What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-28 compared with 2022-04-28 · 102 added, 98 removed, 195 unchanged (51% of the section changed)

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We believe this is a revolutionary approach with the potential to transform the care of patients with rare and prevalent diseases.

To date, our efforts to advance this revolutionary approach have yielded the approval of four first-in-class RNAi-based medicines, ONPATTRO ® (patisiran), GIVLAARI ® (givosiran), OXLUMO ® (lumasiran) and Leqvio ® (inclisiran).

To date, our efforts to advance this revolutionary approach have yielded the approval of five first-in-class RNAi-based medicines, ONPATTRO ® (patisiran), GIVLAARI ® (givosiran), OXLUMO ® (lumasiran), AMVUTTRA™ (vutrisiran) and Leqvio ® (inclisiran).

Our research and development strategy is to target genetically validated genes that have been implicated in the cause or pathway of human disease.

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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, while delivering exceptional financial performance.

We currently have four marketed products and 13 clinical programs, including five in late-stage development, across four Strategic Therapeutic Areas, or “STArs:” Genetic Medicines;

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

Cardio-Metabolic Diseases;

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and CNS/Ocular Diseases.

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

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

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 multiple additional countries, including Brazil.

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

Our fourth product, Leqvio (inclisiran), is being developed and commercialized by our partner Novartis AG, or Novartis, and has received marketing authorization from the European Commission, or EC, for the treatment of adults with hypercholesterolemia or mixed dyslipidemia and is in the Cardio-Metabolic Diseases STAr.

In December 2021, Leqvio was approved by the FDA as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia, or HeFH, or clinical atherosclerotic cardiovascular disease, or ASCVD, who require additional lowering of LDL-C.

As of April 2022, Leqvio has been approved in more than 55 countries.

In addition to our marketed products, we have five late-stage investigational programs advancing toward potential commercialization.

In June 2022, we received regulatory approval for AMVUTTRA in the U.S.

for the treatment of the polyneuropathy of hATTR amyloidosis in adults.

We have also filed for regulatory approval for vutrisiran (the non-branded name of AMVUTTRA) with the European Medicines Agency, or EMA, the Brazilian Health Regulatory Agency and the Japanese Pharmaceuticals and Medical Devices Agency, or PMDA.

Additional regulatory filings are planned for 2022 and beyond.

Our fifth product, Leqvio (inclisiran), is in the Cardio-Metabolic Diseases STAr.

Leqvio is being developed and commercialized by our partner Novartis AG, or Novartis, and has received marketing authorization from the European Commission, or EC, for the treatment of adults with hypercholesterolemia or mixed dyslipidemia and from the FDA as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia, or HeFH, or clinical atherosclerotic cardiovascular disease, or ASCVD, who require additional lowering of LDL-C.

As of the end of June 2022, Leqvio has been approved in 60 countries.

In addition to our marketed products, we have multiple late-stage investigational programs advancing toward potential commercialization.

These programs include our wholly owned programs:

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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 and Stargardt Disease;

as well as fitusiran for the treatment of hemophilia, which is being advanced by our partner Genzyme Corporation, a Sanofi Company, or Sanofi, and cemdisiran for the treatment of complement-mediated diseases, which we are advancing as a monotherapy in a Phase 2 study, and our partner Regeneron Pharmaceuticals, Inc., or Regeneron, is advancing in a Phase 3 study of cemdisiran and pozelimab combination in myasthenia gravis.

In further support of our Alnylam P 5 x25 strategy and in view of our evolving risk profile, we remain focused on continued evolution of our global infrastructure, including key objectives such as optimizing our global structure for execution in key

markets, enhancing performance consistent with our values, and continuing to strengthen our culture.

vutrisiran for the treatment of ATTR amyloidosis with cardiomyopathy and Stargardt Disease;

as well as fitusiran for the treatment of hemophilia, which is being advanced by our partner Genzyme Corporation, a Sanofi Company, or Sanofi;

and cemdisiran for the treatment of complement-mediated diseases, which we are

advancing as a monotherapy in a Phase 2 study, and our partner Regeneron Pharmaceuticals, Inc., or Regeneron, is advancing cemdisiran in combination with pozelimab in Phase 3 studies in myasthenia gravis and paroxysmal nocturnal hemoglobinuria.

We maintain focus on our global compliance program to drive its evolution and enhancement in view of the Alnylam P 5 x25 strategy.

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our program and related controls are built to enhance our business processes, structures, and controls across our global operations.

In January 2022, we reported positive full results for 18-month secondary endpoints and updated safety data from the HELIOS-A Phase 3 study of vutrisiran in patients with hATTR amyloidosis with polyneuropathy.

Vutrisiran met all 18-month secondary endpoints, including statistically significant improvements in neuropathy impairment, quality of life, gait speed, nutritional status and overall disability, relative to external placebo data from the APOLLO Phase 3 study of patisiran.

Additionally, vutrisiran continued to demonstrate an encouraging safety and tolerability profile.

Previously, in January 2021, we reported positive topline results from our HELIOS-A Phase 3 study of vutrisiran, 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 initially set an action date of April 14, 2022 under PDUFA.

In April 2022, we announced that the FDA extended the review timeline of the NDA for vutrisiran to allow for review of newly added information related to a new secondary packaging and labeling facility.

The updated PDUFA goal date to allow for this review is July 14, 2022.

No additional clinical data have been requested by the FDA.

Vutrisiran is also under review by the European Medicines Agency, or EMA, the Brazilian Health Regulatory Agency and the Japanese Pharmaceuticals and Medical Devices Agency, or PMDA.

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, Novartis (which acquired our partner The Medicines Company, or MDCO, in 2020), Sanofi, Vir Biotechnology, Inc., or Vir, Dicerna Pharmaceuticals, Inc.

(acquired by Novo Nordisk A/S, or Novo Nordisk, in December 2021), or Dicerna, and PeptiDream, Inc., or PeptiDream.

We have incurred significant losses since we commenced operations in 2002 and as of March 31, 2022, we had an accumulated deficit of $5.68 billion.

We have incurred significant losses since we commenced operations in 2002 and as of June 30, 2022, we had an accumulated deficit of $5.96 billion.

Historically, we have generated losses principally from costs associated with 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 March 31, 2022, we generate worldwide product revenues from three commercialized products, ONPATTRO, GIVLAARI and OXLUMO, primarily in the U.S., Europe and Japan.

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.

We currently have programs focused on a number of therapeutic areas and, as of July 15, 2022, we generate worldwide product revenues from four commercialized products, ONPATTRO, GIVLAARI, OXLUMO and AMVUTTRA, primarily in the U.S., Europe and Japan.

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

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We could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the current COVID-19 pandemic.

Since the onset of the global pandemic in 2020, 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 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 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 or qualified for an approved exemption.

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 and booster vaccination campaigns, among others.

Where and to the extent permitted to be open under local regulations, our office sites are operational with appropriate safety precautions based on 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 or qualified for an approved exemption.

The ongoing COVID-19 pandemic has continued to ebb and flow, with different jurisdictions having higher levels of infections than others and new variants of the virus (such as the Omicron-lineage variants) emerging and spreading more easily and quickly than other variants 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.

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 and booster vaccination campaigns, among others.

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

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Our Product Pipeline

Our broad pipeline, including four approved products and multiple late and early-stage investigational RNAi therapeutics, is focused in four STArs:

Our broad pipeline, including five approved products and multiple late and early-stage investigational RNAi therapeutics, is focused in four STArs:

Genetic Medicines;

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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 April 2022.

The chart below is a summary of our commercial products and late- and early-stage development programs as of July 2022.

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 first quarter of 2022 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 first quarter of 2022 of $137.0 million.

• We achieved GIVLAARI global net product revenues for the first quarter of 2022 of $35.3 million.

• We achieved OXLUMO global net product revenues for the first quarter of 2022 of $14.6 million.

During the second quarter of 2022 and recent period, we reported the following updates from our commercially approved products and our late-stage clinical programs:

TTR Franchise:

ONPATTRO & AMVUTTRA

• We achieved ONPATTRO global net product revenues for the second quarter of 2022 of $153.4 million.

• Received 133 Start Forms in the U.S.

for AMVUTTRA from launch through July 22, 2022.

• We achieved GIVLAARI global net product revenues for the second quarter of 2022 of $45.2 million.

• We achieved OXLUMO global net product revenues for the second quarter of 2022 of $14.9 million.

• Our partner, Novartis, continued the launch of Leqvio in the U.S.

and in other markets, with focus on patient on-boarding, removing access hurdles and driving urgency to treat.

• Leqvio is now approved in more than 55 countries, with most awaiting reimbursement.

and in other markets, with focus on patient on-boarding, removing access hurdles and enhancing medical education.

Late-Stage Clinical Development

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

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

◦ Announced that the FDA extended the review timeline of the NDA for vutrisiran to July 14, 2022, to allow for review of newly added information related to the new secondary packaging and labeling facility.

◦ Received FDA approval of AMVUTTRA for the treatment of the polyneuropathy of hATTR amyloidosis in adults;

◦ Received a positive opinion from the CHMP of the EMA recommending approval of vutrisiran for the treatment of hATTR amyloidosis in adult patients with stage 1 or stage 2 polyneuropathy.

• We continued to advance lumasiran for the treatment of PH1 and in development for the treatment of recurrent kidney stone disease:

◦ Announced FDA acceptance of our supplemental NDA for OXLUMO for the treatment of advanced PH1, with a PDUFA goal date of October 6, 2022;

◦ Submitted a Type II variation for lumasiran to amend the label to further inform on the use of lumasiran in patients with advanced PH1, which is undergoing review by the Committee for Medicinal Products for Human Use with a decision expected by year-end.

◦ Presented new results from the ILLUMINATE-A Phase 3 study in patients with PH1;

◦ Presented new results from the 12-month analysis of the ILLUMINATE-B Phase 3 open-label pediatric study in patients less than six years of age with PH1;

◦ Presented new results from the ILLUMINATE-C Phase 3 study in patients with advanced PH1.

• We continued to advance cemdisiran for the treatment of complement-mediated diseases, in collaboration with our partner, Regeneron:

◦ Reported positive topline results from the Phase 2 study in patients with immunoglobulin A nephropathy, or IgAN;

◦ Announced that we are working with Regeneron to finalize plans for the Phase 3 clinical development of cemdisiran in IgAN, with the potential to initiate a program by late 2022.

• Our partner, Sanofi, presented positive data from the ATLAS Phase 3 study evaluating the efficacy and safety of once-monthly fitusiran (80 mg) in adults and adolescents with severe hemophilia A or B who were previously treated with prior factor or bypassing agent, or BPA, prophylaxis:

◦ The study met the primary endpoint and demonstrated fitusiran prophylaxis significantly reduced bleeding episodes compared to prior factor or BPA prophylaxis.

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, 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.

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

Due to the numerous risks associated with developing drugs, including those risks associated with the ongoing 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.

Any failure to complete any stage of the development of any potential products or any approved product for an expanded indication in a timely manner or successfully launch, market and sell any of our commercially approved products, could have a material adverse effect on our operations, financial position and liquidity.

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Specifically, with respect to our CNS/Ocular Disease pipeline, 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 disease targets expressed in the eye and CNS, in addition to a select number of targets expressed in the liver.

In July 2020, Regeneron exercised its co-development/co-

commercialization option on our first CNS-targeted development candidate, ALN-APP, an investigational RNAi therapeutic in development for the treatment of hereditary cerebral amyloid angiopathy and autosomal dominant Alzheimer’s Disease, which we are leading.

In July 2020, Regeneron exercised its co-development/co-commercialization option on our first CNS-targeted development candidate, ALN-APP, an investigational RNAi therapeutic in development for the treatment of hereditary cerebral amyloid angiopathy and autosomal dominant Alzheimer’s Disease, which we are leading.

We are also advancing multiple other programs with Regeneron.

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With respect to our Genetic Medicine pipeline, we formed a broad strategic alliance with Sanofi in 2014.

In January 2018, we and Sanofi amended our 2014 collaboration and entered into the Exclusive License Agreement, referred to as the Exclusive TTR License, under which we have the exclusive right to pursue the further global development and commercialization of all TTR products, including ONPATTRO, vutrisiran and any back-up products, and the ALN-AT3 Global License Terms, referred to as the AT3 License Terms, under which Sanofi has the exclusive right to pursue the further global development and commercialization of fitusiran and any back-up products.

In January 2018, we and Sanofi amended our 2014 collaboration and entered into the Exclusive License Agreement, referred to as the Exclusive TTR License, under which we have the exclusive right to pursue the further global development and commercialization of all TTR products, including ONPATTRO, AMVUTTRA and any back-up products, and the ALN-AT3 Global License Terms, referred to as the AT3 License Terms, under which Sanofi has the exclusive right to pursue the further global development and commercialization of fitusiran and any back-up products.

In April 2019, we and Sanofi agreed to further amend the 2014 Sanofi collaboration to conclude the research and option phase and to amend and restate the AT3 License Terms to modify certain of the business terms.

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The following data summarizes the results of our operations:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Total revenues $ 224,818 $ 220,553 $ 4,265 2 % $ 438,077 $ 398,119 $ 39,958 10 %

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Total revenues consist of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Net product revenues $ 213,515 $ 160,811 $ 52,704 33 % $ 400,387 $ 296,580 $ 103,807 35 %

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9,025 59,395 (50,370) (85) % 34,970 101,192 (66,222) (65) %

Royalty revenue 442 — 442 N/A

Royalty revenue 2,278 347 1,931 556 % 2,720 347 2,373 684 %

Total $ 224,818 $ 220,553 $ 4,265 2 % $ 438,077 $ 398,119 $ 39,958 10 %

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

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

United States $ 71,085 $ 52,391 $ 18,694 36 % $ 133,392 $ 101,862 $ 31,530 31 %

Europe 56,787 44,904 11,883 26 % 109,968 85,557 24,411 29 %

Rest of World (primarily Japan) 21,521 11,827 9,694 82 %

Rest of World 25,556 16,544 9,012 54 % 47,077 28,371 18,706 66 %

Total $ 153,428 $ 113,839 $ 39,589 35 % $ 290,437 $ 215,790 $ 74,647 35 %

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Europe 7,593 9,830 (2,237) (23) % 15,751 17,567 (1,816) (10) %

Rest of World 1,016 — 1,016 N/A

Rest of World 223 — 223 N/A 1,239 — 1,239 N/A

Total $ 14,937 $ 16,342 $ (1,405) (9) % $ 29,523 $ 25,487 $ 4,036 16 %

Total net product revenues $ 213,515 $ 160,811 $ 52,704 33 % $ 400,387 $ 296,580 $ 103,807 35 %

Net product revenues increased during the three months ended March 31, 2022, compared to the three months ended March 31, 2021, as a result of increased patients on ONPATTRO, GIVLAARI, and OXLUMO therapies, offset by an unfavorable impact from foreign exchange rates on our international revenues.

We expect net product revenues to increase during 2022, as compared to 2021, as we continue to add new patients onto our commercial products as well as launch our approved products into additional markets, assuming regulatory approvals.

Please read Note 3 to our condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (Unaudited),” of this Quarterly Report on Form 10-Q for balances and activity in each product revenue allowance and reserve category for the three months ended March 31, 2022 and 2021.

Net product revenues increased during the three and six months ended June 30, 2022, compared to the same periods in 2021, as a result of increased patients on ONPATTRO, GIVLAARI, and OXLUMO therapies, offset by an unfavorable impact from foreign exchange rates on our international revenues.

We expect net product revenues to increase during 2022, as compared to 2021, as we continue to add new patients onto our commercial products, including AMVUTTRA which was recently approved, as well as launch these products into additional markets, assuming regulatory approvals.

Net Revenues from Collaborations and Royalty Revenue

Net revenues from collaborations consist of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Regeneron Pharmaceuticals $ 14 $ 46,404 $ (46,390) (100) % $ 12,426 $ 76,747 $ (64,321) (84) %

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Total $ 9,025 $ 59,395 $ (50,370) (85) % $ 34,970 $ 101,192 $ (66,222) (65) %

Net revenues from collaborations decreased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to a decrease in revenue recognized in connection with our collaboration agreement with Regeneron, attributed to reduce manufacturing activities.

Net revenues from collaborations decreased during the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily due to a decrease in revenue recognized in connection with our collaboration agreement with Regeneron, attributed to reduced research and manufacturing activities and timing of reimbursable activities.

We earn royalty revenue from global net sales of Leqvio by our partner, Novartis.

In December 2020, Leqvio received marketing authorization from the EC for the treatment of adults with hypercholesterolemia or mixed dyslipidemia, and in December 2021, Leqvio was approved by the FDA for the treatment of adults with HeFH or ASCVD.

During the quarter ended March 31, 2022, we recorded $0.4 million in royalty revenue.

During the quarter ended June 30, 2022, we recorded $2.3 million in royalty revenue.

Recognition of our combined net revenues from collaborations and royalty revenue is dependent on a variety of factors including the level of work reimbursed by partners, achievement of milestones under our collaboration agreements, and royalties associated with sales of Leqvio.

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Operating costs and expenses consist of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Cost of goods sold $ 34,038 $ 30,256 $ 3,782 13 % $ 57,495 $ 53,279 $ 4,216 8 %

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Cost of goods sold .

Cost of goods sold as a percentage of net product revenues decreased to 12.6% for the three months ended March 31, 2022, as compared to 17.0% for the three months ended March 31, 2021, primarily due to decreased royalties paid to third parties and decreased intangible amortization as a result of third party patent expiry.

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.

Cost of goods sold as a percentage of net product revenues decreased to 15.9% and 14.4% for the three and six months ended June 30, 2022, respectively, as compared to 18.8% and 18.0% for the three and six months ended June 30, 2021, respectively, primarily due to fully amortized intangible assets.

We expect cost of goods sold will increase during 2022, as compared to 2021, primarily as a result of an expected increase in net product sales as well as the sale of capitalized inventory.

Cost of collaborations and royalties.

Cost of collaborations and royalties increased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to an increase in GalNAc material supply to Novartis to support its continued, global launch of Leqvio, as well as its ongoing clinical trials.

Cost of collaborations and royalties decreased during the three months ended June 30, 2022 and increased during the six months ended June 30, 2022, as compared to the same periods in 2021.

Fluctuations year over year are primarily due to timing and demand of GalNAc material supply to Novartis to support its continued, global launch of Leqvio, as well as its ongoing clinical trials.

We expect cost of collaborations and royalties to remain relatively consistent during 2022, as compared to 2021, due to consistency in planned GalNAc material to be supplied to Novartis to support the manufacturing of Leqvio.

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Research and development expenses consist of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Clinical research and outside services $ 107,191 $ 94,366 $ 12,825 14 % $ 184,071 $ 181,776 $ 2,295 1 %

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Total $ 205,712 $ 182,635 $ 23,077 13 % $ 375,605 $ 368,534 $ 7,071 2 %

Research and development expenses decreased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to the following:

• Decreased clinical manufacturing activity;

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

During the three months ended March 31, 2022 and 2021, 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 six months ended June 30, 2022, the increases in research and development expenses, as compared to the same periods in the prior year, were primarily due to the following:

• Increased early development and study activities;

• Increased compensation and related expenses as a result of increased headcount to support our development activities.

For the six months ended June 30, 2022, these increases were offset by decreased stock-based compensation expense primarily due to the accounting for certain performance-based awards in the prior period.

During the three and six months ended June 30, 2022 and 2021, 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 March 31,

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

(In thousands) 2022 2021 2022 2021

Regeneron Pharmaceuticals $ 11,687 $ 20,443 $ 23,054 $ 37,571

Vir Biotechnology 298 2,543

Other 457 2,760 815 6,228

Total $ 12,144 $ 23,203 $ 23,869 $ 43,799

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Selling, general and administrative expenses consist of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Compensation and related $ 66,702 $ 54,369 $ 12,333 23 % $ 126,985 $ 110,441 $ 16,544 15 %

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Total $ 169,984 $ 145,323 $ 24,661 17 % $ 324,455 $ 292,182 $ 32,273 11 %

Selling, general and administrative expenses increased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to the following:

• Increased legal expenses, charitable contributions and other expenses to support our strategic growth.

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

We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2022, as compared to 2021, as we continue to advance and develop our platform and pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial and compliance infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO and potentially additional product launches, including vutrisiran.

For the three months ended June 30, 2022, the increase in selling, general and administrative expenses, as compared to the same period in the prior year, was primarily due to increased compensation and related expenses as a result of increased headcount and increased other expenses to support our commercial portfolio.

For the six months ended June 30, 2022, the increase in selling, general and administrative expenses, as compared to the same period in the prior year, was primarily due to the following:

• Increased compensation and related expenses as a result of increased headcount;

• Increased legal expenses, charitable contributions and other expenses to support our commercial portfolio.

• Decreased stock-based compensation expense primarily due to the accounting for certain performance-based awards in the prior period.

We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2022, as compared to 2021, as we continue to advance and develop our platform and pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial and compliance infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO, and the initial launch of AMVUTTRA, as well as launch these products into additional markets, assuming regulatory approvals.

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.

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Other (expense) income consists of the following:

Three Months Ended March 31,

(In thousands, except percentages) 2022 2021 $ Change % Change

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

(In thousands, except percentages) 2022 2021 $ Change % Change 2022 2021 $ Change % Change

Interest expense $ (42,609) $ (33,416) $ (9,193) 28 % $ (84,971) $ (65,931) $ (19,040) 29 %

Interest income 1,012 450 562 125 %

Other (expense) income, net

Interest income 1,899 409 1,490 364 % 2,911 859 2,052 239 %

Realized and unrealized (losses) gains on marketable equity securities (1,097) (4,434) 3,337 (75) % (32,258) 42,582 (74,840) (176) %

2 unchanged sentences

Total $ (82,987) $ (42,171) $ (40,816) 97 % $ (175,611) $ (55,192) $ (120,419) 218 %

Total other expense increased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to realized and unrealized losses on our marketable equity securities holdings.

Total other expense increased during the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily due to increased loss as a result of a mark-to-market adjustment related to the development derivative liability and increased interest expenses due to additional draws on our term loan facility.

For the six months ended June 30, 2022, additional increases, compared to the same period in 2021, were primarily due to realized and unrealized losses on our marketable equity securities holdings.

Liquidity and Capital Resources

The following table summarizes our cash flow activities:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2022 2021

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Operating activities

Net cash used in operating activities decreased during the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to decreased cash disbursements related to working capital payments and stronger cash receipts from increased product sales.

Net cash used in operating activities decreased during the six months ended June 30, 2022, compared to the same periods ended June 30, 2021, primarily due to decreased cash disbursements related to working capital payments and stronger cash receipts from increased product sales.

Investing activities

Net cash used in investing activities increased during the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to increased purchases of marketable debt securities.

Net cash used in investing activities increased during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to net activities related to our marketable debt securities.

Financing activities

Net cash provided by financing activities decreased during the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to a decrease of $19.9 million in net proceeds from the issuance of common stock in connection with stock option exercises and other types of equity.

Net cash provided by financing activities decreased during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due proceeds of $250.0 million in connection with the second drawdown on our credit agreement, received in June 2021 and a decrease of $79.2 million in net proceeds from the issuance of common stock in connection with stock option exercises and other types of equity.

Additional Capital Requirements

We currently have programs focused on a number of therapeutic areas and, as of March 31, 2022, have received regulatory approval and commercially launched three 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, including vutrisiran, or successfully expand the indication for our approved products, including OXLUMO, ONPATTRO (and vutrisiran,

if approved), in the future.

We currently have programs focused on a number of therapeutic areas and, as of June 30, 2022, have received regulatory approval and commercially launched four products:

ONPATTRO, GIVLAARI, OXLUMO and AMVUTTRA.

However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products or successfully expand the indication for our approved products, including ONPATTRO, AMVUTTRA and OXLUMO in the future.

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, commercial and compliance capabilities, including global operations, continued management and growth of our intellectual property including our patent portfolio, collaborations and general corporate activities

Our expected working and other capital requirements are described in our 2021 Annual Report on Form 10-K in “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of March 31, 2022, other than the changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” section in this Quarterly Report on Form 10-Q, there have been no other material changes to our expected working and other capital requirements as described in our 2021 Annual Report on Form 10-K.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of March 31, 2022, together with the cash we expect to generate from product sales and under our current alliances, including milestones and royalties on Leqvio sales, 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, including vutrisiran.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of June 30, 2022, other than the changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” section in this Quarterly Report on Form 10-Q, there have been no other material changes to our expected working and other capital requirements as described in our 2021 Annual Report on Form 10-K.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of June 30, 2022, together with the cash we expect to generate from product sales and under our current alliances, including milestones and royalties on Leqvio sales, 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, OXLUMO and AMVUTTRA, and to develop, conduct clinical trials for, manufacture and, if approved, commercialize additional product candidates.

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