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Item 7. Management’s Discussion and Analysis

2024-02-15 compared with 2023-02-23 · 87 added, 79 removed, 148 unchanged (53% of the section changed)

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We are a global commercial-stage biopharmaceutical company that discovers, develops, manufactures and commercializes novel therapeutics based on RNAi.

Our commercial products and broad pipeline of investigational RNAi therapeutics are focused in four STArs:

Genetic Medicines, Cardio-Metabolic Diseases, Hepatic Infectious Diseases and CNS/Ocular Diseases.

Our commercial products and broad pipeline of investigational RNAi therapeutics are focused in rare, specialty and select prevalent indications.

As described in Part I, Item 1.

"Business," of this Annual Report on Form 10-K, we currently have five products that have received marketing approval, including one partnered product, and multiple late-stage investigational programs advancing towards potential commercialization.

“Business” of this Annual Report on Form 10-K, we currently have five products that have received marketing approval, including one collaborated product, and multiple late-stage investigational programs advancing towards potential commercialization.

In Part I, Item 1.

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Historically, we have generated losses principally from costs associated with research and development activities, acquiring, filing and expanding intellectual property rights, and selling, general and administrative costs.

As a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical and commercial capabilities, including global commercial operations, continued management and growth of our patent portfolio, collaborations and general corporate activities, we expect to incur additional operating losses, however we expect 2019 represents our peak operating loss year as we transition towards a self-sustainable financial profile.

We anticipate that our operating results will continue to fluctuate for the foreseeable future.

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

We currently have programs focused on a number of therapeutic areas and, as of December 31, 2022, we generate worldwide product revenues from four commercialized products, ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO, primarily in the U.S., Europe and Japan.

While we believe 2019 was our peak operating loss year, we expect to continue to incur annual operating losses, and will require substantial resources over the next several years as we expand our efforts to discover, develop and commercialize RNAi therapeutics, and aim to achieve financial self-sustainability by the end of 2025.

We anticipate that our operating results will continue to fluctuate for the foreseeable future, therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.

We currently have programs focused on a number of therapeutic areas and, as of December 31, 2023, we generate worldwide product revenues from four commercialized products, ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO, primarily in the U.S.

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

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

In addition to revenues from the commercial sales of our approved products and potentially from sales of future products, we expect our sources of potential funding for the next several years to continue to be derived in part from existing and new strategic alliances.

Such alliances include, or may include in the future, license and other fees, funded research and development, milestone payments and royalties on product sales by our licensors, including royalties on sales of Leqvio made by our partner Novartis, as well as proceeds from the sale of equity or debt.

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

Such collaborations include, or may include in the future, license and other fees, funded research and development, milestone payments and royalties on product sales by our licensors, including royalties on sales of Leqvio made by our collaborator, Novartis, as well as proceeds from the sale of equity or debt.

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Results of Operations

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Total revenues consist of the following:

Years Ended December 31, 2022 vs 2021 2021 vs 2020

Years Ended December 31, 2023 vs 2022

(In thousands, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change

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Net revenues from collaborations 546,185 134,912 180,953 411,273 305 % (46,041) (25) %

Royalty revenue 8,177 1,196 — 6,981 584 % 1,196 N/A

Royalty revenue 40,633 8,177 1,196 32,456 397 % 6,981 *

Total $ 1,828,292 $ 1,037,418 $ 844,287 $ 790,874 76 % $ 193,131 23 %

* Indicates the percentage change period over period is greater than 500%.

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Net Product Revenues

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Total 354,546 557,608 474,737 (203,062) (36) % 82,871 17 %

United States 82,521 — — 82,521 N/A — N/A

Europe 4,214 — — 4,214 N/A — N/A

Rest of World 7,060 — — 7,060 N/A — N/A

Total 93,795 — — 93,795 N/A — N/A

United States 411,169 82,521 — 328,648 398 % 82,521 N/A

Europe 70,898 4,214 — 66,684 * 4,214 N/A

Rest of World 75,771 7,060 — 68,711 * 7,060 N/A

Total 557,838 93,795 — 464,043 495 % 93,795 N/A

United States 141,954 115,659 92,747 26,295 23 % 22,912 25 %

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Total 219,251 173,144 127,815 46,107 27 % 45,329 35 %

United States 27,698 18,876 — 8,822 47 % 18,876 N/A

United States 38,159 27,698 18,876 10,461 38 % 8,822 47 %

Europe 60,025 37,915 38,949 22,110 58 % (1,034) (3) %

Rest of World 4,169 1,761 — 2,408 137 % 1,761 N/A

Rest of World 11,655 4,169 1,761 7,486 180 % 2,408 137 %

Total 109,839 69,782 59,586 40,057 57 % 10,196 17 %

Total net product revenues $ 1,241,474 $ 894,329 $ 662,138 $ 347,145 39 % $ 232,191 35 %

Net product revenues increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily as a result of increased patients across our commercial portfolio of products, including the initial launch of AMVUTTRA.

We expect net product revenues to increase during 2023, as compared to 2022, as we continue to add new patients onto our commercial products, as well as launch these products into additional markets, assuming regulatory approvals.

Please read Note 3 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for balances and activity in each product revenue allowance and reserve category for the years ended December 31, 2022 and 2021.

Net product revenues increased during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the launch of AMVUTTRA in the third quarter of 2022, partially offset by a decrease of demand for ONPATTRO due to patient switches to AMVUTTRA.

Additional growth was related to an increase in patients on GIVLAARI and OXLUMO.

Please see Note 3 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for balances and activity in each product revenue allowance and reserve category for the years ended December 31, 2023 and 2022.

Net Revenues from Collaborations and Royalty Revenue

Net revenues from collaborations consist of the following:

Net revenues from collaborations and royalty revenue consist of the following:

Years Ended December 31, 2023 vs 2022 2022 vs 2021

(In thousands, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change

$ 337,802 $ — $ — $ 337,802 N/A $ — N/A

Regeneron Pharmaceuticals 100,468 87,844 113,226 12,624 14 % (25,382) (22) %

Novartis AG 86,727 43,159 49,120 43,568 101 % (5,961) (12) %

Vir Biotechnology 1,755 16,897 31,396 (15,142) (90) % (14,499) (46) %

Other 21,188 3,909 18,607 17,279 442 % (14,698) (79) %

Total $ 134,912 $ 180,953 $ 131,333 $ (46,041) (25) % $ 49,620 38 %

Net revenues from collaborations decreased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to a decrease in revenue recognized in connection with our collaboration agreements with Regeneron and Vir, attributed to reduced research and manufacturing activities and timing of reimbursable activities.

Royalty revenue increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to increased global net sales of Leqvio by our partner, Novartis.

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

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

We expect variability in net revenues from collaboration and royalty revenue in 2023, as compared to 2022, due to the timing of manufacturing activities, achievement of milestones under our collaboration agreements and royalties associated with sales of Leqvio.

Total net revenues from collaborations

$ 546,185 $ 134,912 $ 180,953 $ 411,273 305 % $ (46,041) (25) %

Royalty revenue $ 40,633 $ 8,177 $ 1,196 $ 32,456 397 % $ 6,981 *

Net revenues from collaborations increased during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to revenue recognized under our agreements with Roche and Novartis.

During 2023, we recognized $337.8 million of revenue under our Collaboration and License Agreement with Roche, which was executed in July

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2023, and under our Novartis Collaboration Agreement we recognized an additional $30.0 million of revenue, compared to 2022, associated with the achievement of specified commercialization and regulatory milestones.

Royalty revenue increased during the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to increased royalties earned from global net sales of Leqvio by our collaborator, Novartis.

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

We expect net revenues from collaboration will decrease in 2024, as compared to 2023, primarily driven by a reduction in the revenues recognized under our Roche Collaboration and License Agreement.

We expect our royalty revenues will increase in 2024, as compared to 2023, due to the continued growth of royalties earned from global net sales of Leqvio by our collaborator, Novartis.

The amount of revenue from collaborations that we recognize, in part, is based on estimates of total costs to be incurred.

These estimates reflect our historical experiences, current contractual requirements, and forecasted plans of development or manufacturing activities.

We adjust these estimates for changes in actual costs incurred, contractual terms, and further forecasts.

Such changes in estimates could have a significant impact on revenue and earnings in the period of the adjustment.

Operating Costs and Expenses

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Cost of Goods Sold

Cost of goods sold as a percentage of net product revenues decreased to 15.7% for the year ended December 31, 2022, as compared to 17.4% for the year ended December 31, 2021, primarily due to an increase in sales of products with a lower cost to manufacture.

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

We expect cost of goods sold will increase during 2023, as compared to 2022, primarily as a result of an expected increase in net product sales as well as increased royalties.

Cost of goods sold as a percentage of net product revenues increased to 21.6% for the year ended December 31, 2023, as compared to 15.7% for the year ended December 31, 2022, primarily due to the following:

• Increased volume and rate of royalties payable on net sales of AMVUTTRA.

Our collaborator is eligible to receive tiered royalties of 15% to 30% based on global annual net sales and therefore the growth in AMVUTTRA net sales during 2023 resulted in more net sales and a higher tier rate for the applicable royalties payable;

• Increased excess and obsolete charges primarily due to cancelling manufacturing commitments and the impairment of ONPATTRO inventory that had been manufactured for future demand associated with the use of patisiran for the treatment of patients with ATTR amyloidosis with cardiomyopathy for which we did not receive regulatory approval in the U.S.

We anticipate variability in our cost of goods sold as a percentage of net product revenues in 2024, as compared to 2023.

We expect our cost of goods sold will increase during 2024, as compared to 2023, primarily as a result of an expected increase in net product sales as well as increased royalties.

Cost of collaborations and royalties

Cost of collaborations and royalties increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to timing and demand of GalNAc material supply to our collaboration partners to support certain product manufacturing and ongoing clinical trials.

We anticipate variability in the cost of collaborations and royalties during 2023, as compared to 2022, due to the timing and demand of GalNAc material to be supplied to our collaboration partners.

Cost of collaborations and royalties increased during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to increased demand of GalNAc material supplied to our collaborators to support certain product manufacturing and ongoing clinical trials and increased royalties payable to third parties on the net sales of licensed products by Novartis.

We expect our cost of collaborations and royalties will decrease during 2024, as compared to 2023, primarily due to a decrease in demand of GalNAc material supplied to our collaborators in support of certain product manufacturing as our collaborators begin to transition to producing the material independently.

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Research and Development

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• Increased compensation and related expenses as a result of increased headcount to support our R&D pipeline and development expenses;

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

• Increased clinical research and outside services expenses primarily due to increase in clinical batches manufactured and development expenses associated with the KARDIA-1 and KARDIA-2 zilebesiran phase 2 studies.

• Increased clinical research and outside services primarily associated with zilebesiran as we reached full enrollment for our KARDIA-1 and KARDIA-2 clinical studies and additional costs associated with manufacturing batches associated with those clinical activities.

Costs associated with clinical trials of other programs such as ALN-TTRsc04 and our ongoing early development studies also were higher when compared to 2022;

• Increased occupancy and all other costs as a result of higher costs related to infrastructure and other professional services to support our growing clinical footprint.

During the years ended December 31, 2023 and 2022, in connection with advancing activities under our collaboration agreements, we incurred research and development expenses, primarily related to external development and clinical expenses, including the manufacture of clinical product.

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

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

Year Ended December 31,

(In thousands) 2023 2022 2021

$ 44,620 $ — $ —

Regeneron Pharmaceuticals 77,444 43,002 73,411

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226,664 226,941 201,841 (277) — % 25,100 12 %

Stock-based compensation

138,488 97,302 79,409 41,186 42 % 17,893 23 %

Occupancy and all other costs

145,687 131,967 97,259 13,720 10 % 34,708 36 %

Stock-based compensation

124,407 138,488 97,302 (14,081) (10) % 41,186 42 %

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

• Increased compensation and related expenses as a result of increased headcount and other strategic investments in support of the global launch of AMVUTTRA and other expenses to support our strategic growth;

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

• Increased consulting and professional services expenses to support our commercial portfolio.

We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2023, as compared to 2022, as we continue to advance and develop our platform and pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial and compliance infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO, and the launch of AMVUTTRA in the U.S.

and EU, as well as launch these products into additional markets, assuming regulatory approvals.

$ 795,646 $ 770,658 $ 620,639 $ 24,988 3 % $ 150,019 24 %

Selling, general and administrative expenses increased during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to increased headcount and other investments supporting our strategic growth including the global launch of AMVUTTRA.

We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2024, as compared to 2023, as we continue to advance and develop our platform and pipeline, advance our product candidates, including collaborated programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial and compliance infrastructure as well as launch our commercial products into additional

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markets, assuming regulatory approvals.

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

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Interest expense $ (121,221) $ (155,968) $ (143,021) $ 34,747 (22) % $ (12,947) 9 %

Other (expense) income, net

Other expense, net

Interest income 95,561 24,808 1,579 70,753 285 % 23,229 *

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Other (17,741) (6,204) (19,312) (11,537) 186 % 13,108 (68) %

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

Loss on the extinguishment of debt — (76,586) — 76,586 (100) % (76,586) N/A

Total $ (151,342) $ (341,921) $ (143,492) $ 190,579 (56) % $ (198,429) 138 %

Total other expense increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to a $76.6 million loss on the extinguishment of the Blackstone credit agreement, increased realized and unrealized losses on our marketable equity securities holdings, and increased loss as a result of a mark-to-market adjustment related to the development derivative liability.

* Indicates the percentage change period over period is greater than 500%.

Total other expense decreased during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to increased interest income driven by higher market interest rates on our marketable debt securities, decreased interest expense as a result of a more favorable interest rate under the Convertible Senior Notes compared with the interest rate under the credit facility previously held with Blackstone and a $76.6 million loss on the extinguishment of the Blackstone credit agreement recognized in 2022.

Liquidity and Capital Resources

The following table summarizes our cash flow activities:

Year Ended December 31,

(In thousands) 2022 2021 2020

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

Non-cash adjustments to reconcile net loss to net cash used in operating activities:

625,435 373,954 256,021

Changes in operating assets and liabilities:

(35,553) (162,823) (12,701)

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

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

Net cash provided by financing activities 425,753 1,247,118 994,979

Effect of exchange rate changes on cash, cash equivalents and restricted cash (7,430) (9,018) 4,918

Net increase (decrease) in cash, cash equivalents and restricted cash 46,403 323,107 (50,582)

Cash, cash equivalents and restricted cash, beginning of period

822,153 499,046 549,628

Cash, cash equivalents and restricted cash, end of period $ 868,556 $ 822,153 $ 499,046

Year Ended December 31, $ Change

(In thousands) 2023 2022 2021 2023 vs 2022 2022 vs 2021

Net cash provided by (used in):

Operating activities $ 104,156 $ (541,274) $ (641,693) $ 645,430 $ 100,419

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

Investing activities $ (336,350) $ 169,354 $ (273,300) $ (505,704) $ 442,654

Net cash provided by investing activities increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to net activities related to our marketable debt securities.

Financing activities $ 172,131 $ 425,753 $ 1,247,118 $ (253,622) $ (821,365)

Net cash provided by financing activities decreased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to greater cash received in 2021, including $500.0 million received from our sale of one-half of our royalty interest under the Novartis agreement in September 2021 and $500.0 million received in connection with the second and final drawdowns on our credit agreement in June 2021 and December 2021, respectively, offset by $136.2 million

received from the issuance of convertible debt, net of repayment of credit facility and purchase of capped call transactions in September 2022.

Operating Activities

Net cash provided by operating activities increased during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to receipt of a $310.0 million up-front payment received in connection with the Roche Collaboration and License Agreement and $100.0 million payment from Regeneron in connection with achieving certain criteria during early clinical development for our CNS program, ALN-APP, in addition to cash receipts from increased product sales, offset by cash disbursements related to working capital payments.

Investing Activities

Net cash used in investing activities increased during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to net activities related to our marketable debt securities as a result of an increase of cash invested in marketable debt securities.

Financing Activities

Net cash provided by financing activities decreased during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to greater cash received in 2022, including $136.2 million received from the issuance of convertible debt, net of repayment of the credit facility held with Blackstone and purchase of capped call transactions in September 2022, and greater net proceeds from the issuance of common stock in connection with stock option exercises and other types of equity.

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Additional Capital Requirements

We currently have programs focused on a number of therapeutic areas and, as of December 31, 2023, have received regulatory approval and commercially launched four products.

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

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

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

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 satisfy our near-term capital and operating needs 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, 2023, together with the cash we expect to generate from product sales and under our current collaborations, will be sufficient to satisfy our near-term capital and operating needs for at least the next 12 months from the filing of this Annual Report on Form 10-K.

Recent and expected working and other capital requirements, in addition to the above matters, also include the items described below:

• Amounts related to future lease payments for operating lease obligations at December 31, 2023 totaled $418.0 million, with $43.6 million expected to be paid within the next 12 months.

• Our cash operating expenditures were $541.3 million in 2022 and $641.7 million in 2021, and we expect to increase our investment in operations in 2023.

Cash outflows for capital expenditures were $62.2 million in 2023 and $72.1 million in 2022.

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• Amounts related to future long-term debt total $1.02 billion, of which we do not expect to make payments on principal within the next 12 months.

• Payments associated with the liability related to the sale of future royalties were approximately $3.4 million in 2022, with $40.3 million to be paid within the next 12 months.

• Payments associated with the liability related to the sale of future royalties were approximately $21.6 million in 2023, with an estimated $58.2 million to be paid within the next 12 months.

• Amount associated with the achievement of a development milestone payable to Blackstone was $84.5 million as of December 31, 2023, with $21.1 million to be paid within the next 12 months.

Since we commenced operations in 2002, we have generated significant losses and as of December 31, 2023, we had an accumulated deficit of $7.01 billion.

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The estimates for our product revenue allowances and accruals are most significantly affected by chargebacks, which are contractual commitments with the government and other entities to sell products to qualified healthcare providers at prices lower than the list prices charged to the customer who directly purchases from us, and rebates that represent discount obligations under government programs, including Medicaid in the U.S.

and similar programs in certain other countries,

including countries in which we are accruing for estimated rebates because final pricing has not yet been negotiated.

We are also subject to potential rebates in connection with our VBAs with certain commercial payors.

and similar programs in certain other countries, including countries in which we are accruing for estimated rebates because final pricing has not yet been negotiated.

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

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We use the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts, or the most likely amount method, which is the single most likely amount in a range of possible considerations, to estimate variable consideration related to our product revenues.

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Net Revenues from Collaborations

We earn revenue in connection with collaboration agreements which allow our collaboration partners to utilize our technology platforms and develop product candidates.

For elements of collaboration arrangements that are accounted for pursuant to ASC Topic 606, Revenue from Contracts with Customers, or ASC 606, we identify the performance obligations and allocate the total consideration we expect to receive on a relative standalone selling price basis to each performance obligation.

We earn revenue in connection with collaboration agreements which allow our collaborators to utilize our technology platforms and develop product candidates.

For elements of collaboration arrangements that are accounted for pursuant to Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, or ASC 606, we identify the performance obligations and allocate the total consideration we expect to receive on a relative standalone selling price basis to each performance obligation.

Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, the expected number of targets or indications expected to be pursued under each license, discount rates and probabilities of technical and regulatory success.

We recognize revenue associated with each performance obligation as the control over the promised goods or services transfer to our collaboration partner which occurs either at a point in time or over time.

We recognize revenue associated with each performance obligation as the control over the promised goods or services transfer to our collaborator which occurs either at a point in time or over time.

If control transfers over time, revenue is recognized by using a method of measuring progress that best depicts the transfer of goods or services, for example based on actual costs incurred relative to total forecasted costs to be incurred over the period the transfer of goods or services occurs.

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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.

Third-party forecasts are updated periodically as new data is obtained with regards to Leqvio's global launch progress or as sales information becomes available.

Third-party forecasts are updated periodically as new data is obtained with respect to Leqvio’s global launch progress or as sales information becomes available.

Increases, decreases or a shift in timing of estimated revenues affects the interest rate utilized in the calculation of the liability related to the sale of future royalties.

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Actual results could vary materially from these estimates.

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Recent Accounting Pronouncements

Please read Note 2 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our business.

Please read Note 2 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a description of recent accounting pronouncements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis