What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-15 compared with 2023-02-23 · 384 added, 397 removed, 926 unchanged (46% of the section changed)

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Liability Related to Sale of Future Royalties and Commercial Milestones

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Total assets $ 3,829,880 $ 3,546,359

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

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Convertible debt 1,020,776 1,016,942

Long-term debt, net — 675,697

Liability related to the sale of future royalties, net of current portion 1,322,248 1,252,015

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Commitments and contingencies (Note 13)

Stockholders’ (deficit) equity:

Stockholders’ deficit:

Preferred stock, $ 0.01 par value per share, 5,000 shares authorized and no shares issued and outstanding as of December 31, 2023 and December 31, 2022

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Accumulated deficit ( 7,009,591 ) ( 6,569,349 )

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

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

Total stockholders’ deficit

( 220,644 ) ( 158,223 )

Total liabilities and stockholders’ deficit

$ 3,829,880 $ 3,546,359

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

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Interest expense ( 121,221 ) ( 155,968 ) ( 143,021 )

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

Interest income 95,561 24,808 1,579

Other expense, net ( 125,682 ) ( 134,175 ) ( 2,050 )

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

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Net loss $ ( 440,242 ) $ ( 1,131,156 ) $ ( 852,824 )

Other comprehensive (loss) income:

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

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

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities 11,018 ( 7,840 ) ( 1,978 )

Foreign currency translation gain (loss) 11,922 ( 5,274 ) 11,398

Defined benefit pension plans, net of tax ( 1,661 ) 1,719 943

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

Total other comprehensive income (loss) 21,279 ( 11,395 ) 10,363

Comprehensive loss $ ( 418,963 ) $ ( 1,142,551 ) $ ( 842,461 )

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Capital Accumulated

Comprehensive (Loss) Income Accumulated

Comprehensive Loss

Deficit Total

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Shares Amount

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

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

Balance as of 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

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

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

Exercise of common stock options, net of tax withholdings 1,162 12 114,237 — — 114,249

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Stock-based compensation expense — — 225,865 — — 225,865

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

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

Other comprehensive gain — — — 21,279 — 21,279

Net loss — — — — ( 440,242 ) ( 440,242 )

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

Balance as of December 31, 2023 125,794 $ 1,259 $ 6,811,063 $ ( 23,375 ) $ ( 7,009,591 ) $ ( 220,644 )

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

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Deferred revenue 55,022 ( 65,911 ) ( 50,404 )

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

Net cash provided by (used in) operating activities 104,156 ( 541,274 ) ( 641,693 )

Cash flows from investing activities:

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Other investing activities ( 4,438 ) ( 4,694 ) ( 4,198 )

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

Net cash (used in) provided by investing activities ( 336,350 ) 169,354 ( 273,300 )

Cash flows from financing activities:

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

Repayment of term loan ( 762,107 ) — —

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

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Proceeds from development derivative 24,667 31,000 19,600

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

Proceeds from issuance of common stock to strategic partners, net of closing costs — — 99,498

(Repayment of) proceeds from term loan facility — ( 762,107 ) 500,000

Other financing activities — — ( 18,750 )

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 6,391 ( 7,430 ) ( 9,018 )

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

Net (decrease) increase in cash, cash equivalents and restricted cash ( 53,672 ) 46,403 323,107

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

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Cash paid for interest $ 32,118 $ 45,235 $ 24,657

Supplemental disclosure of noncash investing and financing activities:

Supplemental disclosure of noncash investing activities:

Capital expenditures included in accounts payable and accrued expenses $ 3,805 $ 5,213 $ 13,599

Lease liabilities arising from obtaining right-of-use assets $ 1,013 $ 7,932 $ 34,435

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

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

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Since inception, we have focused on discovering, developing and commercializing RNAi therapeutics by establishing and maintaining a strong intellectual property position in the RNAi field, establishing strategic alliances with leading pharmaceutical and life sciences companies, generating revenues through licensing agreements, and ultimately developing and commercializing RNAi therapeutics globally, either independently or with our strategic partners.

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

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

In early 2021, we launched our Alnylam 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, 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.

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

As of December 31, 2023, we have five marketed products, including one collaborated 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., and Europe.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

In our consolidated financial statements, we use estimates and assumptions related to our inventory valuation and related reserves, liability related to the sale of future royalties, development derivative liability, income taxes, revenue recognition, research and development expenses, and stock-based compensation.

In our consolidated financial statements, we use estimates and assumptions related to our inventory valuation and related reserves, liability related to the sale of future royalties, development derivative liability, income taxes, deferred tax asset valuation allowances, revenue recognition, research and development expenses, and stock-based compensation.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable.

Actual results could differ from those estimates.

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.

Changes in estimates are reflected in reported results in the period in which they become known.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2023 will be sufficient to satisfy our working capital and operating needs 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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Investments are restricted, in accordance with our investment policy, to a concentration limit per issuer.

During the years ended December 31, 2022, 2021 and 2020, our revenues were generated primarily from product sales to distributors and collaborations with strategic partners.

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.

During the years ended December 31, 2023, 2022 and 2021, our revenues were generated primarily from product sales to customers and collaborations with strategic partners.

For the years ended December 31, 2023, 2022 and 2021, our gross accounts receivable balance was comprised of payments primarily due from customers for product sales and our strategic partners.

ALNYLAM PHARMACEUTICALS, INC.

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__________________________________________

* Represents less than 10%

* Represents less than 10% and/or not a customer in the applicable year

The following table summarizes customers with amounts due that represent 10% or greater of our consolidated gross accounts receivable balance:

As of December 31,

Novartis AG 18 % *

Distributor A 16 % 32 %

Distributor B * 10 %

Novartis AG * 20 %

Regeneron Pharmaceuticals * 12 %

__________________________________________

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We invest our excess cash balances in marketable debt securities and classify our investments as either held-to-maturity or available-for-sale based on facts and circumstances present at the time we purchased the securities.

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’ (deficit) equity.

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

As of December 31, 2023 and 2022, 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, for which fair value measurement data is obtained from independent pricing services, and include any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive loss.

Realized gains and losses are determined using the specific identification method and are included in other expense, net.

If any adjustment to fair value reflects a decline in the value of the marketable debt securities, we consider all available evidence to evaluate if an impairment loss exists, and if so, mark the investment to market through a charge to our consolidated statements of operations and comprehensive loss.

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government-sponsored enterprise securities, U.S.

treasury securities and money market funds.

We measure marketable equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of an investee), which have readily available prices, at fair value with changes in fair value recognized in other income (expense) on our consolidated statements of operations and comprehensive loss.

We obtain fair value measurement data for our marketable debt securities from independent pricing services.

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

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.

treasury securities, money market funds and certificates of deposit.

We measure marketable equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of an investee), which have readily available prices, at fair value with changes in fair value recognized in other expense, net on our consolidated statements of operations and comprehensive loss.

Accounts Receivable

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As of December 31, 2023 and 2022, 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

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

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

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.

Inventory is measured at the lower of cost or estimated net realizable value and classified based on the anticipation of when it will be consumed either within our normal operating cycle (short-term) or beyond (long-term).

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(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(ii) identify the performance obligation(s) in the contract;

(iii) determine the transaction price, including variable consideration, if any;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) we satisfy a performance obligation.

(iv) allocate the transaction price to the performance obligation(s) in the contract;

and (v) recognize revenue when (or as) we satisfy the performance obligation(s).

We only apply the five-step model to contracts when collectability of the consideration to which we are entitled in exchange for the goods or services we transfer to the customer is determined to be probable.

At contract inception, once the contract is determined to be within the scope of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, or ASC 606, we assess whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation.

At contract inception, once the contract is determined to be within the scope of ASC Topic 606, Revenue from Contracts with Customers, or ASC 606, we assess whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation.

Goods and services that are determined not to be distinct are combined with other promised goods and services until a distinct bundle is identified.

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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 sales.

We use the expected value method to estimate variable consideration for certain rebates, chargebacks, product returns, and other incentives and we use the most likely amount method for certain rebates and trade discounts and allowances.

We record reserves, based on contractual terms, for components related to product sold during the reporting period, as well as our estimate of product that remains in the distribution channel inventory at the end of the reporting period that we expect will be sold to qualified healthcare providers.

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We offer customers product return rights if products are damaged, defective or expired, with “expired” defined within each customer agreement.

We estimate the amount of product that will be returned using a probability-weighted estimate based on our sales history.

We estimate the amount of product that will be returned based on our sales history.

Other incentives:

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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.

Our collaboration agreements are detailed in Note 4, Net Revenues from Collaborations.

For each collaboration partner, we discuss our revenue recognition, including our significant performance obligations under each agreement.

At contract inception, we assess whether the collaboration arrangements are within the scope of ASC Topic 808, Collaborative Arrangements, or ASC 808, to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.

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

Our significant collaboration agreements are detailed in Note 4, Net Revenues from Collaborations.

For each collaborators, we discuss our revenue recognition, including our significant performance obligations under each agreement.

At contract inception, we assess whether the collaboration arrangements are within the scope of ASC 606 or ASC Topic 808, Collaborative Arrangements, or ASC 808, to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.

This assessment is performed based on the responsibilities of all parties in the arrangement.

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Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, 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.

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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 agreements.

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 and amortization of intangible assets associated with the sale of our products.

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.

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Cost of Collaborations and Royalties

Cost of collaborations and royalties includes costs we incur in connection with providing commercial drug supplies, such as GalNAc material, to collaborators, in addition to royalties we owe to third parties on the net sales of licensed products by Novartis.

We account for income taxes under the asset and liability method.

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We account for all stock-based awards granted to employees at their fair value and recognize compensation expense over the vesting period of the award.

Determining the amount of stock-based compensation to be recorded requires us to develop estimates of fair values of stock options as of the grant date.

Determining the amount of stock-based compensation to be recorded requires us to develop estimates of fair values of stock awards as of the grant date.

We calculate the grant date fair values of stock options using the Black-Scholes valuation model, which requires the input of subjective assumptions, including but not limited to expected stock price volatility over the term of the awards and the expected term of stock options.

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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.

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

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.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Development derivative liability is recorded at fair value based on the probability weighted present value of the estimated cash flows pursuant to contractual terms of the funding agreement.

The liability is remeasured quarterly with any change in fair value recorded in other income (expense) on the consolidated statements of operations and comprehensive loss.

The liability is remeasured quarterly with any change in fair value recorded in other expense on the consolidated statements of operations and comprehensive loss.

Comprehensive Loss

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.

Comprehensive loss is comprised of net loss and certain changes in stockholders’ deficit 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, foreign currency translation adjustments in other comprehensive (if the functional currency is not the U.S.

dollar) and certain changes in the fair value of the plan assets and projected benefit obligation attributed to our defined benefit pension plan.

Net Loss per Common Share

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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.

In the diluted net loss per share calculation, net loss is adjusted for the elimination of interest expense on the convertible debt.

Potential common shares consist of shares issuable upon the vesting of restricted stock units, 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) and 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 periods presenting a net loss, 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 or if-converted methods) excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:

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Please read Note 3 for information regarding our net product sales by geography.

Recently Adopted Accounting Pronouncements

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.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update 2023-09, Improvements to Income Tax Disclosures which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively.

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the disclosure requirements related to the new standard.

In November 2023, the FASB issued Accounting Standard Update 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

We are evaluating the disclosure requirements related to the new standard.

ALNYLAM PHARMACEUTICALS, INC.

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NET PRODUCT REVENUES

Net product revenues consist of the following:

Net product revenues, classified based on the geographic region in which the product is sold, consist of the following:

Year Ended December 31,

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

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 thousands) 2023 2022 2021

$ 337,802 $ — $ —

Regeneron Pharmaceuticals 100,468 87,844 113,226

86,727 43,159 49,120

Vir Biotechnology 1,755 16,897 31,396

Other 21,188 3,909 18,607

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Receivables included in “Accounts receivable, net”

$ 99,576 $ 32,342

Contract liabilities included in “Deferred revenue”

$ 290,763 $ 235,528

We recognized revenue of $ 40.5 million and $ 55.5 million in the years ended December 31, 2023 and 2022, respectively, that was included in the contract liability balance at the beginning of the period.

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.

To determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance.

If additional consideration is received on those contracts in subsequent periods, we assume all revenue recognized in the reporting period first applies to the beginning contract liability as opposed to a portion applying to the new consideration for the period.

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

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

Year Ended December 31,

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(In thousands) Clinical Trial and Manufacturing External Services Other Clinical Trial and Manufacturing External Services Other Clinical Trial and Manufacturing External Services Other

$ 39,320 $ 2,337 $ 2,963 $ — $ — $ — $ — $ — $ —

Regeneron 38,220 5,836 33,388 12,926 2,141 27,935 24,989 840 47,582

1 unchanged sentence

Total $ 79,510 $ 8,963 $ 38,542 $ 13,082 $ 2,820 $ 28,272 $ 35,300 $ 1,615 $ 52,071

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

The research and development expenses incurred for the agreements included in the table above consist of costs incurred for (i) clinical expenses, including manufacturing of clinical product, (ii) external services, including consulting services and lab supplies and services, and (iii) other expenses, including professional services, facilities and overhead allocations, and a reasonable estimate of compensation and related costs as billed to our counterparties, for which we recognize net revenues from

ALNYLAM PHARMACEUTICALS, INC.

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.

collaborations.

For the years ended December 31, 2023, 2022 and 2021, 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 $ 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

Product Collaborations

On July 21, 2023, or the Effective Date, we entered into a Collaboration and License Agreement, or the Roche Agreement, with F.

Hoffmann-La Roche Ltd.

and Genentech, Inc., or, collectively, Roche, pursuant to which we and Roche established a worldwide, strategic collaboration for the joint development of pharmaceutical products containing zilebesiran.

Zilebesiran is our investigational siRNA therapeutic targeting liver-expressed angiotensinogen, which is in Phase 2 clinical trials for the treatment of hypertension.

Under the Roche Agreement, we granted to Roche (i) co-exclusive rights to develop zilebesiran worldwide and commercialize zilebesiran in the U.S., referred to as the Co-Commercialization Territory, (ii) exclusive rights to commercialize zilebesiran outside of the U.S., referred to as the Roche Territory, and (iii) non-exclusive rights to manufacture zilebesiran for the development and commercialization of zilebesiran in the Roche Territory.

In connection with the Roche Agreement, Roche made an upfront, non-refundable payment of $ 310.0 million.

In addition, we will be eligible to receive up to $ 1.24 billion in contingent payments based on the achievement of specified development and regulatory milestones and up to $ 1.28 billion in sales-based milestones.

We will lead the global clinical development for zilebesiran.

We will be responsible for forty percent ( 40 %) and Roche will be responsible for the remaining sixty percent ( 60 %) of development costs incurred in the conduct of development activities that support regulatory approval of zilebesiran globally.

We and Roche will share equally ( 50 / 50 ) all costs incurred in connection with development activities that are conducted to support regulatory approval of zilebesiran solely in the Co-Commercialization Territory if incremental development activities are needed.

Roche will be solely responsible for all costs incurred in the conduct of development activities primarily to support regulatory approval in the Roche Territory if incremental development activities are needed.

Upon regulatory approval Roche has the exclusive right to commercialize zilebesiran in the Roche Territory and will pay us tiered, low double-digit royalties based on net sales of zilebesiran on a country-by-country and product-by-product basis during the applicable royalty term.

We and Roche will co-commercialize zilebesiran in the Co-Commercialization Territory and share equally ( 50 / 50 ) profits and losses (including commercialization costs).

Roche has the right to terminate the Roche Agreement for any or no reason at all upon prior written notice, however, if the termination notice occurs after the achievement of the first development milestone and before the achievement of the third development milestone, Roche is required to pay us a termination fee of $ 50.0 million.

In addition, either party may terminate the Roche Agreement for a material breach by, or insolvency of, the other party, subject to a cure period.

Unless earlier terminated pursuant to its terms, the Roche Agreement commences on the Effective Date and will remain in effect until expiration on a country-by-country and product-by-product basis (a) in the Roche Territory, upon expiration of the applicable royalty term for such product in the applicable country and (b) in the Co-Commercialization Territory, upon expiration of the term of the co-commercialization efforts for the applicable product.

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

We evaluated the Roche Agreement and concluded that the Roche Agreement had elements that were within the scope of ASC 606, Revenue from Contracts with Customers and ASC 808, Collaborative Arrangements .

As of the Effective Date, we identified the following promises in the Roche Agreement that were evaluated under the scope of ASC 606:

delivery of (i) a co-exclusive license to develop zilebesiran worldwide and commercialize zilebesiran within the Co-Commercialization Territory, a non-exclusive license to manufacture zilebesiran in the Roche Territory solely for purposes of developing and commercializing zilebesiran in the Roche Territory, and an exclusive license to commercialize zilebesiran in the Roche Territory, collectively referred to as Roche License Obligation, (ii) development services, including the manufacture of clinical supply, that support regulatory approval of zilebesiran, referred to as the Roche Development Services Obligation, and (iii) technology transfer of the existing manufacturing process for zilebesiran, referred to as the Roche Technology Transfer Obligation.

The three performance obligations under the Roche Agreement are collectively referred to as the Roche Performance Obligations.

We also evaluated whether certain options outlined within the Roche Agreement represented material rights that would give rise to a performance obligation and concluded that none of the options convey a material right to Roche and therefore are not considered separate performance obligations within the Roche Agreement.

We assessed the above promises and determined that the Roche License Obligation, Roche Development Services Obligation and Roche Technology Transfer Obligation are reflective of a vendor-customer relationship and therefore represent performance obligations within the scope of ASC 606.

The Roche License Obligation is considered functional intellectual property and distinct from other promises under the contract as Roche can benefit from the licenses on its own or together with

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other readily available resources.

As the licenses are delivered at the same time, they are considered one performance obligation at contract inception.

The Roche Development Services Obligation is considered distinct as Roche can benefit from the development services together with the licenses transferred by us at the inception of the agreement.

The development services are not expected to significantly modify or customize the initial intellectual property as zilebesiran is in the second phase of clinical development.

The Roche Technology Transfer Obligation is distinct as Roche can benefit from the manufacturing license transferred by us at the inception of the agreement given the advancements of our RNAi platform and our utilization of third-party contract manufacturing organizations to manufacture zilebesiran.

Therefore, each represents a separate performance obligation within the contract with a customer under the scope of ASC 606 at contract inception.

We consider the collaborative activities associated with the co-commercialization of zilebesiran in the U.S.

to be a separate unit of account within the scope of ASC 808 as we and Roche are both active participants in the commercialization activities and are exposed to significant risks and rewards that are dependent on the commercial success of the activities in the arrangement.

We determined the transaction price under ASC 606 at the inception of the Roche Agreement to be $ 857.0 million, consisting of the $ 310.0 million up front payment and $ 547.0 million additional variable consideration attributed to cost reimbursement from development and manufacturing services and technology transfer related to the Roche Performance Obligations.

Since the variable consideration allocated to the Roche Development Services Obligation and the Roche Technology Transfer Obligation would be recognized as revenue only as the costs are incurred, we determined it is not probable that a significant reversal of cumulative revenue would occur.

We utilized the expected value method to determine the amount of reimbursement for these activities.

We determined that any variable consideration related to development and regulatory milestones is deemed to be fully constrained and therefore excluded from the transaction price due to the high degree of uncertainty and risk associated with these potential payments as we determine that we cannot assert that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

We also determined that royalties and sales milestones relate solely to the licenses of intellectual property and are therefore excluded from the transaction price under the sales-or-usage based royalty exception of ASC 606.

We developed the estimated standalone selling price for each of the Roche Performance Obligations with the objective of determining the price at which we would sell such an item if it were to be sold regularly on a standalone basis.

We developed the estimated standalone selling price for the Roche License Obligation primarily based on the probability-weighted present value of expected future cash flows associated with each underlying license or activity.

In developing such estimates, we applied judgment in determining the forecasted revenues, taking into consideration the applicable market conditions and relevant entity-specific factors, the probability of success, the time needed to develop zilebesiran and the discount rate.

We developed the estimated standalone selling price for the services and clinical supply included in the Roche Development Services Obligation and the Roche Technology Transfer Obligation primarily based on the level of effort necessary to perform the service and the costs for full-time equivalent employees and expected resources to be committed plus a reasonable margin.

We allocated the variable consideration related to the estimated reimbursements for the Roche Development Services Obligation and the Roche Technology Transfer Obligation to each performance obligation as the terms of the variable payment relate specifically to our efforts to satisfy the performance obligation and allocating the variable amount of consideration entirely to the respective performance obligation is consistent with the allocation objective of ASC 606 when considering all of the performance obligations and payment terms in the contract.

We allocated the fixed up-front consideration of $ 310.0 million entirely to the Roche License Obligation as the value of the fixed consideration together with the expected value of the development and regulatory milestones, sales-based milestones and royalties, all of which are either currently constrained or subject to the sales-and usage-based royalty exception, approximates the standalone selling price of the Roche License Obligation.

Therefore, allocating the fixed up-front consideration entirely to the Roche License Obligation is consistent with the allocation objective of ASC 606 when considering all of the performance obligations and payment terms in the contract.

The Roche License Obligation was satisfied at a point in time upon transfer of the license to Roche.

Control of the licenses was transferred on the Effective Date and Roche could begin to use and benefit from the licenses.

For the Roche Development Services Obligation, we measure proportional performance over time using an input method based on cost incurred relative to the total estimated cost of the obligation, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend.

This ratio is applied to the transaction price allocated to the obligation.

Management has applied significant judgment in the process of developing our estimates.

We re-evaluate the transaction price as of the end of each reporting period.

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The following tables provide a summary of the transaction price allocated to each performance obligation, in addition to revenue activity during the period, in thousands:

Transaction Price Allocated Revenue Recognized During

Performance Obligations As of December 31, 2023 Year Ended December 31, 2023

Roche License Obligation $ 310,000 $ 310,000

Roche Development Services Obligation 545,000 23,974

Roche Technology Transfer Obligation

$ 857,000 $ 333,974

As of December 31, 2023, the aggregate amount of the transaction price allocated to the Roche Performance Obligations that was unsatisfied was $ 523.0 million, which is expected to be recognized through the term of the Roche Agreement as the services are performed.

Regeneron Pharmaceuticals, Inc.

In April 2019, we entered into a global, strategic collaboration with Regeneron to discover, develop and commercialize RNAi therapeutics for a broad range of diseases by addressing therapeutic targets expressed in the eye and central nervous system, or CNS, in addition to a select number of targets expressed in the liver, which we refer to as the Regeneron Collaboration.

The Regeneron Collaboration is governed by a Master Agreement, referred to as the Regeneron Master Agreement, which became effective on May 21, 2019.

In connection with the Regeneron Master Agreement, we and Regeneron entered into (i) a binding co-co collaboration term sheet covering the continued development of cemdisiran, our C5 small interfering RNA, or siRNA, currently in Phase 2 development for C5 complement-mediated diseases, as a monotherapy and (ii) a binding license term sheet to evaluate anti-C5 antibody-siRNA combinations for C5 complement-mediated diseases including evaluating the combination of Regeneron’s pozelimab (REGN3918), currently in Phase 3 development, and cemdisiran.

The C5 co-co collaboration and license agreements were executed in August 2019.

During 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.

In connection with the Regeneron Master Agreement, we and Regeneron entered into (i) a co-co collaboration agreement covering the continued development of cemdisiran, our C5 small interfering RNA, or siRNA, currently in development for C5 complement-mediated diseases, as a monotherapy and (ii) a license agreement to evaluate anti-C5 antibody-siRNA combinations for C5 complement-mediated diseases including evaluating the combination of Regeneron’s pozelimab and cemdisiran.

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.

The Regeneron Collaboration also covers a select number of RNAi therapeutic programs designed to target genes expressed in the liver, including our previously announced collaboration with Regeneron to identify RNAi therapeutics for the chronic liver disease nonalcoholic steatohepatitis.

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The C5 co-co collaboration agreement, the C5 license agreement, and the Master Agreement have been combined for accounting purposes and treated as a single agreement.

In connection with the Regeneron Master Agreement, Regeneron made an upfront payment of $ 400.0 million.

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 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

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the potential for approximately $ 30.0 million in annual discovery funding to us as the Regeneron Collaboration reaches steady state.

In connection with the Regeneron Master Agreement, Regeneron made an upfront payment of $ 400.0 million.

In 2023, we received a $ 100.0 million milestone payment upon satisfying certain criteria during early clinical development for our CNS program, ALN-APP.

We are also eligible to receive up to an additional $ 100.0 million in milestone payments upon achievement of certain criteria during early clinical development for an eye program.

We and Regeneron plan to advance programs directed to up to 30 targets in the first five years under the Regeneron Collaboration during the Initial Research Term.

For each program, Regeneron will provide us with $ 2.5 million in funding at program initiation and an additional $ 2.5 million at lead candidate identification, with the potential for approximately $ 30.0 million in annual discovery funding to us as the Regeneron Collaboration reaches steady state.

Regeneron has the right to terminate the Regeneron Master Agreement for convenience upon ninety days ’ notice.

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The licensee will pay to the licensor certain development and/or commercialization milestone payments totaling up to $ 150.0 million for each collaboration product.

In addition, following the first commercial sale of the applicable collaboration product under a license agreement, the licensee is required to make certain tiered royalty payments, ranging from low double-digits up to 20 %, to the licensor based on the aggregate annual net sales of the collaboration product, subject to customary reductions.

In addition, following the first commercial sale of the applicable collaboration product under a license agreement, the licensee is required to make certain tiered royalty payments, ranging from low double-digits up to 20 %, to the licensor based on the aggregate annual sales of the collaboration product, subject to customary reductions.

For any co-co collaboration agreement subsequently entered into, we and Regeneron will share equally all costs of, and profits from, development and commercialization activities.

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If a party exercises its opt-out right, following the first commercial sale of the applicable collaboration product under a co-co collaboration agreement, the lead party is required to make certain tiered royalty payments, ranging from low double-digits up to 20 %, to the other party based on the aggregate annual net sales of the collaboration product and the timing of the exercise of the opt-out right, subject to customary reductions and a reduction for opt-out transition costs.

Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any milestone or royalty payments from Regeneron under the Regeneron Master Agreement, the C5 license agreement, or any future license agreement, or under any co-co collaboration agreement in the event we exercise our opt-out right.

Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any additional milestone or royalty payments from Regeneron under the Regeneron Master Agreement, the C5 license agreement, or any future license agreement, or under any co-co collaboration agreement in the event we exercise our opt-out right.

Our obligations under the Regeneron Collaboration include:

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and (iii) development, manufacturing and commercialization activities for cemdisiran monotherapies, referred to as the C5 Co-Co Obligation.

The research license is not distinct from the research services primarily as a result of Regeneron being unable to benefit on its own or with other resources reasonably available, as the license is providing access to specialized expertise, particularly as it relates to RNAi technology that is not available in the marketplace.

Similarly, the worldwide license to cemdisiran for combination therapies is not distinct from the manufacturing and supply, and development service obligations, as Regeneron cannot benefit on its own from the value of the license without receipt of supply.

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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.

The transaction price allocated to the C5 Co-Co obligation

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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.

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.

We utilized the expected value method to determine the amount of reimbursement for these activities.

We determined that any variable consideration related to sales-based royalties and milestones related to the worldwide license to cemdisiran for combination therapies is deemed to be constrained and therefore has been excluded from the transaction price.

In addition, we are eligible to receive a future milestone payment upon the achievement of certain criteria during early clinical development for an eye program.

We are also eligible to receive royalties on future commercial sales for certain eye, CNS or liver targets, if any;

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We allocated the initial transaction price to each unit of account based on the applicable accounting guidance as follows, in thousands:

Performance Obligations Standalone Selling Price Transaction Price Allocated Accounting Guidance

Research Services Obligation $ 130,700 $ 183,100 ASC 606

C5 License Obligation $ 97,600 92,500 ASC 606

C5 Co-Co Obligation $ 364,600 246,000 ASC 606

Performance Obligations Standalone Selling Price Transaction Price Allocated

Research Services Obligation $ 130,700 $ 183,100

C5 License Obligation $ 97,600 92,500

C5 Co-Co Obligation $ 364,600 246,000

The transaction price was allocated to the obligations based on the relative estimated standalone selling prices of each obligation, over which management has applied significant judgment.

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In developing such estimate, we applied judgment in determining the indications that will be pursued, the forecasted revenues for such indications, the probability of success and the discount rate.

For the Research Services Obligation and the C5 License Obligation accounted for under ASC 606, we measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for each of the identified obligations, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend.

For the Research Services Obligation, the C5 License Obligation, and the C5 Co-Co Obligation accounted for under ASC 606, we measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for each of the identified obligations, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend.

This ratio is applied to the transaction price allocated to each obligation.

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We re-evaluate the transaction price as of the end of each reporting period and as of December 31, 2023, the total transaction price was determined to be $ 675.8 million, an increase of $ 116.9 million from December 31, 2022.

The increase in the transaction price is primarily due to the $ 100.0 million milestone we earned in 2023 as we met certain criteria during early clinical development for our CNS program, ALN-APP.

As of December 31, 2023, the transaction price is comprised of the upfront payment and variable consideration related to development, manufacture and supply activities.

For the C5 Co-Co Obligation accounted for under ASC 808, the transaction price allocated to this obligation is recognized using a proportional performance method.

Revenue recognized under this agreement, inclusive of the amount allocated to the C5 Co-Co Obligation, is accounted for as collaboration revenue.

Revenue recognized under this agreement is accounted for as collaboration revenue.

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The following tables provide a summary of the transaction price allocated to each unit of account based on the applicable accounting guidance, in addition to revenue activity during the period, in thousands:

Transaction Price Allocated Deferred Revenue

Performance Obligations As of December 31, 2022 As of December 31, 2022 As of December 31, 2021 Accounting Guidance

Research Services Obligation $ 215,680 $ 26,200 $ 42,300 ASC 606

C5 License Obligation 97,200 7,000 26,900 ASC 606

C5 Co-Co Obligation 246,000 193,600 212,500 ASC 606

Performance Obligations As of December 31, 2023 As of December 31, 2023 As of December 31, 2022

Research Services Obligation $ 305,700 $ 63,400 $ 26,200

C5 License Obligation 124,100 27,500 7,000

C5 Co-Co Obligation 246,000 186,200 193,600

Total $ 675,800 $ 277,100 $ 226,800

Revenue Recognized During

Performance Obligations Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Accounting Guidance

Research Services Obligation $ 28,600 $ 37,600 $ 44,800 ASC 606

C5 License Obligation 32,500 44,600 7,100 ASC 606

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

Performance Obligations Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021

Research Services Obligation $ 80,200 $ 28,600 $ 37,600

C5 License Obligation ( 15,100 ) 32,500 44,600

C5 Co-Co Obligation 7,400 20,080 18,900

Total $ 72,500 $ 81,180 $ 101,100

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.

As of December 31, 2023, 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 $ 334.7 million, which is expected to be recognized through the term of the Regeneron Collaboration as the services are performed, but could be recognized earlier after an assessment of strategic alternatives which could change the scope of our obligations.

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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We refer to this agreement, as amended through the date hereof, as the MDCO License Agreement.

On January 6, 2020, Novartis AG, or Novartis, completed its acquisition of MDCO and assumed all rights and obligations under the MDCO License Agreement.

As of December 31, 2022, we have earned $ 80.0 million of milestones and upon achievement of certain events, we will be entitled to receive additional milestones, up to an aggregate of $ 100.0 million, including $ 90.0 million in specified commercialization milestones and $ 10.0 million in other specified regulatory milestones.

In 2020, Novartis AG, or Novartis, completed its acquisition of MDCO and assumed all rights and obligations under the MDCO License Agreement.

As of December 31, 2023, we have earned $ 120.0 million of milestones and upon achievement of certain events, we will be entitled to receive an additional $ 60.0 million in commercialization milestones.

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.

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

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product (for Alnylam) and any siRNA product (for Novartis) directed to the PCSK9 gene, other than a licensed product, without the prior written agreement of the other party, subject to the terms of the MDCO License Agreement.

We evaluated the MDCO License Agreement and concluded that Novartis meets the definition of a customer and that the MDCO License Agreement is a contract.

We determined the transaction price, identified the performance obligations and allocated the transaction price to each performance obligation.

We also determined that substantially all of our performance obligations are within the scope of the revenue standard as they relate to the delivery of goods and services to a customer for that customer’s use in monetizing an asset.

Specifically, we concluded that Novartis meets the definition of a customer as we are delivering intellectual property and know-how rights as well as research and development activities.

In addition, we determined that the MDCO License Agreement met the requirements to be accounted for as a contract, including that it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services that will be delivered to Novartis.

We determined that, pursuant to ASC 606, the performance obligations were not separately identifiable and were not distinct (and did not have standalone value) due to the specialized nature of the services to be provided by us and the dependent relationship between the performance obligations.

Given this fact pattern, we have concluded the MDCO License Agreement has a single identified or combined performance obligation.

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 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.

During 2018, we completed the performance obligations identified in the MDCO License Agreement, including the supply and technical transfer agreement, however, we continue to receive additional orders for supply of certain material.

We consider such orders as promised goods to be distinct from the other performance obligations since Novartis now has the ability to manufacture on its own through its own vendors.

Such orders will be treated as separate agreements and any associated revenue will be recognized upon transfer of control.

Novartis License Agreement

In December 2021, we and Novartis entered into a collaboration and license agreement, or the Novartis License Agreement, pursuant to which we granted to Novartis an exclusive, worldwide license to develop, manufacture and commercialize siRNAs targeting end-stage liver disease, or ESLD, potentially leading to the development of a treatment designed to promote the regrowth of functional liver cells and to provide an alternative to transplantation for patients with liver failure.

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.

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.

Once a lead candidate is identified, further development and clinical research will be conducted by Novartis.

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

Unless terminated earlier in accordance with the terms of the Novartis License Agreement, the Collaboration Term expires at the earlier of (1) 180 days after completion of the development activities assigned to us as agreed upon between the parties, or (2) December 17, 2024.

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

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 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:

i) the exclusive license to develop, manufacture and commercialize siRNAs targeting ESLD;

and ii) the obligation to perform work under the DC Workplan.

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

We measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for the identified performance

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obligation, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend.

This ratio is applied to the total transaction price.

Management has applied significant judgment in the process of developing our estimates.

Any changes to these estimates will be recognized in the period in which they change as a cumulative catch up.

As of December 31, 2022, the total transaction price was determined to be approximately $ 16.0 million, comprised of the $ 12.5 million upfront payment and estimated variable consideration attributed to work to be performed under the DC Workplan.

We utilized the expected value method to determine the amount of reimbursement for these activities.

The total transaction price is allocated entirely to the single performance obligation.

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, 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.

In October 2017, we and Vir Biotechnology, Inc., or Vir, entered into a collaboration and license agreement, or the Vir Agreement, for the development and commercialization of RNAi therapeutics for infectious diseases, including chronic hepatitis B virus, or HBV, infection.

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 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.

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.

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.

If Vir does not exercise its option for an infectious disease program, the Vir Agreement will expire upon the expiration of the applicable option period with respect to such program.

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.

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.

In addition, Vir has the right to terminate the agreement on a program-by-program basis or in its entirety for any reason on 90 days’ written notice.

We identified one performance obligation under the Vir Agreement, as amended, comprised of:

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

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.

We measure proportional performance over time using an input method based on cost incurred relative to the total estimated costs for the identified performance obligation, on a quarterly basis, by determining the proportion of effort incurred as a percentage of total effort we expect to expend.

This ratio is applied to the total transaction price.

Management has applied significant judgment in the process of developing our estimates.

Any changes to these estimates will be recognized in the period in which they change as a cumulative catch up.

As of December 31, 2022, the total transaction price was determined to be $ 111.0 million, comprised of the upfront payment, fair value of non-cash equity consideration at contract inception, milestones achieved, and variable consideration related to development, manufacture and supply activities.

We utilized the expected value method to determine the amount of reimbursement for these activities.

The total transaction price is allocated entirely to the single performance obligation.

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.

Other Strategic License Agreements

PeptiDream, Inc.

In July 2021, we entered into a license and collaboration agreement with PeptiDream, Inc., or PeptiDream, to discover and develop peptide-siRNA conjugates to create multiple opportunities to deliver RNAi therapeutics to tissues outside the liver.

Through this collaboration, the companies will collaborate to select and optimize peptides for targeted delivery of small siRNA molecules to a wide range of cell types and tissues via specific interactions with receptors expressed on the target cells.

Under the terms of the agreement, PeptiDream received an upfront payment from us of $ 10.0 million and we will provide research and development funding over the term of the research collaboration, according to the terms of the PeptiDream agreement.

Due to the early stage of these assets, we recorded research and development expense for the upfront payment of $ 10.0 million during the third quarter of 2021.

PeptiDream may also receive payments based on the achievement of specified development, regulatory, and commercial milestones potentially totaling up to $ 247.0 million for each product developed by us that utilizes PeptiDream’s technology, as well as low-to-mid single digit royalties on sales, if any, of any such products.

During the term of the MDCO 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 (for Alnylam) and any siRNA product (for Novartis) directed to the PCSK9 gene, other than a licensed product, without the prior written agreement of the other party, subject to the terms of the MDCO License Agreement.

During 2018, we completed the performance obligations previously identified in the MDCO License Agreement, including the supply and technical transfer agreement, however, we continue to receive additional orders for supply of certain material.

We consider such orders as promised goods to be distinct from the other performance obligations since Novartis is able to manufacture on its own through its vendors.

Such orders are treated as separate agreements and any associated revenue will be recognized upon transfer of control.

Unearned future milestones are not included in the transaction price as they are not considered likely of achievement and therefore constrained.

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

In addition to the collaboration agreements discussed above, we have various other collaboration agreements that are not individually significant to our operating results or financial condition at this time.

Pursuant to the terms of those agreements, we may be required to pay, or we may receive, additional amounts contingent upon the occurrence of various future events (e.g., upon the achievement of various development and commercial milestones) which in the aggregate could be significant.

We may also incur, or be reimbursed for, significant research and development costs.

In addition, if any products related to these collaborations are approved for sale, we may be required to pay, or we may receive, royalties on future sales.

The payment or receipt of these amounts, however, is contingent upon the occurrence of various future events.

LIABILITY RELATED TO THE SALE OF FUTURE ROYALTIES

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treasury securities 30,712 — 30,712 —

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

Commercial paper 2,685 — 2,685 —

Certificates of deposit 3,289 — 3,289 —

Corporate notes 762 — 762 —

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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 —

Corporate notes 253,239 — 253,239 —

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 —

Municipal securities 1,015 — 1,015 —

Marketable equity securities 28,122 28,122 — —

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

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

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

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

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

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

As of December 31,

(In thousands) 2023 2022

Cash and cash equivalents $ 34,159 $ 113,243

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As of December 31, 2023 and 2022, we had $ 36.3 million and $ 32.7 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, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant and Equipment, Net

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Leasehold improvements 235,411 230,848

Construction in progress 14,595 80,753

Laboratory equipment 107,147 82,586

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Computer equipment and software 35,616 33,370

Construction in progress 30,099 14,595

Furniture and fixtures 12,153 11,832

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Total $ 526,057 $ 523,494

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Accrued Expenses

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Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 814,884 $ 868,556 $ 822,153

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Accumulated Other Comprehensive (Loss) Income

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Other comprehensive loss before reclassifications — — 11 ( 5,274 ) ( 5,263 )

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

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

Amounts reclassified from other comprehensive loss

— 1,719 ( 7,851 ) — ( 6,132 )

Net other comprehensive loss

— 1,719 ( 7,840 ) ( 5,274 ) ( 11,395 )

Balance as of December 31, 2022

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Amounts reclassified from other comprehensive income — ( 1,661 ) 11,024 — 9,363

Net other comprehensive income (loss) — 1,719 ( 7,840 ) ( 5,274 ) ( 11,395 )

Net other comprehensive income

— ( 1,661 ) 11,018 11,922 21,279

Balance as of December 31, 2023

$ ( 32,792 ) $ ( 2,753 ) $ 1,548 $ 10,622 $ ( 23,375 )

CREDIT AGREEMENT

In April 2020, we entered into a credit agreement, or Credit Agreement, among us, certain of our subsidiaries (such subsidiaries, together with us, the Loan Parties), funds or accounts managed or advised by GSO Capital Partners LP (now Blackstone Alternative Credit Advisors LP) and certain other affiliates of T he Blackstone Group Inc.

, 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 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

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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(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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the conversion rate of the Notes on such trading day;

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

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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.

We may redeem for cash equal to 100 % of the principal amount of the Notes being redeemed plus accrued and unpaid interest of 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.

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The fair value was determined based on the last actively traded price per $100 of the Notes for the period ended December 31, 2023 (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.

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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.

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, 2023 as the Capped Call Transactions are indexed to our own stock and met the criteria to be classified in stockholders' deficit.

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, two of our cardiometabolic programs.

and BXLS Family Investment Partnership V – ESC L.P., collectively referred to as Blackstone Life

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sciences, pursuant to which Blackstone Life Sciences will provide up to $ 150.0 million in funding for the clinical development of vutrisiran and zilebesiran, 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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The amount of funding ultimately provided by Blackstone Life Sciences is dependent on us achieving specified development milestones with respect to each clinical trial.

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 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 between Blackstone and the Company, 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 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 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.

In September 2023, we announced positive topline results from the KARDIA-1 Phase 2 study of zilebesiran, triggering the achievement of a development milestone of $ 84.5 million payable to Blackstone in 16 equal, quarterly payments over four years .

As consideration for Blackstone Life Sciences’ funding for Phase 3 clinical development costs of zilebesiran, we have agreed to pay Blackstone Life Sciences fixed payments of up to 4.5 times their Phase 3 investment over a four-year period upon regulatory approval of zilebesiran in specified countries, unless it is later withdrawn from the market following a mandatory recall.

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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 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.

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 vutrisiran for ATTR-cardiomyopathy following termination.

We account for the Funding Agreement under ASC 815, Derivatives and Hedging , as a derivative liability, measured at fair value, recorded within accrued expenses or other liabilities on our consolidated balance sheets, depending on timing of our payment to Blackstone Life Sciences.

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, 2023 and 2022, the derivative liability is classified as a Level 3 financial liability in the fair value hierarchy.

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 %).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

royalty payable on net sales of AMVUTTRA, assuming regulatory approval for ATTR-cardiomyopathy, (iv) our cost of borrowing ( 11 %), and (v) Blackstone Life Sciences’ cost of borrowing ( 6 %).

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

1 unchanged sentence

Amount received under the Funding Agreement 31,000

Loss recorded from remeasurement 38,433

Loss recorded from change in fair value

Carrying value as of December 31, 2022

Amount received under the Funding Agreement 24,667

Loss recorded from remeasurement 94,659

Loss recorded from change in fair value

Carrying value as of December 31, 2023

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

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.

Each stock option shall expire within 10 years of issuance.

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.

STOCKHOLDERS’ DEFICIT

Stock-Based Compensation

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Total $ 221,680 $ 230,649 $ 165,717

The following table summarizes stock-based compensation expense:

The following table summarizes stock-based compensation expense by type of award:

Year Ended December 31,

(In thousands) 2023 2022 2021

Stock-based compensation expense by type of award:

Time-based stock options $ 114,901 $ 118,635 $ 112,971

Time-based restricted stock units $ 55,169 $ 12,791 $ 4,231

Performance-based restricted stock units 63,879 102,925 39,943

Time-based stock options 99,165 114,901 118,635

Other equity programs 7,652 4,057 6,235

5 unchanged sentences

Type of award:

Time-based stock options $ 187,534 2.47

Time-based restricted stock units $ 125,118 2.14

Performance-based restricted stock units * $ 1,792 0.13

Time-based stock options $ 124,825 2.04

Other equity programs $ 3,306 0.55

1 unchanged sentence

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

Valuation Assumptions for Stock Options

The fair value of stock options, at date of grant, based on the following assumptions, was estimated using the Black-Scholes option-pricing model.

Our expected stock-price volatility assumption is based on the historical volatility of our publicly traded stock.

The expected life assumption is based on our historical data.

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:

Year Ended December 31,

2022 2021 2020

Risk-free interest rate 1.3 - 4.2 %

Expected dividend yield — — —

Expected option life 5.1 - 7.0 years

5.4 - 6.8 years

5.4 - 7.2 years

Expected volatility 50 - 60 %

Stock Option Activity

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

Time-Based Restricted Stock Units and Awards

The following table summarizes the activity of our time-based restricted stock units and awards, excluding performance-based restricted stock units:

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

Outstanding as of December 31, 2022 292 $ 165.27

Awarded 922 $ 188.78

Released ( 126 ) $ 164.47

Cancelled ( 63 ) $ 186.25

Outstanding as of December 31, 2023 1,025 $ 185.24

Performance-Based Restricted Stock Units

The following table summarizes the activity of our performance-based restricted stock units:

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

Outstanding as of December 31, 2022 1,195 $ 144.77

Awarded 439 $ 190.01

Released ( 472 ) $ 139.38

Cancelled ( 129 ) $ 150.02

Outstanding as of December 31, 2023 1,033 $ 165.82

The performance-based restricted stock units granted in 2023 and 2022 will vest upon the later of the one-year anniversary of the date of grant and the achievement of specific clinical development, regulatory, commercial and/or financial performance events, as approved by our people, culture and compensation committee.

Time-Based Stock Options

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

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

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We satisfy stock option exercises with newly issued shares of our common stock.

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Performance-Based Stock Options

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We satisfy performance-based stock option exercises with newly issued shares of our common stock.

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Restricted Stock Units and Awards

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

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

Outstanding as of December 31, 2021 75 $ 158.87

Awarded 249 $ 165.32

Released ( 23 ) $ 152.98

Cancelled ( 9 ) $ 143.85

Outstanding as of December 31, 2022 292 $ 165.27

Performance-Based Restricted Stock Units

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

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

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

Awarded 690 $ 147.47

Released ( 501 ) $ 142.72

Cancelled ( 130 ) $ 143.95

Outstanding as of December 31, 2022 1,195 $ 144.77

The performance-based restricted stock units granted in 2022 and 2021 will vest upon the later of the one-year anniversary of the date of grant and the achievement of specific clinical development, regulatory, commercial and/or financial performance events, as approved by our people, culture and compensation committee.

Valuation Assumptions for Stock Options

The fair value of stock options, at date of grant, based on the following assumptions, was estimated using the Black-Scholes option-pricing model.

Our expected stock-price volatility assumption is based on the historical volatility of our publicly traded stock.

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

Year Ended December 31,

2023 2022 2021

Risk-free interest rate 3.5 - 4.1 %

Expected dividend yield — — —

Expected option life 5.1 - 7.0 years

5.1 - 7.0 years

5.4 - 6.8 years

Expected volatility 49 - 60 %

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.

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.

As of December 31, 2023, an aggregate of 18,256,842 shares of common stock were reserved for issuance under our stock plans, including outstanding stock options to purchase 7,422,183 shares of common stock, 2,057,874 outstanding restricted stock units, 8,168,918 of common stock available for additional equity awards and 607,867 shares available for future grant under our Amended and Restated 2004 Employee Stock Purchase Plan, as amended, or the Amended and Restated ESPP.

Each stock option shall expire within 10 years of issuance.

Restricted stock units granted to employees generally vest over a three-year period, with one-third of the shares vesting on each of the three successive anniversaries of the grant date.

Employee Stock Purchase Plan

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In 2020, our stockholders approved an amendment to the Amended and Restated ESPP, to increase the number of shares authorized for issuance to 1,965,789 shares.

Under the Amended and Restated ESPP, as amended, each offering period is six months , at the end of which employees may purchase shares of common stock through payroll deductions made over the term of the offering.

Under the Amended and Restated ESPP, as amended, each offering

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period is six months , at the end of which employees may purchase shares of common stock through payroll deductions made over the term of the offering.

The per-share purchase price at the end of each offering period is equal to the lesser of 85 % of the closing price of our common stock at the beginning or end of the offering period.

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Expected volatility 34 % - 39 %

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STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred Stock

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As of December 31, 2023 and 2022, there were no shares of preferred stock outstanding.

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.

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.

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.

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 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.

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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

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, 2022 or 2021.

Overview of Significant Leases

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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

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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.

PPP, or RREEF, entered into in 2015.

In 2020, we amended our lease agreement, pursuant to which the term of the lease with respect to two floors was extended for an additional five years, through June 2026, with an option to renew for one five-year term.

Exercise of this option 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, 2023.

In addition, we have a separate lease agreement for an additional floor at 101 Main Street, which expires in March 2024 and will not be extended.

Other Lease Disclosures

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total rent expense, including operating expenses, under all of our real property leases was $ 61.6 million, $ 58.6 million and $ 59.5 million for the years ended December 31, 2023, 2022 and 2021, 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, 2023:

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

Year Ended December 31,

(In thousands) 2023 2022 2021

Operating lease cost $ 46,367 $ 45,789 $ 45,359

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Total $ 284,611

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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

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 Section 1498(a).

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

On July 12, 2022, we filed an additional lawsuit against each of Pfizer and Moderna seeking damages for infringement of U.S.

11,382,979, or ‘979 patent, 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.

On February 8, 2023, we received notification from the U.S.

Patent Office that a third patent would issue on February 28, 2023, as U.S.

11,590,229, or ‘229 patent, which we also believe Pfizer and Moderna’s COVID-19 vaccines infringe upon.

On February 15, 2023, we filed a motion with the court to add this patent to the existing cases against Pfizer and Moderna, and on April 26, 2023, the court held a hearing and denied Moderna’s partial motion to dismiss those claims for sales under Section 1498(a), our motion to add the ‘229 patent to the then current lawsuits as well as a motion filed by Moderna to add certain invalidity arguments made by Pfizer in our case to supplement Moderna’s invalidity arguments previously made.

On May 26, 2023, we filed additional lawsuits against Pfizer and Moderna in Delaware seeking damages for infringing the ‘229 patent.

In addition to this patent, we added U.S.

11,633,479 and 11,633,480 in the recently filed suits against both Pfizer and Moderna and also U.S.

11,612,657 against Pfizer only.

On August 9, 2023, a Markman hearing was held in the U.S.

District Court for the District of Delaware to consider the meaning of three disputed terms as used in the ’933 and ’979 patents.

On August 21, 2023, the court issued an order construing two of the three terms, and deferred a ruling on the third term pending an evidentiary hearing, which was held on January 4, 2024 with the final ruling pending.

Subsequently, we and Moderna jointly agreed to final judgment of non-infringement of two of our patents, and such judgment was entered by the court on August 30, 2023, and on September 7, 2023, we appealed the claim construction ruling to the Court of Appeals for the Federal Circuit in the initial lawsuit against Moderna.

The claim construction ruling did not affect one of the patents in the lawsuit filed against Moderna on May 26, 2023, and that case is going forward on a schedule to be set by the court.

The two separate suits against Pfizer are ongoing subject to the ruling on the third claim term, and in September 2023, we and Pfizer agreed to consolidate the 2022 and 2023 lawsuits in one case, which will require moving the trial date from November 2024 to the first half of 2025, with the final schedule to be determined by the court.

Indemnifications

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 recently closed 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.

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

Year Ended December 31,

(In thousands) 2023 2022 2021

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During the year ended December 31, 2023, we recorded a net provision for income taxes of $ 6.7 million.

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

This is primarily comprised of $ 4.0 million of state current provision, $ 3.4 million of foreign current provision offset by $ 0.7 million of foreign deferred provision.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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Net deferred tax asset $ 11,581 $ 10,840

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our effective income tax rate differs from the statutory federal income tax rate, as follows:

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Tax credits 6.7 2.7 4.5

Nondeductible compensation ( 3.0 ) — —

Other permanent items 0.8 ( 1.5 ) ( 1.0 )

Foreign rate differential ( 0.7 ) ( 0.5 ) ( 1.7 )

Bermuda tax law enactment 85.9 — —

Internal reorganization of certain intellectual property rights 12.6 — 20.1

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We have concluded, in accordance with the applicable accounting standards, that it is more likely than not that we may not realize the benefit of all of our deferred tax assets, with the exception of the deferred assets related to certain foreign subsidiaries.

Accordingly, we have recorded a valuation allowance against the deferred tax assets that management believes will not be realized.

We re-evaluate the positive and negative evidence on a quarterly basis.

Accordingly, we have recorded a valuation allowance against our U.S., Bermuda and Switzerland deferred tax assets.

We continue to maintain a valuation allowance on the majority of our net operating losses and other deferred tax assets because we have a history of cumulative losses.

On a quarterly basis, we reassess the valuation allowance on our deferred income tax assets weighing positive and negative evidence to assess the recoverability of the deferred tax assets.

Based on our recent financial performance and our future projections, we could record a reversal of all, or a portion of the valuation allowance.

However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the assessment.

The valuation allowance increased by $ 623.8 million, $ 384.6 million and $ 459.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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.

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.

The increase in our valuation allowance is primarily due to capitalized research and development costs and internally developed intellectual property for the year ending December 31, 2023, additional net operating losses for the year ended December 31, 2022, and primarily due to the liability related to the sale of future royalties for the year ended December 31, 2021.

As of December 31, 2023, we had federal and state net operating loss carryforwards, or NOLs, of $ 2.74 billion and $ 3.18 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.

Federal NOLs of $ 912.0 million, generated before 2017, will begin expiring in varying amounts through 2037 unless utilized.

The remaining federal NOLs of $ 1.83 billion, generated after 2017, will be carried forward indefinitely and could be used to offset up to 80 % of taxable income in all other future tax years.

State NOLs will begin expiring in varying amounts through 2043 unless utilized.

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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.

As of December 31, 2023, we had Switzerland NOLs of $ 382.4 million to reduce future taxable income which will begin expiring in varying amounts through 2030 unless utilized.

We have a valuation allowance against our Switzerland NOLs as it is unlikely that we will realize these assets given our historical losses.

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act of 2023, or Corporate Income Tax Act, which introduces a corporate income tax regime in Bermuda with a statutory tax rate of 15% effective January 1, 2025.

Companies are not subject to income tax in Bermuda prior to this change and with the transition into the Act there is an economic transition adjustment that requires the tax basis of certain Bermudian assets to be established at fair market value.

Upon the enactment of the Corporate Income Tax Act, we determined the fair market value of our identifiable intangibles in Bermuda and recognized a deferred tax asset in our consolidated financial statements.

We recorded a full valuation allowance against this deferred tax asset as we have generated historical losses and expect to generate future losses.

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

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Our reserve related to income taxes, including potential interest and penalties, was not material as of December 31, 2023 and 2022.

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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.

As of December 31, 2022, the unremitted earnings of our foreign subsidiaries are not material.

As of December 31, 2023, the unremitted earnings of our foreign subsidiaries are approximately $ 45.0 million.

We have not provided for U.S.

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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.

ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023, 2022 and 2021 contributions and net periodic benefit costs to such plans generated a total expense of $ 17.5 million, $ 16.5 million and $ 13.1 million, respectively.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data