What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-23 compared with 2022-02-10 · 421 added, 385 removed, 902 unchanged (47% of the section changed)

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Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Cash Flows for the Years Ended December 31, 202 2 , 202 1 and 20 20

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We have audited the accompanying consolidated balance sheets of Alnylam Pharmaceuticals, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, of stockholders’ (deficit) equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Management’s estimate of the amount of expected future payments to Blackstone over the life of the arrangement is based on the estimated global net sales of Leqvio.

Th e Company recorded a liability related to the sale of future royalties of $1.19 billion as of December 31, 2021 and recognized interest expense on the liability related to the sale of future royalties of $116.9 million for the year ended December 31, 2021.

The Company recorded a liability related to the sale of future royalties of $1.29 billion as of December 31, 2022 and recognized interest expense on the liability related to the sale of future royalties of $107.6 million for the year ended December 31, 2022.

The principal considerations for our determination that performing procedures relating to the liability related to the sale of future royalties and commercial milestones is a critical audit matter are the significant judgment by management when developing the estimate of the timing and amount of future royalties and commercial milestones to be paid.

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Prepaid expenses and other current assets 132,916 88,078

Receivable related to the sale of future royalties — 500,000

Total current assets 2,692,247 2,808,576

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Total assets $ 3,546,359 $ 3,643,304

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Current liabilities:

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Deferred revenue, net of current portion 193,791 152,360

Convertible debt 1,016,942 —

Long-term debt, net — 675,697

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Commitments and contingencies (Note 14)

Stockholders’ equity:

Stockholders’ (deficit) equity:

Preferred stock, $ 0.01 par value per share, 5,000 shares authorized and no shares issued and outstanding as of December 31, 2022 and December 31, 2021

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Accumulated deficit ( 6,569,349 ) ( 5,438,193 )

Total stockholders’ equity 588,203 1,016,247

Total liabilities and stockholders’ equity $ 3,643,304 $ 3,407,061

Total stockholders’ (deficit) equity ( 158,223 ) 588,203

Total liabilities and stockholders’ (deficit) equity $ 3,546,359 $ 3,643,304

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

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Interest expense ( 155,968 ) ( 143,021 ) ( 84,496 )

Interest income 1,579 11,809 33,448

Other (expense) income, net ( 109,367 ) ( 471 ) 57,334

Total other (expense) income, net ( 143,492 ) ( 27,162 ) 54,178

Loss on the extinguishment of debt ( 76,586 ) — —

Total other expense, net ( 341,921 ) ( 143,492 ) ( 27,162 )

Loss before income taxes ( 1,126,993 ) ( 852,144 ) ( 855,600 )

Benefit (provision) for income taxes ( 680 ) ( 2,681 ) ( 863 )

Provision for income taxes ( 4,163 ) ( 680 ) ( 2,681 )

Net loss $ ( 1,131,156 ) $ ( 852,824 ) $ ( 858,281 )

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Net loss $ ( 1,131,156 ) $ ( 852,824 ) $ ( 858,281 )

Other comprehensive income (loss):

Other comprehensive (loss) income:

Unrealized (loss) gain on marketable securities ( 7,840 ) ( 1,978 ) 211

Foreign currency translation gain (loss) 11,398 ( 7,081 ) ( 343 )

Foreign currency translation (loss) gain ( 5,274 ) 11,398 ( 7,081 )

Defined benefit pension plans, net of tax 1,719 943 ( 234 )

Total other comprehensive income (loss) 10,363 ( 7,104 ) ( 3,305 )

Total other comprehensive (loss) income ( 11,395 ) 10,363 ( 7,104 )

Comprehensive loss $ ( 1,142,551 ) $ ( 842,461 ) $ ( 865,385 )

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ALNYLAM PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands, except share amounts)

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Stockholders’

(Deficit) Equity

Shares Amount

Balance as of December 31, 2018 101,177 $ 1,011 $ 4,175,139 $ ( 33,213 ) $ ( 2,840,972 ) $ 1,301,965

Balance at December 31, 2019 112,188 $ 1,122 $ 5,201,176 $ ( 36,518 ) $ ( 3,727,088 ) $ 1,438,692

Exercise of common stock options, net of tax withholdings 2,926 28 189,343 — — 189,371

1,374 15 63,484 — — 63,499

Issuance of common stock under equity plans 350 4 11,079 — — 11,083

Issuance of common stock under benefit plans 61 1 5,032 — — 5,033

Issuance of common stock, net of offering costs 9,444 94 772,383 — — 772,477

Issuance of common stock to strategic partners, net of closing costs 963 10 99,488 — — 99,498

Stock-based compensation expense — — 142,988 — — 142,988

Other comprehensive loss, net of tax — — — ( 3,305 ) — ( 3,305 )

Other comprehensive loss — — — ( 7,104 ) — ( 7,104 )

Net loss — — — — ( 858,281 ) ( 858,281 )

Balance as of December 31, 2019 112,188 1,122 5,201,176 ( 36,518 ) ( 3,727,088 ) 1,438,692

Balance at December 31, 2020 116,427 1,164 5,644,074 ( 43,622 ) ( 4,585,369 ) 1,016,247

Exercise of common stock options, net of tax withholdings 2,978 30 232,456 — — 232,486

Issuance of common stock under equity plans 777 8 13,623 — — 13,631

Issuance of common stock to strategic partners, net of closing costs 963 10 99,488 — — 99,498

Stock-based compensation expense — — 168,300 — — 168,300

Other comprehensive loss — — — ( 7,104 ) — ( 7,104 )

Other comprehensive gain — — — 10,363 — 10,363

Net loss — — — — ( 852,824 ) ( 852,824 )

Balance as of December 31, 2020 116,427 1,164 5,644,074 ( 43,622 ) ( 4,585,369 ) 1,016,247

Balance at December 31, 2021 120,182 1,202 6,058,453 ( 33,259 ) ( 5,438,193 ) 588,203

Exercise of common stock options, net of tax withholdings 3,103 32 263,580 — — 263,612

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Stock-based compensation expense — — 237,399 — — 237,399

— — 168,300 — — 168,300

Other comprehensive gain — — — 10,363 — 10,363

Purchase of capped calls related to convertible debt — — ( 118,611 ) — — ( 118,611 )

Other comprehensive loss — — — ( 11,395 ) — ( 11,395 )

Net loss — — — — ( 1,131,156 ) ( 1,131,156 )

Balance as of December 31, 2021 120,182 $ 1,202 $ 6,058,453 $ ( 33,259 ) $ ( 5,438,193 ) $ 588,203

Balance at December 31, 2022 123,925 $ 1,240 $ 6,454,540 $ ( 44,654 ) $ ( 6,569,349 ) $ ( 158,223 )

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

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Stock-based compensation 230,649 165,717 139,873

Realized and unrealized gain on marketable equity securities ( 55,695 ) ( 54,042 ) ( 11,288 )

Realized and unrealized loss (gain) on marketable equity securities 33,312 ( 55,695 ) ( 54,042 )

Loss on extinguishment of debt 76,586 — —

Change in fair value of development derivative liability 94,659 38,433 17,185

Other 479 19,243 ( 5,926 )

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Accounts payable, accrued expenses and other liabilities 191,769 88,240 143,732

Deferred revenue ( 50,404 ) ( 43,965 ) 392,251

Operating lease liability ( 43,171 ) ( 40,352 ) ( 33,823 )

Deferred revenue ( 65,911 ) ( 50,404 ) ( 43,965 )

Net cash used in operating activities ( 541,274 ) ( 641,693 ) ( 614,961 )

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Other investing activities ( 4,694 ) ( 4,198 ) ( 5,300 )

Net cash used in investing activities ( 273,300 ) ( 435,518 ) ( 417,677 )

Net cash provided by (used in) investing activities 169,354 ( 273,300 ) ( 435,518 )

Cash flows from financing activities:

Proceeds from exercise of stock options and other types of equity, net 259,360 246,268 200,484

Proceeds from convertible debt, net 1,016,111 — —

Repayment of term loan ( 762,107 ) — —

Purchases of capped calls related to convertible debt ( 118,611 ) — —

Proceeds from the sale of future royalties — 500,000 500,000

Proceeds from development derivative 31,000 19,600 8,400

Offering proceeds, net of costs — — 381,900

Proceeds from term loan facility — 500,000 200,000

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We have devoted substantially all of our efforts to business planning, research, development, manufacturing and early commercial efforts, acquiring, filing and expanding intellectual property rights, recruiting management and technical staff, and raising capital.

In early 2021, we launched our Alnylam P 5 x25 strategy, which focuses on our planned transition to a top five biotech company by the end of 2025.

In early 2021, we launched our Alnylam P 5 x25 strategy, which focuses on our planned transition to a top-tier biotech company by the end of 2025.

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.

As of December 31, 2021, we have four products that have received marketing approval, including one partnered product, and five late-stage investigational programs advancing towards potential commercialization.

We currently generate worldwide product revenues from three commercialized products, ONPATTRO, GIVLAARI and OXLUMO, primarily in the United States, or U.S., Europe and Japan.

As of December 31, 2022, we have five products that have received marketing approval, 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Actual results could differ from those estimates.

The full extent to which the ongoing COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, the supply of our products and product candidates, clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and variants thereof, and the actions taken to contain or treat it or vaccinate against it, as well as the economic impact on local, regional, national and international customers and markets.

We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

Actual results may differ from these estimates.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2021, 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 Alnylam P 5 x25 strategy for at least the next 12 months from the filing of this Annual Report on Form 10-K.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2022, 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 P 5 x25 strategy for at least the next 12 months from the filing of this Annual Report on Form 10-K.

Concentrations of Credit Risk and Significant Customers

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treasury securities through highly rated financial institutions.

Corporate notes may also

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

include foreign bonds denominated in U.S.

Corporate notes may also include foreign bonds denominated in U.S.

Investments are restricted, in accordance with our investment policy, to a concentration limit per issuer.

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For the years ended December 31, 2022, 2021 and 2020, our gross accounts receivable balance was comprised of payments primarily due from distributors for product sales and our strategic partners.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes customers that represent 10% or greater of our consolidated total gross revenues:

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As of December 31,

Novartis AG 20 % 16 %

Distributor A 32 % 14 %

Regeneron Pharmaceuticals 12 % 11 %

Distributor B 10 % 10 %

Novartis AG * 20 %

Regeneron Pharmaceuticals * 12 %

__________________________________________

* Represents less than 10%

Fair Value Measurements

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At each balance sheet date presented, we classified 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 report available-for-sale debt securities at fair value at each balance sheet date and include any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive (loss) income, a component of stockholders’ equity.

Realized gains and losses are determined using the specific identification method and are included in other income (expense).

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We perform validation procedures to ensure the reasonableness of this data.

This includes meeting with the independent pricing services to understand the methods and data sources used.

This includes discussing with the independent pricing services to understand the methods and data sources used.

For our marketable debt securities, we perform our own review of prices received from the independent pricing services by comparing these prices to other sources and for our marketable equity securities, we confirm those securities are trading in active markets.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable

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As of December 31, 2022 and 2021, based on our estimation of expected write-offs, we determined an allowance for doubtful accounts was not material.

We have standard payment terms that generally require payment within approximately 30 to 90 days.

We have standard payment terms that generally require

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

payment within approximately 30 to 90 days.

Accounts receivable, net on our consolidated balance sheets also includes billed and unbilled collaboration receivables.

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As most of our leases do not provide an implicit rate, in determining the operating lease liabilities, we use an estimate of our incremental borrowing rate based on the information available at commencement.

Lease expense for lease

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Short-term leases, or leases that have a lease term of 12

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

payments is recognized on a straight-line basis over the lease term.

Short-term leases, or leases that have a lease term of 12 months or less at commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

months or less at commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

Clinical Accruals

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We are also subject to potential rebates in connection with our value-based agreements with certain commercial payors.

We record reserves for rebates in the same period the related product revenue is recognized, resulting in a

We record reserves for rebates in the same period the related product revenue is recognized, resulting in a reduction of product revenues and a current liability that is included in accrued expenses on our consolidated balance sheet.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reduction of product revenues and a current liability that is included in accrued expenses on our consolidated balance sheet.

Our estimate for rebates is based on statutory discount rates, expected utilization or an estimated number of patients on treatment, as applicable.

estimate for rebates is based on statutory discount rates, expected utilization or an estimated number of patients on treatment, as applicable.

Trade discounts and allowances :

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Cost of Goods Sold

Cost of goods sold includes the cost of producing and distributing inventories that are related to product revenues during the respective period (including salary-related and stock-based compensation expenses for employees involved with production and distribution, freight and indirect overhead costs), third-party royalties payable on our net product revenues, amortization of intangible assets associated with the sale of our products and costs related to sales of product supply under our collaboration

Cost of goods sold may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cost of goods sold may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances.

Cost of Collaborations and Royalties

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Any change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.

We have recorded no interest and penalty expense related to uncertain tax positions for the years ended December 31, 2021, 2020 or 2019.

Research and Development Expenses

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Interest on the liability related to the sale of future royalties will be recognized using the effective interest rate method over the life of the related royalty stream.

The liability related to the sale of future royalties and the related interest expense are based on our current estimates of future royalties and commercial milestones expected to be paid over the life of the arrangement, which we determine by using third-party forecasts of Leqvio’s global net revenue.

We will periodically assess the expected payments and to the extent the amount or timing of our future estimated payments is materially different than our previous estimates, we will account for any

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We will periodically assess the expected payments and to the extent the amount or timing of our future estimated payments is materially different than our previous estimates, we will account for any such change by adjusting the liability related to the sale of future royalties and prospectively recognizing the related non-cash interest expense.

such change by adjusting the liability related to the sale of future royalties and prospectively recognizing the related non-cash interest expense.

Development Derivative Liability

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Comprehensive Loss

Comprehensive loss is comprised of net loss and certain changes in stockholders’ equity that are excluded from net loss.

We include foreign currency translation adjustments in other comprehensive loss if the functional currency is not the U.S.

Comprehensive loss is comprised of net loss and certain changes in stockholders’ (deficit) equity that are excluded from net loss.

We include unrealized gains and losses on certain marketable securities in other comprehensive loss, including changes in the value of our marketable debt securities.

We include foreign currency translation adjustments in other comprehensive loss if the functional currency is not the U.S.

We include certain changes in the fair value of the plan assets and projected benefit obligation attributed to our defined benefit pension plan in other comprehensive loss.

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We compute basic net loss per common share by dividing net loss by the weighted-average number of common shares outstanding.

We compute diluted net loss per common share by dividing net loss by the weighted-average number of common shares and dilutive potential common share equivalents then outstanding.

We compute diluted net loss per common share by dividing net loss by the weighted-average number of common shares and dilutive potential common share equivalents then outstanding during the period.

In the diluted net loss per share calculation, net loss would be adjusted for the elimination of interest expense on the Convertible debt.

Potential common shares consist of shares issuable upon the exercise of stock options (the proceeds of which are then assumed to have been used to repurchase outstanding shares using the treasury stock method) or upon conversion of the convertible debt outstanding during the period (calculated using the if-converted method assuming the conversion of the convertible debt as of the earliest period reported or at the date of issuance, if later).

Because the inclusion of potential common shares would be anti-dilutive for all periods presented, diluted net loss per common share is the same as basic net loss per common share.

The following table sets forth the potential common shares (prior to consideration of the treasury stock method) excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:

The following table sets forth the potential common shares (prior to consideration of the treasury stock or if-converted methods) excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:

As of December 31,

(In thousands) 2022 2021 2020

Options to purchase common stock 10,015 11,692 13,069

Unvested restricted common stock 1,210 1,160 749

Options to purchase common stock, inclusive of performance-based stock options 8,424 10,015 11,692

Unvested restricted common stock, inclusive of performance-based restricted common stock 1,487 1,210 1,160

Convertible debt 3,616 — —

Total 13,527 11,225 12,852

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Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board, or FASB, issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Taxes, amending accounting guidance that simplify the accounting for income taxes, as part of its initiative to reduce complexity in the accounting standards.

The amendments eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The amendments also clarify and simplify other aspects of the accounting for income taxes.

We early adopted the amendments as of January 1, 2020, on a prospective basis.

The amendments did not have a significant impact on our consolidated financial statements and related disclosures.

In August 2020, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Specifically, ASU 2020-06 simplifies accounting for the issuance of convertible instruments by removing certain separation models required under existing guidance.

In addition, the standard removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, or EPS.

ASU 2020-06 is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted.

We adopted the new standard on January 1, 2022 and there was no impact on the date of adoption.

During the third quarter of 2022, we issued convertible notes as described in Note 10, Convertible Debt.

ALNYLAM PHARMACEUTICALS, INC.

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Europe 224,063 190,435 107,755

Rest of World (primarily Japan) 71,092 46,752 6,105

Rest of World 86,797 71,092 46,752

Total 557,608 474,737 306,081

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Total 173,144 127,815 55,106

United States 27,698 18,876 —

Europe 37,915 38,949 333

Rest of World 4,169 1,761 —

Total 69,782 59,586 333

Total net product revenues $ 894,329 $ 662,138 $ 361,520

As of December 31, 2022 and 2021, net product revenue-related receivables of $ 203.8 million and $ 124.9 million , respectively, were included in “Accounts receivable, net.”

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes balances and activity in each product revenue allowance and reserve category:

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Total $ 191,772 $ 2,450 $ 14,776 $ 208,998

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021

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Credit or payments made during the period for current year sales ( 75,073 ) ( 7,665 ) ( 5,190 ) ( 87,928 )

Credit or payments made

during the period for prior period sales ( 2,995 ) ( 33 ) ( 1,213 ) ( 4,241 )

Credit or payments made during the period for prior period sales ( 62,641 ) ( 516 ) ( 684 ) ( 63,841 )

Total $ 120,682 $ 522 $ 10,112 $ 131,316

During the year ended December 31, 2021 , we paid $ 56.4 million attributed to the finalization of pricing and reimbursement for the sale of ONPATTRO in France.

During the years ended December 31, 2022 and 2021 , we paid $ 44.3 million and $ 56.4 million, respectively, attributed to the pricing and reimbursement for the sale of our commercial products in France.

NET REVENUES FROM COLLABORATIONS

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In order 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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:

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Regeneron $ 12,926 $ 2,141 $ 27,935 $ 24,989 $ 840 $ 47,582 $ 13,302 $ 171 $ 44,360

Vir 9,546 723 3,080 18,470 584 11,590 10,353 381 4,745

Other 156 679 337 10,311 775 4,489 20,113 765 14,422

Total $ 13,082 $ 2,820 $ 28,272 $ 35,300 $ 1,615 $ 52,071 $ 33,415 $ 936 $ 58,782

The research and development expenses incurred for each agreement listed 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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reasonable estimate of compensation and related costs as billed to our counterparties, for which we recognize net revenues from collaborations.

For the years ended December 31, 2022, 2021 and 2020, we did not incur material selling, general and administrative expenses related to our collaboration agreements.

In addition, we recognized a reduction to our research and development expenses of $ 17.1 million, $ 11.1 million, and $ 1.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, from cost reimbursement due under certain of our collaboration agreements accounted for under ASC 808.

In addition, we recognized a reduction to our research and development expenses of $ 16.9 million, $ 17.1 million, and $ 11.1 million for the years ended December 31, 2022, 2021 and 2020, 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

Regeneron Pharmaceuticals, Inc.

In April 2019, we entered into a global, strategic collaboration with Regeneron Pharmaceuticals, Inc., or 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.

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.

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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 five-year research period, which we refer to as the Initial Research Term.

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 up to $ 400.0 million.

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The Regeneron Collaboration is governed by a joint steering committee that is comprised of an equal number of representatives from each party.

Regeneron will lead 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 will alternate 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 will 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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

Under the C5 co-co collaboration agreement, we and Regeneron equally share costs and potential future profits on any monotherapy program.

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 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.

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We are also eligible to receive up to an additional $ 200.0 million in milestone payments upon achievement of certain criteria during early clinical development for eye and CNS programs.

We and Regeneron plan to advance programs directed to up to 30 targets 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.

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

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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, the cemdisiran monotherapy co-co collaboration agreement is under the scope of ASC 808 as we and Regeneron are both active participants in the development and manufacturing activities and are exposed to significant risks and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

rewards that are dependent on commercial success of the activities of the arrangement.

The development and manufacturing activities are a combined unit of account under the scope of ASC 808 and are not deliverables under ASC 606.

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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 future milestones upon the achievement of certain criteria during early clinical development for the eye and CNS programs.

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C5 Co-Co Obligation 20,080 18,900 11,700 ASC 606

$ 101,100 $ 63,600 $ 23,900

As of December 31, 2021, the aggregate amount of the transaction price allocated to the remaining Research Services Obligation and C5 License Obligation that was unsatisfied was $ 137.3 million, which is expected to be recognized through the term of the Regeneron Collaboration as the services are performed.

This amount excludes the transaction price allocated to the C5 Co-Co Obligation accounted for under ASC 808.

Total $ 81,180 $ 101,100 $ 63,600

As of December 31, 2022, the aggregate amount of the transaction price allocated to the remaining Research Services Obligation, C5 License Obligation and C5 Co-Co Obligation that was unsatisfied was $ 289.1 million, which is expected to be recognized through the term of the Regeneron Collaboration as the services are performed.

Deferred revenue related to the Regeneron Collaboration is classified as either current or non-current in the consolidated balance sheets based on the period the revenue is expected to be recognized.

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In addition, we are entitled to royalties ranging from 10 % up to 20 % based on annual worldwide net sales of licensed products by Novartis, its affiliates and sublicensees, subject to reduction under specified circumstances.

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 payments under the MDCO License Agreement.

Unless terminated earlier in accordance with the terms of the agreement, the MDCO License Agreement expires on a licensed product-by-licensed product and country-by-country basis upon expiration of the last royalty term for any licensed product in any country, where a royalty term is defined as the latest to occur of (1) the expiration of the last valid claim of patent rights covering a licensed product, (2) the expiration of the Regulatory Exclusivity, as defined in the MDCO License Agreement, and (3) the twelfth anniversary of the first commercial sale of the licensed product in such country.

We estimate that our core technology patents covering licensed products under the MDCO License Agreement will expire in most countries by 2029.

We also estimate that our inclisiran product-specific patents covering licensed products under the MDCO License Agreement will expire in the U.S., Europe, China, Japan and elsewhere between 2027 and 2036.

Certain of these patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available due to regulatory delay.

We also estimate that our Leqvio (inclisiran) product-specific patents covering licensed products under the MDCO License Agreement will expire in the U.S.

and Europe between 2027 and 2036, inclusive of any patent term extensions and/or any supplementary protection certificates extending such terms due to regulatory delay in those countries where such extensions are available.

In addition, more patent filings relating to the collaboration may be made in the future.

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None of the unearned milestones are included in the transaction price, as all unearned milestone amounts are not considered likely of achievement and therefore constrained.

We considered several factors, including that achievement of the milestones is outside our control and contingent upon success in clinical trials and regulatory decisions and the licensee’s efforts.

We considered several factors, including that achievement of the milestones is outside our control and contingent upon success in regulatory decisions.

Any consideration related to sales-based royalties (including milestones) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to MDCO and as a result have also been excluded from the transaction price.

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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.

Pursuant to the Novartis License Agreement, we will receive an upfront fee of $ 12.5 million.

Pursuant to the Novartis License Agreement, we received an upfront fee of $ 12.5 million.

We may also receive milestone payments upon the achievement of certain development, regulatory and commercial milestones, as well as royalties on the net sales of licensed products ranging from high-single-digit to sub-teen double-digit percentages.

Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any milestone or royalty payments under the Novartis License Agreement.

Under the Novartis License Agreement, we will develop and test potential siRNAs using target-specific assays developed by Novartis pursuant to an agreed upon research plan for a specified period referred to as the Collaboration Term.

Under the Novartis License Agreement, we are developing and testing potential siRNAs using target-specific assays developed by Novartis pursuant to an agreed upon research plan for a specified period referred to as the Collaboration Term.

Novartis will reimburse us for the cost of our activities under the research plan, referred to as the DC Workplan, subject to an agreed upon cap.

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In addition, Novartis has the right to terminate the agreement without cause at any time upon three months ’ prior written notice.

During the term of the Novartis License Agreement, neither party will, alone or with an affiliate or third party, research, develop or commercialize, or grant a license to any third party to research, develop or commercialize, in any country, any product directed to a liver target identified by Novartis, other than a licensed product, without the prior written agreement of the other party, subject to the terms of the Novartis License Agreement.

During the term of the Novartis License Agreement, neither party will, alone or with an affiliate or third party, research, develop or commercialize, or grant a license to any third party to research, develop or commercialize, in any country, any siRNA product directed to a liver target identified by Novartis, other than a licensed product, without the prior written agreement of the other party, subject to the terms of the Novartis License Agreement.

We identified one performance obligation under the Novartis License Agreement comprised of:

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We determined any variable consideration related to sales-based royalties and milestones related to the exclusive license to be constrained and therefore excluded such consideration from the transaction price.

As of December 31, 2021, no revenue was recognized under the Novartis License Agreement and the aggregate amount of the transaction price allocated to the performance obligation that was unsatisfied was $ 17.0 million, which is expected to be recognized through the term of the DC Workplan as the services are performed.

As of December 31, 2022, the aggregate amount of the transaction price allocated to the performance obligation that was unsatisfied was $ 11.0 million, which is expected to be recognized through the term of the DC Workplan as the services are performed.

Vir Biotechnology, Inc.

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Pursuant to the Vir Agreement, we granted to Vir an exclusive license to develop, manufacture and commercialize ALN-HBV02 (VIR-2218), for all uses and purposes other than certain excluded fields, as set forth in the Vir Agreement.

In addition, we granted Vir an exclusive option for up to 4 additional RNAi therapeutic programs for the treatment of infectious diseases.

In addition, we granted Vir an exclusive option for up to four additional RNAi therapeutic programs for the treatment of infectious diseases.

Under the terms of the Vir Agreement, for each product arising from the HBV program, including ALN-HBV02, we retained the right to opt into a profit-sharing arrangement prior to the start of a Phase 3 clinical trial.

In addition, we have the right on a product-by-product basis with respect to each additional infectious disease program that Vir elects to pursue, to opt into a profit-sharing arrangement for each such product at any time during a specified period prior to the initiation of a Phase 3 clinical trial for each such product.

Pursuant to the Vir Agreement, Vir paid us an upfront fee of $ 10.0 million and issued to us 1,111,111 shares of its common stock.

Under the Vir Agreement, we may also receive milestone payments upon the achievement of certain development, regulatory and commercial milestones, as well as royalties on the net sales of licensed products ranging from high-single-digit to sub-teen double-digit percentages.

In March 2020, we achieved a development milestone relating to ALN-HBV02 and earned a $ 15.0 million cash milestone and 1,111,111 shares of Vir's common stock, which were received in the second quarter of 2020.

In June 2020, we earned and received a $ 10.0 million payment from Vir related to Vir's sublicense for ALN-HBV02 in China.

Under the Vir Agreement, we have earned and received certain upfront and development milestone payments in the form of cash ad Vir common stock, as well as sublicense revenue.

We may receive additional milestone payments upon the achievement of certain development, regulatory and commercial milestones, as well as royalties on the net sales of licensed products ranging from high-single-digit to sub-teen double-digit percentages.

In March and April 2020, we entered into amendments to the Vir Agreement to expand our collaboration to include the development and commercialization of RNAi therapeutics targeting SARS-CoV-2, the virus that causes the disease COVID-19, along with three additional targets focused on human host factors for SARS-CoV-2, including angiotensin converting enzyme-2 and transmembrane protease, serine 2 and potentially a third mutually selected host factor target.

Under the Vir amendments, we and Vir were each responsible for our own pre-clinical development costs incurred in performing our allocated responsibilities under an agreed-upon initial pre-clinical development plan.

Under the original agreements, we and Vir agreed to equally share certain costs incurred in connection with the manufacture of non-GMP drug product required for pre-clinical development prior to filing an IND for the first product in the coronavirus program.

We also agreed that Vir would lead all development and commercialization of any selected development candidates.

In December 2020, we signed a letter agreement to amend the Vir Agreement such that we would be solely responsible for conducting pre-clinical research activities under the pre-clinical development plan, related to the COVID-19 activities in the March and April 2020 amendments, at our discretion and sole expense and effective as of July 1, 2020, were responsible for all pre-clinical development costs incurred under such plan for such COVID-19 related activities.

In July 2021, we notified Vir that we elected to discontinue ALN-COV, in development for the treatment of COVID-19, and all other COVID-19 research and development activities, based on a portfolio prioritization decision in view of the availability of highly effective vaccines and alternative treatment options, in accordance with our rights under the letter agreement with Vir.

Following such discontinuation of COVID-19 related activities, we have no further obligations to work on the COVID-related targets and Vir will have no further rights to such targets under the Vir Agreement.

Unless terminated earlier in accordance with the terms of the agreement, the Vir Agreement expires on a licensed product-by-product and country-by-country basis upon expiration of all royalty payment obligations under the agreement.

1 unchanged sentence

However, if we exercise our profit-sharing option for any product, the term of the agreement will continue until the expiration of the profit-sharing arrangement for such product.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Either party may terminate the agreement in the event the other party fails to cure a material breach, or upon patent-related challenges by the other party.

2 unchanged sentences

i) the exclusive license to develop, manufacture and commercialize RNAi therapeutics (including ALN-HBV02);

ii) the obligation to deliver four additional development candidates and supply product for each such RNAi therapeutic program;

and iii) the obligation to deliver up to four development candidates and supply product for RNAi therapeutic programs targeting SARS-CoV-2 (through July 2021).

and ii) the obligation to deliver four additional development candidates and supply product for each such RNAi therapeutic program.

The license is not distinct from the services, including the obligation to deliver development candidates and supply product, as Vir cannot benefit on its own from the value of the license without receipt of such services and supply.

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ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, the aggregate amount of the transaction price allocated to the performance obligation that was unsatisfied was $ 36.3 million, which is expected to be recognized through the term of the Vir Agreement as the services are performed.

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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 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.

(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 $ 500.0 million in April 2020 and $ 500.0 million in September 2021.

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.

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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.

At execution and as of December 31, 2021, our estimate of this total interest expense resulted in an effective annual interest rate of 11 %.

This estimate contains assumptions that impact both the amount recorded at execution and the interest expense that will be recognized in future periods.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, 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.

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The carrying value of the liability related to the sale of future royalties approximates fair value as of December 31, 2022 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.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows the activity with respect to the liability related to the sale of future royalties, in thousands:

Carrying value as of January 1, 2020 $ —

Sale of future royalties 1,000,000

Carrying value as of December 31, 2020

Interest expense recognized 116,940

Capitalized closing costs ( 12,955 )

Payments ( 378 )

Carrying value as of December 31, 2021

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Carrying value as of December 31, 2022

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 December 31,

2022 Quoted Prices in Active Markets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

Financial assets

Cash equivalents:

Money market funds $ 270,394 $ 270,394 $ — $ —

treasury securities 44,817 — 44,817 —

government-sponsored enterprise securities 41,763 — 41,763 —

Commercial paper 22,350 — 22,350 —

Certificates of deposit 3,289 — 3,289 —

Corporate notes 1,024 — 1,024 —

Marketable debt securities:

treasury securities 820,913 — 820,913 —

government-sponsored enterprise securities 230,770 — 230,770 —

Corporate notes 208,284 — 208,284 —

Commercial paper 36,793 — 36,793 —

Certificates of deposit 1,130 — 1,130 —

Marketable equity securities 28,122 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

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) As of December 31,

2021 Quoted Prices in Active Markets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

Financial assets

Cash equivalents:

Money market funds $ 255,869 $ 255,869 $ — $ —

treasury securities 54,998 — 54,998 —

Marketable debt securities:

treasury securities 1,030,578 — 1,030,578 —

Corporate notes 253,239 — 253,239 —

government-sponsored enterprise securities 177,741 — 177,741 —

Commercial paper 78,543 — 78,543 —

Certificates of deposit 7,501 — 7,501 —

Municipal securities 1,015 — 1,015 —

Marketable equity securities 66,972 66,972 — —

Restricted cash (money market funds) 1,195 1,195 — —

Total financial assets $ 1,927,651 $ 324,036 $ 1,603,615 $ —

Financial liabilities

Development derivative liability $ 83,618 $ — $ — $ 83,618

For the years ended December 31, 2022 and 2021, there were no transfers between Level 1 and Level 2 financial assets.

The carrying amounts reflected in our 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.

MARKETABLE DEBT SECURITIES

The following tables summarize our marketable debt securities:

As of December 31, 2022

(In thousands) Amortized

Losses Fair Value

treasury securities $ 870,033 $ 79 $ ( 4,382 ) $ 865,730

government-sponsored enterprise securities 275,610 24 ( 3,101 ) 272,533

Corporate notes 211,398 16 ( 2,106 ) 209,308

Commercial paper 59,143 — — 59,143

Certificates of deposit 4,419 — — 4,419

Total $ 1,420,603 $ 119 $ ( 9,589 ) $ 1,411,133

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021

(In thousands) Amortized

Losses Fair Value

treasury securities $ 1,086,232 $ 6 $ ( 662 ) $ 1,085,576

Corporate notes 253,926 1 ( 688 ) 253,239

government-sponsored enterprise securities 178,027 2 ( 288 ) 177,741

Commercial paper 78,543 — — 78,543

Certificates of deposit 7,501 — — 7,501

Municipal securities 1,016 — ( 1 ) 1,015

Total $ 1,605,245 $ 9 $ ( 1,639 ) $ 1,603,615

The fair values of our marketable debt securities by classification in the consolidated balance sheets were as follows:

(In thousands) December 31, 2022 December 31, 2021

Cash and cash equivalents $ 113,243 $ 54,998

Marketable debt securities 1,297,890 1,548,617

Total $ 1,411,133 $ 1,603,615

OTHER BALANCE SHEET DETAILS

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As of December 31, 2022 and 2021, we had $ 32.7 million and $ 36.3 million of long-term inventory, respectively, included within other assets in our consolidated balance sheet as we anticipate it being consumed beyond our normal operating cycle.

As of December 31, 2021, we had $ 7.1 million of capitalized inventory produced for commercial sale for products awaiting regulatory approval.

As of December 31, 2020, there was no capitalized inventory for products awaiting regulatory approval.

As of December 31, 2022 and 2021, we had $ 0.0 million and $ 7.1 million, respectively, of capitalized inventory produced for commercial sale for products awaiting regulatory approval.

ALNYLAM PHARMACEUTICALS, INC.

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Consulting and professional services 19,848 17,784

Contingent liabilities — 41,216

Other 59,542 46,151

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Amounts reclassified from other comprehensive income — 44 ( 1,978 ) — ( 1,934 )

Net other comprehensive (loss) income — ( 234 ) 211 ( 7,081 ) ( 7,104 )

Net other comprehensive income (loss) — 943 ( 1,978 ) 11,398 10,363

Balance as of December 31, 2021

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, and the other lenders from time to time parties thereto, collectively, the Lenders, and Wilmington Trust, National Association, as the administrative agent for the Lenders.

The Credit Agreement provides for a senior secured delayed draw term loan facility, referred to as the Term Loans, which consists of three tranches providing funding of $ 700.0 million.

The Tranche 1 Loan of $ 200.0 million, the Tranche 2 loan of $ 250.0 million and the Tranche 3 Loan of $ 250.0 million were drawn as of December 31, 2020, June 30, 2021, and December 31, 2021 respectively, and are included in long-term debt in the consolidated balance sheets.

In addition to the $ 700.0 million previously drawn under the Credit Agreement, we may also request an increase in an amount not to exceed $ 50.0 million on terms to be agreed and subject to the consent of the Lenders providing such increase.

The Term Loans mature in December 2027.

We may, at our option, pay interest in kind on interest due through 2023 at a rate that is 1 % higher than the interest rate otherwise applicable to such Term Loan .

As of December 31, 2021, we had elected a LIBOR Rate plus 7 %, and paid $ 17.5 million in total funding fees in connection with such Term Loans.

Our interest rate was 8 % as of December 31, 2021 and 2020.

We are obligated to pay interest due on the Term Loans from 2021 through 2022 which will be calculated without regard to the Term Loans being prepaid.

Any prepayments of Term Loans that occur between 2023 and 2025 are subject to a fee of up to 5 % of the loan principal that is prepaid.

All obligations under the Credit Agreement are secured, subject to certain exceptions, by security interests in the following assets:

(i) intellectual property owned by us relating to ONPATTRO, GIVLAARI and vutrisiran, (ii) the equity interests held by the Loan Parties in their subsidiaries, (iii) all of our ownership of the inclisiran royalty remaining after the royalty purchase under the Purchase Agreement, and (iv) material real property, and certain personal property, including, without limitation, cash held in certain deposit accounts of the Loan Parties and equipment.

The Credit Agreement contains negative covenants that, among other things and subject to certain exceptions, could restrict our ability to, incur additional liens, incur additional indebtedness, make investments, including acquisitions, engage in fundamental changes, sell or dispose of assets that constitute collateral, including certain intellectual property, pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests, amend, modify or waive certain material agreements or organizational documents and make payments of certain subordinated indebtedness.

Additionally, the Credit Agreement contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default, including nonpayment of principal, interest and other amounts;

failure to comply with covenants;

the rendering of judgments or orders or default by us in respect of other material indebtedness;

and certain insolvency and ERISA events.

The Credit Agreement also requires us to have consolidated liquidity of at least $ 100.0 million as of the last day of each fiscal

The Credit Agreement provided for a senior secured delayed draw term loan facility, referred to as the Term Loans, which consisted of three tranches providing funding of $ 700.0 million.

In September 2022, we extinguished the Term Loans and paid all outstanding balances, including principal of $ 700.0 million and prepayment premiums of $ 62.1 million and terminated the Credit Agreement.

Upon termination, we recorded a $ 76.6 million loss on the extinguishment of the debt.

The Term Loans were set to mature in December 2027.

During the period the Term Loans were outstanding, we had elected a LIBOR Rate plus 7 %, and paid $ 17.5 million in total funding fees in connection with such Term Loans.

Our interest rate was 9 % and 8 % as of June 30, 2022 and December 31, 2021, respectively.

CONVERTIBLE DEBT

Convertible Senior Notes Due 2027

On September 12, 2022, we commenced a private offering of $ 900.0 million in aggregate principal amount of 1 % Convertible Senior Notes due 2027, or the Initial Notes.

On September 13, 2022, the initial purchasers in such offering exercised their option to purchase an additional $ 135.0 million in aggregate principal amount of our 1 % Convertible Senior Notes due 2027, or the Additional Notes, and together with the Initial Notes collectively referred to as the Notes, bringing the total aggregate principal amount of the Notes to $ 1.04 billion.

The Notes were issued pursuant to an indenture, dated September 15, 2022, or the Indenture.

The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Notes become automatically due and payable.

The Notes will mature on September 15, 2027, unless earlier converted, redeemed or repurchased.

The Notes will bear interest from September 15, 2022 at a rate of 1 % per year payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2023.

The Notes are convertible at the option of the noteholder on or after June 15, 2027.

Prior to June 15, 2027, the Notes are convertible only under the following circumstances:

(1) During any calendar quarter commencing after the calendar quarter ending on December 31, 2022 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) During the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that ten consecutive trading day period was less than 98 % of the product of the last reported sale price of our common stock and

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021 and 2020, we were in compliance with the applicable terms and conditions of the covenants under the Credit Agreement.

the conversion rate of the Notes on such trading day;

(3) If we call any or all of the Notes for redemption;

or (4) Upon the occurrence of specific corporate events as set forth in the Indenture governing the Notes.

We will settle any conversions of Notes by paying or delivering, as applicable, cash, shares of our common stock, or a combination of cash and shares of common stock, at our election.

The conversion rate for the Notes will initially be 3.4941 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 286.20 per share of common stock.

The initial conversion price of the Notes represents a premium of approximately 35 % over the $ 212.00 per share last reported sale price of common stock on September 12, 2022.

The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

We may not redeem the Notes prior to September 20, 2025.

We may redeem for cash equal to 100 % of the principal amount of the Notes being redeemed plus accrued and unpaid interest all or any portion of the Notes, at our option, on or after September 20, 2025, if the last reported sales price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

No sinking fund is provided for the Notes and therefore we are not required to redeem or retire the Notes periodically.

If we undergo a fundamental change, as defined in the indenture agreement, then subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Notes to be repurchased plus accrued and unpaid interest.

In addition, if specific corporate events occur prior to the maturity date or if we issue a notice of redemption, we will increase the conversion rate by pre-defined amounts for holders who elect to convert their notes in connection with such a corporate event.

The conditions allowing holders of the Notes to convert were not met this quarter.

As of December 31, 2022, the Notes are classified as a long-term liability, net of issuance costs of $ 19.2 million, on the consolidated balance sheets.

As of December 31, 2022, the estimated fair value of the Notes was approximately $ 1.12 billion.

The fair value was determined based on the last actively traded price per $100 of the Notes for the period ended December 31, 2022 (Level 2).

Interest expense recognized related to the Notes for the twelve months ended December 31, 2022 was $ 3.0 million.

The Notes were issued at par and costs associated with the issuance of the Notes are amortized to interest expense over the contractual term of the Notes.

As of December 31, 2022, the effective interest rate of the Notes is 1 %.

Capped Call Transactions

In September 2022, in connection with the pricing of the Initial Notes and the initial purchasers’ exercise of their option to purchase the Additional Notes, we entered into privately negotiated capped call transactions, or Capped Call Transactions.

The Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of common stock that underlie the Notes.

The cap price of the Capped Call Transactions is initially $ 424.00 per share, which represents a premium of 100 % over the last reported sale price of common stock of $ 212.00 per share on September 12, 2022, and is subject to certain adjustments under the terms of the capped call transactions.

We used approximately $ 118.6 million of the proceeds from the offering of Notes to pay the cost of the Capped Call Transactions.

We evaluated the Capped Call Transactions and determined that they should be accounted for separately from the Notes.

The cost of $ 118.6 million to purchase the Capped Call Transactions was recorded as a reduction to additional paid-in capital in the consolidated balance sheet as of December 31, 2022 as the Capped Call Transactions are indexed to our own stock and met the criteria to be classified in stockholders' equity.

DEVELOPMENT DERIVATIVE LIABILITY

In August 2020, we entered into a co-development agreement, referred to as the Funding Agreement, with BXLS V Bodyguard – PCP L.P.

and BXLS Family Investment Partnership V – ESC L.P., collectively referred to as Blackstone Life Sciences, pursuant to which Blackstone Life Sciences will provide up to $ 150.0 million in funding for the clinical development of vutrisiran and zilebesiran (formerly ALN-AGT), two of our cardiometabolic programs.

With respect to vutrisiran, Blackstone Life Sciences has committed to provide up to $ 70.0 million to fund development costs related to the HELIOS-B Phase 3 clinical trial.

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We retain sole responsibility for the development and commercialization of both vutrisiran and zilebesiran.

As consideration for Blackstone Life Sciences’ funding for vutrisiran clinical development costs, we have agreed to pay Blackstone Life Sciences a 1 % royalty on net sales of vutrisiran for a 10 -year term beginning upon the first commercial sale following regulatory approval of vutrisiran for ATTR-cardiomyopathy, as well as fixed payments of up to 2.5 times their investment over a two-year period upon regulatory approval of vutrisiran for ATTR-cardiomyopathy in specified countries, unless it is later withdrawn from the market following a mandatory recall.

As consideration for Blackstone Life Sciences’ funding for vutrisiran clinical development costs, we have agreed to pay Blackstone Life Sciences a 1 % royalty on net sales of AMVUTTRA (vutrisiran) for a 10 -year term beginning upon the first commercial sale following regulatory approval of vutrisiran for ATTR-cardiomyopathy, as well as fixed payments of up to 2.5 times their investment over a two-year period upon regulatory approval of vutrisiran for ATTR-cardiomyopathy in specified

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

countries, unless it is later withdrawn from the market following a mandatory recall.

As consideration for Blackstone Life Sciences’ funding for Phase 2 clinical development costs of zilebesiran, we have agreed to pay Blackstone Life Sciences fixed payments of up to 3.25 times their Phase 2 investment over a four-year period upon the successful completion of the zilebesiran Phase 2 clinical trial, unless certain regulatory events affecting the continued development of zilebesiran occur.

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Blackstone Life Sciences may also terminate the Funding Agreement with respect to a product if the joint steering committee elects to terminate the development program for that product in its entirety, if certain clinical endpoints are not achieved for that product or, with respect to vutrisiran only, if our right to develop or commercialize vutrisiran is enjoined in a specified major market as a result of an alleged patent infringement.

In certain termination circumstances, we will be obligated to pay Blackstone Life Sciences an amount that is equal to, or a multiplier of, the development funding received from Blackstone Life Sciences, and we may remain obligated under certain circumstances to make the payments to Blackstone Life Sciences described above, or the royalty described above in the case of vutrisiran, should we obtain regulatory approval for vutrisiran or zilebesiran following termination.

We account for the Funding Agreement under ASC 815 as a derivative liability, measured at fair value, within other liabilities on our consolidated balance sheets.

In certain termination circumstances, we will be obligated to pay Blackstone Life Sciences an amount that is equal to, or a multiplier of, the development funding received from Blackstone Life Sciences, and we may remain obligated under certain circumstances to make the payments to Blackstone Life Sciences described above, or the royalty described above in the case of AMVUTTRA, should we obtain regulatory approval for zilebesiran or for vutrisiran for ATTR-cardiomyopathy following termination.

We account for the Funding Agreement under ASC Topic 815, Derivatives and Hedging, as a derivative liability, measured at fair value, within other liabilities on our consolidated balance sheets.

The change in fair value due to the remeasurement of the development derivative liability is recorded as other expense on our consolidated statements of operations and comprehensive loss.

As of December 31, 2022 and 2021, the derivative liability is classified as a Level 3 financial liability in the fair value hierarchy.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

royalty payable on net sales of vutrisiran, assuming regulatory approval, (iv) our cost of borrowing ( 14 %), and (v) Blackstone Life Sciences' cost of borrowing ( 4 %).

The valuation method incorporates certain unobservable Level 3 key inputs including (i) the probability and timing of achieving stated development milestones to receive payments from Blackstone Life Sciences, (ii) the probability and timing of achieving regulatory approval and payments to Blackstone Life Sciences, (iii) an estimate of the amount and timing of the royalty payable on net sales of AMVUTTRA, assuming regulatory approval for ATTR-cardiomyopathy, (iv) our cost of borrowing ( 12 %), and (v) Blackstone Life Sciences' cost of borrowing ( 4 %).

The following table presents the activity with respect to the development derivative liability, in thousands:

Carrying value as of January 1, 2020 $ —

Carrying value as of December 31, 2020

Amount received under the Funding Agreement 19,600

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Carrying value as of December 31, 2022

FAIR VALUE MEASUREMENTS

(In thousands) As of December 31,

2021 Quoted Prices in Active Markets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

Financial assets

Cash equivalents:

Money market funds $ 255,869 $ 255,869 $ — $ —

treasury securities 54,998 — 54,998 —

Marketable debt securities:

treasury securities 1,030,578 — 1,030,578 —

Corporate notes 253,239 — 253,239 —

government-sponsored enterprise securities 177,741 — 177,741 —

Commercial paper 78,543 — 78,543 —

Certificates of deposit 7,501 — 7,501 —

Municipal securities 1,015 — 1,015 —

Marketable equity securities 66,972 66,972 — —

Restricted cash (money market funds) 1,195 1,195 — —

Total financial assets $ 1,927,651 $ 324,036 $ 1,603,615 $ —

Financial liabilities

Development derivative liability $ 83,618 $ — $ — $ 83,618

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) As of December 31,

2020 Quoted Prices in Active Markets

(Level 1) Significant Observable Inputs

(Level 2) Significant Unobservable Inputs

Financial assets

Cash equivalents:

Money market funds $ 75,726 $ 75,726 $ — $ —

treasury securities 20,000 — 20,000 —

Marketable debt securities:

treasury securities 1,087,968 — 1,087,968 —

government-sponsored enterprise securities 245,214 — 245,214 —

Marketable equity securities 44,633 44,633 — —

Restricted cash (money market funds) 1,483 1,483 — —

Total financial assets $ 1,475,024 $ 121,842 $ 1,353,182 $ —

Financial liabilities

Development derivative liability $ 25,585 $ — $ — $ 25,585

For the year ended December 31, 2021, there were no transfers between Level 1 and Level 2 financial assets.

During the year ended December 31, 2020, we transferred one financial asset from Level 2 to Level 1 as a result of the expiration of a securities' holding restriction on a marketable equity security.

There were no other transfers between Level 1 and Level 2 financial assets or liabilities during the year ended December 31, 2020.

The carrying amount of our debt as of December 31, 2021 and 2020 is subject to variable interest rates, which are based on current market rates, and as such, approximates fair value.

MARKETABLE DEBT SECURITIES

The following tables summarize our marketable debt securities:

As of December 31, 2021

(In thousands) Amortized

Losses Fair Value

treasury securities $ 1,086,232 $ 6 $ ( 662 ) $ 1,085,576

Corporate notes 253,926 1 ( 688 ) 253,239

government-sponsored enterprise securities 178,027 2 ( 288 ) 177,741

Commercial paper 78,543 — — 78,543

Certificates of deposit 7,501 — — 7,501

Municipal securities 1,016 — ( 1 ) 1,015

Total $ 1,605,245 $ 9 $ ( 1,639 ) $ 1,603,615

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2020

(In thousands) Amortized

Losses Fair Value

treasury securities $ 1,107,721 $ 328 $ ( 81 ) $ 1,107,968

government-sponsored enterprise securities 245,113 135 ( 34 ) 245,214

Total $ 1,352,834 $ 463 $ ( 115 ) $ 1,353,182

The fair values of our marketable debt securities by classification in the consolidated balance sheets were as follows:

(In thousands) December 31, 2021 December 31, 2020

Cash and cash equivalents $ 54,998 $ 20,000

Marketable debt securities 1,548,617 1,333,182

Total $ 1,603,615 $ 1,353,182

Overview of Significant Leases

We lease three facilities for office and laboratory space in Cambridge, Massachusetts that represent substantially all of our significant lease obligations.

An overview of these significant leases are as follows:

675 West Kendall Street

We lease office and laboratory space located at 675 West Kendall Street, Cambridge, Massachusetts for our corporate headquarters from BMR-675 West Kendall Street, LLC, or BMR, under a non-cancelable real property lease.

The lease commenced on May 1, 2018 and monthly rent payments became due commencing on February 1, 2019 upon substantial completion of the building improvements, and continue for 15 years, with options to renew for two five-year terms each.

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2021.

300 Third Street

We lease office and laboratory space located at 300 Third Street, Cambridge, Massachusetts under a non-cancelable real property lease agreement by and between us and ARE-MA Region No.

28, LLC, or ARE-MA, dated as of September 26, 2003, as amended.

The term of the lease expires on January 31, 2034 with options to renew for two five-year terms each.

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2021.

101 Main Street

We lease office space on several floors at 101 Main Street, Cambridge, Massachusetts under non-cancelable real property lease agreements by and between us and RREEF America REIT II CORP.

PPP, or RREEF, entered into in March 2015 and May 2015, as amended in September 2020, that will expire in March 2024 and June 2026, respectively, each with an option to renew for one five-year term.

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2021.

Other Lease Disclosures

Our facility leases described above generally contain customary provisions allowing the landlords to terminate the leases if we fail to remedy a breach of any of our obligations under any such lease within specified time periods, or upon our bankruptcy or insolvency.

The leases do not include any restrictions or covenants that had to be accounted for under the lease guidance.

Total rent expense, including operating expenses, under all of our real property leases was $ 59.5 million, $ 50.7 million and $ 52.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our costs included in operating expenses related to right of use lease assets we have entered into through December 31, 2021:

(In thousands) Year Ended December 31, 2021 Year Ended December 31, 2020

Operating lease cost $ 45,359 $ 42,271

Variable lease cost 18,271 11,049

Total $ 63,630 $ 53,320

Short-term lease costs were not material for the years ended December 31, 2021 and 2020.

Net cash paid for the amounts included in the measurement of the operating lease liability in our consolidated balance sheet and included in change in operating lease liability within operating activities in our consolidated statement of cash flow was $ 41.9 million and $ 38.0 million for the years ended December 31, 2021 and 2020, respectively.

The weighted-average remaining lease term and weighted-average discount rate for all leases as of December 31, 2021 was 11 years and 8 %, respectively, and as of December 31, 2020 was 12 years and 8 %, respectively.

Future lease payments for non-cancellable operating leases and a reconciliation to the carrying amount of the operating lease liability presented in the consolidated balance sheet as of December 31, 2021 were as follows, in thousands:

Year Ending December 31

2022 $ 41,783

2026 and thereafter 287,013

Total undiscounted lease liability 503,587

Less imputed interest ( 181,692 )

Total discounted lease liability $ 321,895

Current operating lease liability $ 40,548

Non-current operating lease liability 281,347

Total $ 321,895

COMMITMENTS AND CONTINGENCIES

Technology License and Other Commitments

We have licensed from third parties the rights to use certain technologies and information in our research processes as well as in any other products we may develop.

In accordance with the related license or technology agreements, we are required to make certain fixed payments to the licensor or a designee of the licensor over various agreement terms.

Many of these agreement terms are consistent with the remaining lives of the underlying intellectual property that we have licensed.

As of December 31, 2021, our commitments over the next five years to make fixed and cancellable payments under existing license agreements were not material.

Legal Matters

From time to time, we may be a party to litigation, arbitration or other legal proceedings in the course of our business, including the matters described below.

The claims and legal proceedings in which we could be involved include challenges to the scope, validity or enforceability of patents relating to our products or product candidates, and challenges by us to the scope, validity or enforceability of the patents held by others.

These include claims by third parties that we infringe their patents or breach our license or other agreements with such third parties.

The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain.

In addition, litigation and related matters are costly and may divert the attention of our management and other resources that would otherwise be engaged in other activities.

If we were unable to prevail in any such legal proceedings, our business, results of operations, liquidity and financial condition could be adversely affected.

Our accounting policy for accrual of legal costs is to recognize such expenses as incurred.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Securities Litigation

On September 12, 2019, the Chester County Employees Retirement Fund, individually and on behalf of all others similarly situated, filed a purported securities class action complaint for violation of federal securities laws against us, certain of our current and former directors and officers, and the underwriters of our November 14, 2017 public stock offering, in the Supreme Court of the State of New York, New York County.

On November 7, 2019, plaintiff filed an amended complaint, or the New York Complaint.

The New York Complaint is brought on behalf of an alleged class of those who purchased our securities pursuant and/or traceable to our November 14, 2017 public stock offering.

The New York Complaint purports to allege claims arising under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, and generally alleges that the defendants violated the federal securities laws by, among other things, making material misstatements or omissions concerning the results of our APOLLO Phase 3 clinical trial of patisiran.

The plaintiff seeks, among other things, the designation of the action as a class action, an award of unspecified compensatory damages, rescissory damages, interest, costs and expenses, including counsel fees and expert fees, and other relief as the court deems appropriate.

All defendants filed a joint motion to dismiss the New York Complaint in its entirety on December 20, 2019.

On November 2, 2020, the Supreme Court of the State of New York entered a Decision and Order denying defendants’ motion to dismiss.

In November 2020, defendants filed a notice of appeal of the Supreme Court's decision to the Appellate Division of the Supreme Court of the State of New York for the First Department.

In April 2021, the First Department entered a Decision and Order affirming in part and reversing in part the Supreme Court’s decision.

In June 2021, defendants filed a motion in the First Department seeking reargument or, in the alternative, for leave to appeal to the New York Court of Appeals.

In August 2021, the parties reached an agreement in principle to resolve the matter.

A hearing is scheduled for April 12, 2022 in the Supreme Court of the State of New York regarding final approval of the settlement.

Proceedings in the First Department are adjourned until February 2022, subject to further adjournment, pending final approval of any settlement.

Government Investigation

We have previously disclosed that, on or about April 9, 2021, we received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of Massachusetts, requiring production of documents pertaining to our marketing and promotion of ONPATTRO (patisiran) in the U.S.

We are cooperating with the U.S.

Attorney’s Office and producing documents in response to the subpoena.

Current and former officers and employees also have received subpoenas in connection with the preservation and production of related materials.

Given the ongoing nature of the investigation, it is possible that the U.S.

Attorney’s Office for the District of Massachusetts or other government entities may request other information from, or issue other subpoenas, findings or similar documents to, us, our related entities and their respective directors, officers and employees.

In light of the relatively early stage and ongoing nature of the investigation, no determination has been made that a loss, if any, arising from this matter is probable or that the amount of any such loss, or range of loss, is reasonably estimable.

We also previously disclosed that since learning of this federal government investigation, our nominating and corporate governance committee is directing our review of and response to the matter.

Indemnifications

In connection with license agreements we may enter with companies to obtain rights to intellectual property, we may be required to indemnify such companies for certain damages arising in connection with the intellectual property rights licensed under the agreements.

Under such agreements, we may be responsible for paying the costs of any litigation relating to the license agreements or the underlying intellectual property rights, including the costs associated with certain litigation regarding the licensed intellectual property.

We are also a party to a number of agreements entered into in the ordinary course of business, which contain typical provisions that obligate us to indemnify the other parties to such agreements upon the occurrence of certain events, including litigation or other legal proceedings.

In addition, we have agreed to indemnify our officers and directors for expenses, judgments, fines, penalties, excise taxes, and settlement amounts paid in connection with any threatened, pending or completed litigation proceedings, including, for example, the current government investigation, in which an officer or director was, is or will be involved as a party, on account of such person’s status as an officer or director, or by reason of any action taken by the officer or director while acting in such capacity, subject to certain limitations.

These indemnification costs are charged to selling, general and administrative expense.

Our maximum potential future liability under any such indemnification provisions is uncertain.

We have determined that the estimated aggregate fair value of our potential liabilities under all such indemnification provisions is minimal and had not recorded any liability related to such indemnification provisions as of December 31, 2021 or 2020.

STOCKHOLDERS’ EQUITY

Preferred Stock

We have authorized up to 5,000,000 shares of preferred stock, $ 0.01 par value per share, for issuance.

The preferred stock will have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by our board of directors upon its issuance.

As of December 31, 2021 and 2020, there were no shares of preferred stock outstanding.

STOCK-BASED COMPENSATION

In May 2020, our stockholders approved a second amendment to our 2018 Stock Incentive Plan, as amended, to increase the number of shares authorized for issuance thereunder by 7,000,000 shares, and in May 2022, our stockholders approved the amendment and restatement of our 2018 Stock Incentive Plan, as amended, or the Amended and Restated 2018 Plan, which increased the number of shares authorized for issuance thereunder by 6,000,000 shares.

The Amended and Restated 2018 Plan provides for the granting of stock options, restricted stock and restricted stock units (together, restricted stock awards), stock appreciation rights and other stock-based awards, and has a fungible share pool.

Any award that is not a full value award is

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Blackstone Equity Placement

In April 2020, we entered into a stock purchase agreement, or Investors SPA, with certain affiliates of The Blackstone Group Inc., or Investors, pursuant to which we sold 963,486 shares of our common stock to the Investors for aggregate cash consideration of $ 100.0 million, or $ 103.79 per share, as part of the broad strategic financing collaboration with The Blackstone Group Inc.

The Investors SPA contains customary representations, warranties, and covenants of each of the parties thereto.

Regeneron Equity Placement

In April 2019, we executed a stock purchase agreement, or Regeneron SPA, with Regeneron to sell 4,444,445 shares of our common stock for aggregate cash consideration of $ 400.0 million, or $ 90.00 per share, which we refer to as the Equity Transaction.

Under the terms of the Regeneron SPA, if at the time of closing of the Equity Transaction a sufficient number of authorized shares of common stock under our Restated Certificate of Incorporation was not available, the $ 400.0 million of equity under the Regeneron SPA would instead have been issued in the form of 1,481,482 shares of our Series A redeemable convertible preferred stock, par value $ 0.01 per share, at a purchase price of $ 270.00 per share, that would have converted automatically into common stock on a 1-for- 3 basis upon stockholder approval of additional authorized shares of common stock.

On April 25, 2019, following the receipt of stockholder approval at our annual meeting, a Certificate of Amendment was filed to our Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 125,000,000 to 250,000,000 shares, providing for a sufficient number of authorized shares of common stock available to be issued to Regeneron pursuant to the Equity Transaction.

On May 21, 2019, subsequent to the expiration of the applicable pre-merger waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, Regeneron purchased 4,444,445 shares of our common stock for aggregate cash consideration of $ 400.0 million.

Because we had an obligation to Regeneron as of April 8, 2019 that may have resulted in the issuance of redeemable convertible preferred stock, we were required to follow the guidance in ASC 480 and mark-to-market the obligation to potentially issue this redeemable security until April 25, 2019, when it became known that the obligation would be fulfilled in common stock.

The final mark-to-market adjustment of this obligation under ASC 480 resulted in us recording a gain of $ 9.4 million included in other income in the consolidated statements of comprehensive loss during the year ended December 31, 2019, with the offsetting adjustment to equity netting against the $ 400.0 million proceeds that were received upon closing.

Public Offering

In January 2019, we sold an aggregate of 5,000,000 shares of our common stock through an underwritten public offering at a price to the public of $ 77.50 per share.

As a result of the offering, we received aggregate net proceeds of $ 381.9 million, after deducting underwriting discounts and commissions and other estimated offering expenses of $ 5.6 million.

STOCK-BASED COMPENSATION

In May 2017, our stockholders approved a second amendment and restatement of the 2009 Stock Incentive Plan, or the Amended 2009 Plan, pursuant to which 15,480,000 shares of common stock were authorized for issuance.

In May 2020, our stockholders approved a second amendment to the 2018 Stock Incentive Plan, as amended, or the Amended 2018 Plan, to increase the number of shares authorized for issuance thereunder by 7,000,000 shares.

The Amended 2018 Plan provides for the granting of stock options, restricted stock and restricted stock units (together, restricted stock awards), stock appreciation rights and other stock-based awards, and has a fungible share pool.

Any award that is not a full value award is counted against the authorized share limits specified as one share for each share of common stock subject to the award, and all full value awards, defined as restricted stock awards or other stock-based awards, are counted as one and a half shares for each one share of common stock subject to such full value award.

counted against the authorized share limits specified as one share for each share of common stock subject to the award, and all full value awards, defined as restricted stock awards or other stock-based awards, are counted as one and a half shares for each one share of common stock subject to such full value award.

As of December 31, 2022, an aggregate of 20,711,629 shares of common stock were reserved for issuance under our stock plans, including outstanding stock options to purchase 8,423,552 shares of common stock, 1,487,394 outstanding restricted stock units, 10,083,911 of common stock available for additional equity awards and 716,772 shares available for future grant under our Amended and Restated 2004 Employee Stock Purchase Plan, as amended, or the Amended and Restated ESPP.

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Time-based stock options granted to employees generally vest as to 25 % of the shares on the first anniversary of the grant date and 6.25 % of the shares at the end of each successive three-month period thereafter until fully vested.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

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As of December 31, 2022

(in thousands) Weighted-

Unrecognized Expense, Net of Estimated Forfeitures (in thousands) Weighted-average Recognition Period (in years)

Type of award:

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__________________________________________

* Performance-based restricted stock units are recorded as expense beginning when vesting events are determined to be probable.

* Excludes performance-based restricted stock units for which the associated vesting events are not yet determined to be probable.

Valuation Assumptions for Stock Options

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The expected life assumption is based on our historical data.

The dividend yield assumption is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends.

The risk-free interest rate used for each grant is equal to the zero coupon rate for instruments with a similar expected life.

The dividend yield assumption is based on the fact

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

that we have never paid cash dividends and have no present intention to pay cash dividends.

The risk-free interest rate used for each grant is equal to the zero coupon rate for instruments with a similar expected life.

The following table summarizes the Black-Scholes valuation assumption inputs for employee stock options granted:

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The following table summarizes the activity of our stock option plans, excluding performance-based stock options:

(in thousands) Weighted-

Price Weighted-

Term (in years) Aggregate

(in thousands)

Number of Options (in thousands) Weighted-average Exercise Price (per share) Weighted-average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of December 31, 2021 8,840 $ 103.87

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The following table summarizes the activity of our performance-based stock options granted under our equity plans:

(in thousands) Weighted-

Price Weighted-

Term (in years) Aggregate

(in thousands)

Number of Options (in thousands) Weighted-average Exercise Price (per share) Weighted-average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of December 31, 2021 1,175 $ 92.31

Granted — $ —

Exercised ( 619 ) $ 87.85

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The following table summarizes the activity of our restricted stock units and awards granted under our equity plans, excluding performance-based restricted stock units:

(in thousands) Weighted-

Grant Date Fair Value

Number of Units (in thousands) Weighted-average Grant Date Fair Value (per share)

Outstanding as of December 31, 2021 75 $ 158.87

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The following table summarizes the activity of our performance-based restricted stock units granted under our equity plans:

(in thousands) Weighted-

Grant Date Fair Value

Number of Units (in thousands) Weighted-average Grant Date Fair Value (per share)

Outstanding as of December 31, 2021 1,136 $ 143.13

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred Stock

We have authorized up to 5,000,000 shares of preferred stock, $ 0.01 par value per share, for issuance.

As of December 31, 2022 and 2021, there were no shares of preferred stock outstanding.

Blackstone Equity Placement

The Investors SPA contains customary representations, warranties, and covenants of each of the parties thereto.

COMMITMENTS AND CONTINGENCIES

Technology License and Other Commitments

We have licensed from third parties the rights to use certain technologies and information in our research processes as well as in any other products we may develop.

In accordance with the related license or technology agreements, we are required to make certain fixed payments to the licensor or a designee of the licensor over various agreement terms.

Many of these agreement terms are consistent with the remaining lives of the underlying intellectual property that we have licensed.

As of December 31, 2022, our commitments over the next five years to make fixed and cancellable payments under existing license agreements were not material.

Legal Matters

From time to time, we may be a party to litigation, arbitration or other legal proceedings in the course of our business, including the matters described below.

These include claims by third parties that we infringe their patents or breach our license or other agreements with such third parties.

The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain.

In addition, litigation and related matters are costly and may divert the attention of our management and other resources that would otherwise be engaged in other activities.

If we were unable to prevail in any such legal proceedings, our business, results of operations, liquidity and financial condition could be adversely affected.

Our accounting policy for accrual of legal costs is to recognize such expenses as incurred.

Government Investigation

We have previously disclosed that, on or about April 9, 2021, we received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of Massachusetts, requiring production of documents pertaining to our marketing and promotion of ONPATTRO (patisiran) in the U.S.

We are cooperating with the U.S.

Attorney’s Office and producing documents in response to the subpoena.

Current and former officers and employees also have received subpoenas in connection with the preservation and production of related materials.

Given the ongoing nature of the investigation, it is possible that the U.S.

In light of the ongoing nature of the investigation, no determination has been made that a loss, if any, arising from this matter is probable or that the amount of any such loss, or range of loss, is reasonably estimable.

We also previously disclosed that since learning of this federal government investigation, our nominating and corporate governance committee is directing our review of and response to the matter.

Patent Infringement Lawsuits

In March 2022, we filed separate lawsuits in the U.S.

District Court for the District of Delaware against (1) Pfizer, Inc.

and its subsidiary Pharmacia & Upjohn Co.

LLC, collectively referred to as Pfizer, and (2) Moderna, Inc., and its subsidiaries ModernaTX, Inc., and Moderna US, Inc., collectively referred to as Moderna.

The lawsuits seek damages for infringement of U.S.

11,246,933, or ‘933 Patent, in Pfizer’s and Moderna’s manufacture and sale of their messenger RNA, or mRNA, COVID-19 vaccines.

The patent relates to the Company’s biodegradable cationic lipids that are foundational to the success of the mRNA COVID-19 vaccines.

We are seeking judgment that each of Pfizer and Moderna is infringing the ‘933 Patent, as well as damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the unlicensed uses made of our patented lipids by Pfizer and Moderna, together with interest and costs as may be awarded by the court.

As stated in the filed complaints, we are not seeking injunctive relief in these lawsuits.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 23, 2022, Moderna filed a partial motion to dismiss, asserting an affirmative defense under Section 1498(a).

We responded on May 27, 2022, opposing their motion arguing Moderna had significant non-government sales and the government contract ended in April 2022.

Moderna responded on June 13, 2022, requesting a partial motion to dismiss those claims for sales under 1498(a).

This motion is fully briefed and pending before the court.

On May 27, 2022, Pfizer filed an answer to our complaint, denying the allegations, and asserting invalidity and non-infringement defenses.

In addition, Pfizer added BioNTech SE to the suit and added counter-claims seeking a declaratory judgment that our patent is invalid and a second claim alleging that our patent is invalid due to patent misuse.

We believe their defenses and counter-claims have no merit and responded on June 10, 2022, with substantive arguments as to the validity of our claims and the lack of merit of their patent misuse claim.

On July 12, 2022, we filed a new lawsuit against each of Pfizer and Moderna seeking damages for infringing our newly granted U.S.

11,382,979 in Pfizer’s and Moderna’s manufacture and sale of their mRNA COVID-19 vaccines.

The parties agreed to combine the two patents in one lawsuit, separately against each of Moderna and Pfizer/BioNTech.

The court has set a trial date of November 12, 2024 for Alnylam v.

Moderna and November 18, 2024 for Alnylam v.

Pfizer/BioNTech.

Indemnifications

These indemnification costs are charged to selling, general and administrative expense.

Our maximum potential future liability under any such indemnification provisions is uncertain.

Overview of Significant Leases

We lease three facilities for office and laboratory space in Cambridge, Massachusetts that represent substantially all of our significant lease obligations.

An overview of these significant leases are as follows:

675 West Kendall Street

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2022.

300 Third Street

We lease office and laboratory space located at 300 Third Street, Cambridge, Massachusetts under a non-cancelable real property lease agreement by and between us and ARE-MA Region No.

28, LLC, or ARE-MA, dated as of September 26, 2003, as amended.

The term of the lease expires on January 31, 2034 with options to renew for two five-year terms each.

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2022.

101 Main Street

We lease office space on several floors at 101 Main Street, Cambridge, Massachusetts under non-cancelable real property lease agreements by and between us and RREEF America REIT II CORP.

PPP, or RREEF, entered into in March 2015 and May 2015, as amended in September 2020, that will expire in March 2024 and June 2026, respectively, each with an option to

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

renew for one five-year term.

Exercise of these options was not determined to be reasonably certain and thus was not included in the operating lease liability on the consolidated balance sheet as of December 31, 2022.

Other Lease Disclosures

The leases do not include any restrictions or covenants that had to be accounted for under the lease guidance.

Total rent expense, including operating expenses, under all of our real property leases was $ 58.6 million, $ 59.5 million and $ 50.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table summarizes our costs included in operating expenses related to right of use lease assets we have entered into through December 31, 2022:

(In thousands) Year Ended December 31, 2022 Year Ended December 31, 2021

Operating lease cost $ 45,789 $ 45,359

Variable lease cost 17,614 18,271

Total $ 63,403 $ 63,630

Short-term lease costs were not material for the years ended December 31, 2022 and 2021.

Net cash paid for the amounts included in the measurement of the operating lease liability in our consolidated balance sheet and included in change in operating lease liability within operating activities in our consolidated statement of cash flow was $ 43.1 million and $ 41.9 million for the years ended December 31, 2022 and 2021, respectively.

The weighted-average remaining lease term and weighted-average discount rate for all leases as of December 31, 2022 was 10 years and 8 %, respectively, and as of December 31, 2021 was 11 years and 8 %, respectively.

Year Ending December 31

2023 $ 43,028

2028 and thereafter

Total undiscounted lease liability 460,132

Less imputed interest ( 156,826 )

Total discounted lease liability $ 303,306

Current operating lease liability $ 41,967

Non-current operating lease liability 261,339

Total $ 303,306

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The domestic and foreign components of loss before income taxes are as follows:

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During the year ended December 31, 2022, we recorded a net provision for income taxes of $ 4.2 million.

This is primarily comprised of $ 3.2 million of foreign current provision offset by $ 2.8 million of deferred provision, primarily related to foreign jurisdictions.

This is primarily comprised of $ 5.6 million of foreign current provision offset by $ 1.4 million of foreign deferred provision.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes.

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Intangible assets 264,564 279,082

Capitalized research and development expenditures 206,727 23,039

Other 133,376 48,242

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The increase in our valuation allowance is primarily due to additional net operating losses for the years ended December 31, 2022 and 2020 and primarily due to the liability related to the sale of future royalties for the year ended December 31, 2021.

As of December 31, 2021, we had federal and state net operating loss carryforwards of $ 2.8 billion and $ 2.5 billion, respectively, to reduce future taxable income.

On December 22, 2017, the Tax Cuts and Jobs Act, or TCJA, was signed into law.

Under the TCJA provisions, effective with tax years beginning on or after January 1, 2022, taxpayers can no longer immediately expense qualified research and development expenditures, including all direct, indirect, overhead and software development costs.

Taxpayers are now required to capitalize and amortize these costs over five years for research conducted within the United States or 15 years for research conducted abroad.

As a result, the Company capitalized $ 870.6 million of research and development expenses for the year ended December 31, 2022.

As of December 31, 2022, we had federal and state net operating loss carryforwards, or NOLs, of $ 2.9 billion and $ 3.0 billion, respectively, to reduce future taxable income.

Federal NOLs of $ 1.1 billion, generated before 2018, will begin expiring in varying amounts through 2037 unless utilized.

The remaining federal NOLs of $ 1.8 billion, generated after 2017, will be carried forward indefinitely and could be used to offset up to 100 % of taxable income of each future tax year for tax years before January 1, 2021 and up to 80 % of taxable income in all other future tax years.

State NOLs will begin expiring in varying amounts through 2042 unless utilized.

As of December 31, 2022, we had federal and state research and development, including Orphan Drug, and state investment tax credit carryforwards of $ 343.0 million and $ 62.3 million, respectively, available to reduce future tax liabilities that expire at various dates through 2042.

We have a valuation allowance against the net operating loss and credit carryforwards as it is unlikely that we will realize these assets.

Ownership changes, as defined in the Internal Revenue Code, including those resulting from the issuance of common stock in connection with our public offerings, may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income or tax liability.

The amount of the limitation is determined in accordance with Section 382 of the Internal Revenue Code.

We have a valuation allowance against the net operating loss and tax credit carryforwards as it is unlikely that we will realize these assets.

Ownership changes, as defined in the Internal Revenue Code and similar state provisions, including those resulting from the issuance of common stock in connection with our public offerings, may limit the amount of federal and state net operating loss and tax credit carryforwards that can be utilized to offset future taxable income or tax liability.

The amount of the limitation is determined in accordance with Section 382 of the Internal Revenue Code and similar state provisions.

We have performed an analysis of ownership changes through December 31, 2022.

Based on this analysis, we do not believe that any of our tax attributes will expire unutilized due to Section 382 limitations.

Based on this analysis, we do not believe that any of our federal and state tax attributes will expire unutilized due to Section 382 limitations.

As of December 31, 2022, we had foreign NOLs of $ 153.3 million to reduce future taxable income which will begin expiring in varying amounts through 2029 unless utilized.

We have a valuation allowance against the foreign NOLs as it is unlikely that we will realize these assets.

We apply the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes.

2 unchanged sentences

Our reserve related to income taxes, including potential interest and penalties, was not material as of December 31, 2022 and 2021.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our uncertain income tax positions do not impact our effective tax rate due to our full valuation allowance in the U.S.

4 unchanged sentences

Events that could trigger a tax liability include, but are not limited to, distributions, reorganizations or restructurings and/or tax law changes.

The tax years 2018 through 2021 remain open to examination by major taxing jurisdictions, which are primarily in the U.S., although net operating loss and credit carryforwards generated prior to 2018 may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DEFINED BENEFIT PLANS

We maintain defined benefit plans for employees in certain countries outside the U.S., including retirement benefit plans required by applicable local law.

The unfunded benefit obligation corresponds to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increases and pension adjustments, offset by the fair value of the assets held by the plan.

The unfunded benefit obligation was approximately $ 4.3 million and $ 5.2 million as of December 31, 2021 and 2020, respectively, and is recorded in other liabilities on the consolidated balance sheet.

The total net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 were not material.

The tax years 2019 through 2022 remain open to examination by major taxing jurisdictions, which are primarily in the U.S., although net operating loss and tax credit carryforwards generated prior to 2019 may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period.

EMPLOYEE BENEFIT PLANS

We maintain a retirement saving plan under Section 401(k) of the Internal Revenue Code, in which eligible U.S.

employees may defer compensation for income tax purposes.

Contributions made by employees are limited to the maximum allowable for U.S.

federal income tax purposes.

The plan allows for a discretionary match in an amount up to 100 % of each participant’s first 2 % of compensation contributed plus 50 % of each participant’s next 4 % of compensation contributed.

The expense related to our 401(k) Savings Plan primarily consists of our matching contributions.

Furthermore, we maintain defined benefit plans for employees in certain countries outside the U.S., including retirement benefit plans required by applicable local law.

The benefit obligation corresponds to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increases and pension adjustments.

For the years ended December 31, 2022, 2021 and 2020 contributions and net periodic benefit costs to such plans generated a total expense of $ 16.5 million, $ 13.1 million and $ 12.0 million, respectively.

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What changed 10-K

Item 8. Financial Statements and Supplementary Data