as compared to the same periods in the prior year, was primarily due to a change in an estimate of contingent liabilities related to our arbitration with Ionis Pharmaceuticals, Inc.

For the nine months ended September 30, 2021, the increase in selling, general and administrative expenses, as compared to the same periods in the prior year, was primarily related to increases in compensation and related expenses and stock-based compensation expense as a result of increased headcount to support our Alnylam P 5 x25 strategy, offset by a change in an estimate of contingent liabilities related to our arbitration with Ionis Pharmaceuticals, Inc.

However, we expect that certain expenses will be variable depending on the timing of manufacturing batches, clinical trial enrollment and results, regulatory review of our product candidates and programs, and stock-based compensation expenses due to our determination regarding the probability of vesting for performance-based awards.

Total Other (Expense) Income, Net .

Total other (expense) income, net, consists of the following:

Three Months Ended June 30, Six Months Ended June 30,

Other (Expense) Income.

Other (expense) income consists of the following:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Other (expense) income, net

Realized and unrealized (losses) gains on marketable equity securities (4,434) 45,532 (49,966) (110) % 42,582 69,643 (27,061) (39) %

Realized and unrealized gains (losses) on marketable equity securities 18,691 (3,017) 21,708 (720) % 61,273 66,626 (5,353) (8) %

Change in fair value of development derivative liability 3,188 (1,229) 4,417 N/A (19,655) (1,229) (18,426) N/A

Other (expense) income (140) (493) 353 (72) % (9,859) (1,572) (8,287) 527 %

Other (4,389) 3,652 (8,041) (220) % (14,248) 2,080 (16,328) (785) %

Total $ (22,559) $ (27,253) $ 4,694 (17) % $ (77,751) $ 22,215 $ (99,966) (450) %

For the three months ended June 30, 2021, total other expense, net, increased, as compared to total other income, net, in the same period in the prior year, primarily due to realized and unrealized losses on marketable equity securities compared with realized and unrealized gains on marketable equity securities in the prior year.

For the six months ended June 30, 2021, total other expense, net, increased, as compared to total other income, net, in the same period in the prior year, primarily due to the following:

• Increased interest expense associated with the sale of future royalties;

• Decreased realized and unrealized gains on marketable equity securities;

• $22.8 million loss as a result of a mark-to-market adjustment related to the development derivative liability.

For the three months ended September 30, 2021, total other expense, net, decreased, as compared to the same period in the prior year, primarily due to realized and unrealized gains on marketable equity securities offset by increases in interest expense associated with the sale of future royalties and the drawdown of our credit facility beginning in December 2020.

For the nine months ended September 30, 2021, total other expense, net, increased, as compared to total other income, net, in the same period in the prior year, primarily due to increases in interest expense associated with the sale of future royalties and the drawdown of our credit facility beginning in December 2020.

We expect total other expense, net, will increase for the twelve-month period ending December 31, 2021, as compared to the same period in 2020, as we continue to incur interest expense on our long-term debt and sale of future royalties.

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The following table summarizes our cash flow activities:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2021 2020

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Effect of exchange rate changes on cash, cash equivalents and restricted cash (5,968) 1,946

Net increase in cash, cash equivalents and restricted cash 249,019 33,653

Net increase (decrease) in cash, cash equivalents and restricted cash 597,412 (50,472)

Cash, cash equivalents and restricted cash, beginning of period

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Since we commenced operations in 2002, we have generated significant losses.

As of June 30, 2021, we had an accumulated deficit of $4.98 billion.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $1.90 billion, compared to $1.87 billion as of December 31, 2020.

As of September 30, 2021, we had an accumulated deficit of $5.18 billion.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $2.33 billion, compared to $1.87 billion as of December 31, 2020.

Operating activities

Net cash used in operating activities decreased during the six months ended June 30, 2021, compared to the same period in 2020, primarily due to increased cash receipts from product sales offset by increased cash disbursements for operating costs and expenses and interest on long-term debt.

Net cash used in operating activities was relatively consistent during the nine months ended September 30, 2021, compared to the same period in 2020, as stronger cash receipts from increased product sales were largely offset by cash disbursements related to working capital receipts and payments.

Investing activities

Net cash provided by investing activities increased during the six months ended June 30, 2021, compared to the same period in the prior year, primarily due to a decrease in the purchases of marketable securities.

Net cash provided by investing activities increased during the nine months ended September 30, 2021, compared to the same period in the prior year, reflecting timing differences related to purchases, sales, and maturities of debt securities and changes in our portfolio-mix.

Financing activities

Net cash provided by financing activities decreased during the six months ended June 30, 2021, compared to the same period in the prior year, primarily due to $500.0 million received from our sale of one-half of our royalty interest under the Novartis agreement and net proceeds of $99.5 million from the issuance of common stock to strategic partners in April 2020, offset by proceeds of $250.0 million in connection with the second drawdown on our credit agreement, received in June 2021.

Net cash provided by financing activities increased during the nine months ended September 30, 2021, compared to the same period in the prior year, primarily due to proceeds of $250.0 million in connection with the second drawdown on our credit agreement, received in June 2021.

Operating Capital Requirements

We currently have programs focused on a number of therapeutic areas and, as of June 30, 2021, have received regulatory approval and commercially launched three products:

We currently have programs focused on a number of therapeutic areas and, as of September 30, 2021, have received regulatory approval and commercially launched three products:

ONPATTRO, GIVLAARI and OXLUMO.

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In addition, we anticipate that we will continue to generate losses as a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical, manufacturing and commercial capabilities, including global operations, continued management and growth of our intellectual property including our patent portfolio, collaborations and general corporate activities.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of June 30, 2021, together with the cash we expect to generate from product sales and under our current alliances, in addition to our strategic financing collaboration with The Blackstone Group Inc.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of September 30, 2021, together with the cash we expect to generate from product sales and under our current alliances, in addition to our strategic financing collaboration with The Blackstone Group Inc.

and certain of its affiliates, will be sufficient to enable us to advance our long-term strategic goals for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q.

However, due to numerous factors described in more detail under the caption Part II, Item 1A, "Risk Factors" of this quarterly report on Form 10-Q, we may require significant additional funds earlier than we currently expect in order to continue to commercialize ONPATTRO, GIVLAARI and OXLUMO, and to develop, conduct clinical trials for, manufacture and, if approved, commercialize additional product candidates.

However, due to numerous factors described in more detail under the caption Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q, we may require significant additional funds earlier than we currently expect in order to continue to commercialize ONPATTRO, GIVLAARI and OXLUMO, and to develop, conduct clinical trials for, manufacture and, if approved, commercialize additional product candidates, including vutrisiran.

Contractual Obligations and Commitments

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis