Overview


We are a global commercial-stage biopharmaceutical company developing novel
therapeutics based on RNA interference, or RNAi. RNAi is a naturally occurring
biological pathway within cells for sequence-specific silencing and regulation
of gene expression. By harnessing the RNAi pathway, we have developed a new
class of innovative medicines, known as RNAi therapeutics. RNAi therapeutics are
comprised of small interfering RNA, or siRNA, and function upstream of
conventional medicines by potently silencing messenger RNA, or mRNA, that encode
for disease-causing proteins, thus preventing them from being made. We believe
this is a revolutionary approach with the potential to transform the care of
patients with genetic and other diseases. To date, our efforts to advance this
revolutionary approach have yielded the approval of two first-in-class
RNAi-based medicines, ONPATTRO® (patisiran) and GIVLAARI® (givosiran).
Our research and development strategy is to target genetically validated genes
that have been implicated in the cause or pathway of human disease. We utilize a
lipid nanoparticle (LNP) or N-acetylgalactosamine (GalNAc) conjugate approach to
enable hepatic delivery of siRNAs. For delivery to the central nervous system,
or CNS, and the eye (ocular delivery), we are utilizing an alternative conjugate
approach. Our focus is on clinical indications where there is a high unmet need,
early biomarkers for the assessment of clinical activity in Phase 1 clinical
studies, and a definable path for drug development, regulatory approval, patient
access and commercialization.
We continue to execute on our Alnylam 2020 strategy of building a multi-product,
global, commercial biopharmaceutical company with a deep and sustainable
clinical pipeline of RNAi therapeutics for future growth and a robust, organic
research engine for sustainable innovation and great potential for patient
impact. Based on our accomplishments to-date, we are confident we will achieve
our Alnylam 2020 goals by the end of 2020. Specifically, our broad pipeline of
investigational RNAi therapeutics is focused in four Strategic Therapeutic
Areas, or "STArs:" Genetic Medicines; Cardio-Metabolic Diseases; Hepatic
Infectious Diseases; and CNS/Ocular Diseases. We now have two marketed products
that are within the Genetic Medicines STAr, ONPATTRO and GIVLAARI. ONPATTRO is
approved by the United States Food and Drug Administration, or FDA, for the
treatment of the polyneuropathy of hereditary transthyretin-mediated
amyloidosis, or hATTR amyloidosis, in adults and has also been approved in the
European Union, or EU, for the treatment of hATTR amyloidosis in adult patients
with stage 1 or stage 2 polyneuropathy, Japan for the treatment of
transthyretin, or TTR, type familial amyloidosis with polyneuropathy, and in
several additional countries, including Brazil. Regulatory filings in other
territories are pending and additional filings are planned for the remainder of
2020 and beyond. GIVLAARI is approved by the FDA for the treatment of adults
with acute hepatic porphyria, or AHP, and in March 2020, GIVLAARI was granted
marketing authorisation by the European Commission, or EC, for the treatment of
AHP in adults and adolescents aged 12 years and older. In July 2020, we received
marketing authorisation approval for GIVLAARI in Brazil for the treatment of AHP
in adults and in October 2020, we received regulatory approval for GIVLAARI in
Canada for the treatment of AHP in adult patients. We have also filed for
regulatory approval for givosiran (the non-branded drug name for GIVLAARI) in
Switzerland and Japan and additional regulatory filings are pending or planned
for the remainder of 2020 and beyond.
We have six late-stage investigational programs, advancing toward potential
commercialization. These programs include our wholly owned programs: givosiran
for the treatment of adolescent patients with AHP, lumasiran for the treatment
of primary hyperoxaluria type 1, or PH1, patisiran (the non-branded drug name
for ONPATTRO) for the treatment of transthyretin amyloidosis, or ATTR
amyloidosis, with cardiomyopathy, and vutrisiran for the treatment of ATTR
amyloidosis. Inclisiran for the treatment of hypercholesterolemia and
atherosclerotic cardiovascular disease, or ASCVD, is being advanced by our
partner, The Medicines Company (acquired by Novartis AG in January 2020), or
MDCO, and fitusiran for the treatment of hemophilia is being advanced by our
partner Sanofi Genzyme, the specialty care global business unit of Sanofi.
In December 2019, we reported positive topline results from our ILLUMINATE-A
Phase 3 clinical trial for lumasiran, our investigational RNAi therapeutic
targeting glycolate oxidase, for the treatment of PH1, and in September 2020, we
reported positive topline results from our ILLUMINATE-B Phase 3 clinical trial
for lumasiran for the treatment of PH1 in children under the age of six. Based
on the data from the ILLUMINATE-A study, in April 2020, we submitted a New Drug
Application, or NDA, which was accepted by the FDA and granted Priority Review.
The FDA has set an action date of December 3, 2020 under the Prescription Drug
User Fee Act, and indicated that they were not currently planning an advisory
committee meeting as part of the NDA review. Additionally, in March 2020, we
submitted a marketing authorisation application, or MAA, for lumasiran with the
European Medicines Agency, or EMA, which has been validated by the EMA.
Lumasiran was previously granted an accelerated assessment by the EMA. In
October 2020, we announced that the Committee for Medicinal Products for Human
Use, or CHMP, adopted a positive opinion recommending marketing authorisation of
lumasiran for the treatment of PH1. If approved by the EC, lumasiran will be
marketed in Europe under the brand name OXLUMO. The CHMP positive opinion was
based on an evaluation of the effects of lumasiran in patients with PH1 and its
safety profile as demonstrated in both our ILLUMINATE-A and ILLUMINATE-B Phase 3
studies. We expect a decision from the EC on the authorisation recommended by
CHMP for lumasiran in the fourth quarter of 2020.
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Based on our expertise in RNAi therapeutics and broad intellectual property
estate, we have formed alliances with leading pharmaceutical and life sciences
companies to support our development and commercialization efforts, including
Regeneron Pharmaceuticals, Inc., or Regeneron, MDCO, Sanofi Genzyme, Vir
Biotechnology, Inc., or Vir, and Dicerna Pharmaceuticals, Inc., or Dicerna.
In March 2020, we announced an expansion of our exclusive licensing agreement
with Vir for the development and commercialization of RNAi therapeutics for
infectious diseases to include the development and commercialization of RNAi
therapeutics targeting SARS-CoV-2, the virus that causes the disease COVID-19.
In April 2020, we further expanded our collaboration with Vir to include up to
three human host factor targets relating to susceptibility to coronaviruses, for
use in connection with the treatment, palliation, diagnosis or prevention of
SARS-CoV-2 and other diseases caused by coronaviruses.
In April 2020, we and Dicerna formed a development and commercialization
collaboration on investigational RNAi therapeutics for the treatment of alpha-1
antitrypsin deficiency-associated liver disease, or alpha-1 liver disease. In
addition, in April 2020, we and Dicerna entered into a Patent Cross-License
Agreement, pursuant to which each party agreed to cross-license its respective
intellectual property related to our lumasiran and Dicerna's nedosiran
investigational programs for the treatment of primary hyperoxaluria.
In April 2020, we entered into a strategic financing collaboration with certain
affiliates of The Blackstone Group Inc., or Blackstone, to accelerate our
advancement of RNAi therapeutics. In connection with the collaboration,
Blackstone will provide us up to $2.00 billion in financing, including $1.00
billion in committed payments to acquire 50% of royalties and 75% of commercial
milestones payable to us in connection with sales of inclisiran, up to $750.0
million in a first lien senior secured term loan, and up to $150.0 million
towards the development of vutrisiran and ALN-AGT pursuant to the agreement
finalized in August 2020 and described below. As part of the strategic financing
collaboration, Blackstone also purchased an aggregate of $100.0 million of our
common stock.
In August 2020, we entered into the agreement, or 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 ALN-AGT. 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 for vutrisiran. In addition, Blackstone Life
Sciences has the right, but is not obligated, to fund up to $26.0 million for
development costs related to a Phase 2 clinical trial of ALN-AGT and up to $54.0
million for development costs related to a Phase 3 clinical trial of ALN-AGT. We
retain sole responsibility for the development and commercialization of both
vutrisiran and ALN-AGT. Please read Note 5 and Note 10 to our condensed
consolidated financial statements included in Part I, Item 1, "Financial
Statements (Unaudited)," of this Quarterly Report on Form 10-Q for additional
details on our transaction with Blackstone.
We have incurred significant losses since we commenced operations in 2002 and
expect such losses to continue for the foreseeable future. As of September 30,
2020, we had an accumulated deficit of $4.34 billion. Historically, we have
generated losses principally from costs associated with the establishment of
late-stage clinical and commercial capabilities, including global commercial
operations, research and development activities, acquiring, filing and expanding
intellectual property rights, and selling, general and administrative costs.
While we believe 2019 was our peak net loss year, and believe the funding
provided by our strategic financing collaboration with Blackstone should enable
us to achieve a self-sustainable financial profile without the need for future
equity financing, we expect to continue to incur annual net operating losses for
the foreseeable future as we expand our efforts to discover, develop and
commercialize RNAi therapeutics. We also anticipate that our operating results
will fluctuate for the foreseeable future. Therefore, period-to-period
comparisons should not be relied upon as predictive of the results in future
periods.
We currently have programs focused on a number of therapeutic areas and as of
September 30, 2020, we are generating net revenue from product sales for two
marketed products, ONPATTRO and GIVLAARI. However, our ongoing development
efforts may not be successful and we may not be able to commence sales of any
other products and/or successfully market and sell ONPATTRO, GIVLAARI or any
other approved products in the future. A substantial portion of our total
revenues in recent years has been derived from collaboration revenues from
strategic alliances with Regeneron, Sanofi Genzyme and MDCO. In addition to
revenues from the commercial sales of ONPATTRO and GIVLAARI and potentially from
sales of future products, we expect our sources of potential funding for the
next several years to continue to be derived in part from existing and new
strategic alliances, which may include license and other fees, funded research
and development, milestone payments and royalties on product sales by our
licensees, as well as funding due or available to us under our strategic
financing collaboration with Blackstone.
The COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of a novel
strain of coronavirus, or COVID-19, as a pandemic, which continues to spread or
resurge throughout the U.S. and worldwide. We could be materially and adversely
affected by the risks, or the public perception of the risks, related to an
epidemic, pandemic, outbreak, or other public health crisis, such as the current
COVID-19 pandemic. We are continuing to monitor the global pandemic and spread
of COVID-19 and plan to continue taking steps to identify and mitigate the
adverse impacts on, and risks to, our business posed by its spread
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and actions taken by governmental and health authorities to address the COVID-19
pandemic. The spread of COVID-19 has caused us to modify our business practices,
including implementing a global work from home policy for all employees who are
able to perform their duties remotely and restricting all nonessential business
travel, and we expect to continue to take actions as may be required or
recommended by government authorities or as we determine are in the best
interests of our employees, the patients we serve and other business partners in
light of COVID-19. In September 2020, we initiated a voluntary program that
allowed certain employees to return to physical locations in some geographies,
including in the U.S. and certain countries in Europe, in accordance with local
government laws, regulations and restrictions and our own safety procedures and
practices. Our office sites are equipped and operational with physical
distancing, temperature screening, contact tracing and cleaning measures in
place, and we expect to adopt and implement additional precautions commensurate
with any expansion of employees returning to our physical locations. At this
time, we cannot predict when certain restrictions that are in place to protect
our employees can be safely reduced or will no longer be needed. Given the
fluidity of the COVID-19 pandemic and the uncertainty on whether a second wave
of the COVID-19 pandemic will occur during the remainder of 2020 or in 2021, we
do not yet know the full extent of the impact of COVID-19 on our business
operations. The ultimate extent of the impact of any epidemic, pandemic,
outbreak, or other public health crisis on our business, financial condition and
results of operations will depend on future developments, which are highly
uncertain and cannot be predicted, including new information that may emerge
concerning the severity of such epidemic, pandemic, outbreak, or other public
health crisis and actions taken to contain or prevent the further spread, among
others. Accordingly, we cannot predict the extent to which our business,
financial condition and results of operations will be affected. We remain
focused on maintaining a strong balance sheet, liquidity and financial
flexibility and continue to monitor developments as we deal with the disruptions
and uncertainties from a business and financial perspective relating to
COVID-19. We will continue to work diligently with our partners and stakeholders
to continue supporting patient access to our approved medicines, advancing our
product candidates under regulatory review as well as in our clinical studies to
the extent safe to do so for patients, caregivers and healthcare practitioners,
and ensuring the continuity of our manufacturing and supply chain. For
additional information related to the actual or potential impacts of COVID-19 on
our business, please read Part II, Item 1A, "Risk Factors" of this Quarterly
Report on Form 10-Q.
Research and Development
Since our inception, we have focused on drug discovery and development programs.
Research and development expenses represent a substantial percentage of our
total operating expenses, as reflected by our broad pipeline of clinical
development programs, which includes multiple programs in late-stage
development.
Our broad pipeline, including two approved products and multiple investigational
RNAi therapeutics across all stages of development, is focused in four STArs:
Genetic Medicines; Cardio-Metabolic Diseases; Hepatic Infectious Diseases; and
CNS/Ocular Diseases.
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Commercial Products and Late-Stage Clinical Development Pipeline
The chart below is a summary of our commercial products and late-stage
development programs as of November 4, 2020. It identifies those programs for
which we have received marketing approval, those programs for which we have
received Breakthrough Therapy Designation from the FDA, the stage of these
programs and our commercial rights to such programs:
                    [[Image Removed: alny-20200930_g1.jpg]]
Early-Stage Clinical Development Pipeline
The chart below is a summary of our early-stage development programs as of
November 4, 2020. It identifies those programs in which we have achieved human
proof-of-concept, or POC, by demonstrating target gene knockdown and/or
additional evidence of activity in clinical studies, the stage of these
programs, and our commercial rights to such programs, as well as programs which
we believe could result in an IND or CTA filing in 2020:
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During the third quarter of 2020 and recent period, we reported the following
updates from ONPATTRO and GIVLAARI commercialization and our late-stage clinical
programs:
Commercial
ONPATTRO
•We achieved ONPATTRO global net product revenues for the third quarter of 2020
of $82.5 million, continued progress with market access efforts with a recent
launch in Portugal, and continued global expansion with achievement of
regulatory approval in Israel.
GIVLAARI
•We achieved GIVLAARI global net product revenues for the third quarter of 2020
of $16.7 million, continued progress with market access efforts with ongoing
launch in Germany, and continued global expansion with approval in Canada and
submission of a new drug application in Japan.
Late-Stage Clinical Development
•We continued to advance patisiran, in development for the treatment of the
cardiomyopathy of both hereditary and wild-type ATTR amyloidosis, and continued
enrollment in the APOLLO-B Phase 3 study in ATTR amyloidosis patients with
cardiomyopathy.
•We presented new interim data from the Phase 1/2 open-label extension study of
givosiran in AHP.
•We continued to advance lumasiran for the treatment of PH1:
•Received a positive CHMP opinion from the EMA recommending approval of
lumasiran for the treatment of PH1 in patients of all ages;
•Received a positive scientific opinion from the UK's Medicines and Healthcare
Products Regulatory Agency through the Early Access to Medicines Scheme;
•Presented positive complete results from ILLUMINATE-B, a global Phase 3
pediatric study of lumasiran in PH1 patients less than six years of age,
including infants, with preserved renal function; and
•Continued enrollment in the ILLUMINATE-C Phase 3 study of lumasiran for the
treatment of advanced PH1 in patients of all ages.
•We continued to advance vutrisiran, a subcutaneously administered
investigational RNAi therapeutic in development for the treatment of ATTR
amyloidosis:
•Continued treating patients in the fully enrolled HELIOS-A Phase 3 study of
vutrisiran in hATTR amyloidosis patients with polyneuropathy, and remain on
track to report topline results in early 2021; and
•Continued enrollment in the HELIOS-B Phase 3 study in ATTR amyloidosis patients
with cardiomyopathy.
•Inclisiran continued to advance under our partner, MDCO (which was acquired by
Novartis AG in January 2020), and is undergoing review for approval in the U.S.
and EU:
•Received a positive CHMP opinion from the EMA recommending approval of
inclisiran for the treatment of adults with hypercholesterolemia or mixed
dyslipidemia. If approved, inclisiran will be marketed under the brand name
LEQVIO®.
•Our partner, Sanofi Genzyme, continued advancement of the ATLAS Phase 3 program
for fitusiran in patients with hemophilia A or B with and without inhibitors.
There is a risk that any drug discovery or development program may not produce
revenue for a variety of reasons, including the possibility that we will not be
able to adequately demonstrate the safety and effectiveness of the product
candidate. Moreover, there are uncertainties specific to any new field of drug
discovery, including RNAi. The success of ONPATTRO, GIVLAARI or any other
product candidate we develop is highly uncertain. Due to the numerous risks
associated with developing drugs, including those risks associated with the
COVID-19 pandemic, we cannot reasonably estimate or know the nature, timing and
estimated costs of the efforts necessary to complete the development of any
potential product candidate or indication, or the period, if any, in which
material net cash inflows will commence from any approved product or indication.
Any failure to complete any stage of the development of any potential products
or any approved product for an expanded indication in a timely manner or
successfully launch, market and sell any approved product, including ONPATTRO
and GIVLAARI, could have a material adverse effect on our operations, financial
position and liquidity. A discussion of some of the risks and uncertainties
associated with completing our research and development programs within the
planned timeline, or at all, and the potential consequences of failing to do so,
are set forth in Part II, Item 1A below under the heading "Risk Factors."
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Strategic Alliances
Our business strategy is to develop and commercialize a broad pipeline of RNAi
therapeutic products directed towards our four STArs. As part of this strategy,
we have entered into, and expect to enter into additional, collaboration and
licensing agreements as a means of obtaining resources, capabilities and funding
to advance our investigational RNAi therapeutic programs.
Our collaboration strategy is to form alliances that create significant value
for ourselves and our collaborators in the advancement of RNAi therapeutics as a
new class of innovative medicines. Specifically, with respect to our CNS/Ocular
Disease pipeline, in April 2019, we entered into a global, strategic
collaboration with Regeneron to discover, develop and commercialize RNAi
therapeutics for a broad range of diseases by addressing disease targets
expressed in the eye and CNS, in addition to a select number of targets
expressed in the liver. In July 2020, Regeneron exercised its
co-development/co-commercialization option on our first CNS-targeted development
candidate, ALN-APP, an investigational RNAi therapeutic in development for the
treatment of hereditary cerebral amyloid angiopathy and autosomal dominant
Alzheimer's Disease, which we will lead.
With respect to our Cardio-Metabolic pipeline, in March 2013, we entered into an
exclusive, worldwide license with MDCO (acquired by Novartis AG in January 2020)
pursuant to which MDCO was granted the right to develop, manufacture and
commercialize RNAi therapeutics targeting PCSK9 for the treatment of
hypercholesterolemia and other human diseases, including inclisiran. In March
2018, we entered into a discovery collaboration with Regeneron to identify RNAi
therapeutics for nonalcoholic steatohepatitis, or NASH, and potentially other
related diseases, and in November 2018, we and Regeneron entered into a
separate, fifty-fifty collaboration to further research, co-develop and
commercialize any therapeutic product candidates that emerge from these
discovery efforts. In April 2020, we entered into a development and
commercialization collaboration with Dicerna to advance investigational RNAi
therapeutics for the treatment of alpha-1 liver disease.
With respect to our Hepatic Infectious Disease pipeline, in October 2017, we
announced an exclusive licensing agreement with Vir for the development and
commercialization of RNAi therapeutics for infectious diseases, including
chronic hepatitis B virus, or HBV, infection. In March 2020, we announced an
expansion of our exclusive licensing agreement with Vir to include the
development and commercialization of RNAi therapeutics targeting SARS-CoV-2, the
virus that causes the disease COVID-19. In April 2020, we further expanded our
broad multi-target existing collaboration for the development and
commercialization of RNAi therapeutics for infectious diseases to include up to
three additional targets focused on host factors for SARS-CoV-2, including
angiotensin converting enzyme-2, or ACE2, and transmembrane protease, serine 2,
or TMPRSS2.
With respect to our Genetic Medicine pipeline, we formed a broad strategic
alliance with Sanofi Genzyme in 2014. In January 2018, we and Sanofi Genzyme
amended our 2014 collaboration and entered into the Exclusive License Agreement,
referred to as the Exclusive TTR License, under which we have the exclusive
right to pursue the further global development and commercialization of all TTR
products, including ONPATTRO, vutrisiran and any back-up products, and the
ALN-AT3 Global License Terms, referred to as the AT3 License Terms, under which
Sanofi Genzyme has the exclusive right to pursue the further global development
and commercialization of fitusiran and any back-up products. In April 2019, we
and Sanofi Genzyme agreed to further amend the 2014 Sanofi Genzyme collaboration
to conclude the research and option phase and to amend and restate the AT3
License Terms to modify certain of the business terms.
Critical Accounting Policies and Estimates
Liability Related to the Sale of Future Royalties
In April 2020, we entered into a purchase and sale agreement with Blackstone,
prompting our adoption of a new accounting policy associated with the liability
related to the sale of future royalties. Please read Note 2 and Note 5 to our
condensed consolidated financial statements included in Part I, Item 1,
"Financial Statements (Unaudited)," of this Quarterly Report on Form 10-Q for a
discussion of the policy and the accounting implications of this agreement,
respectively.
Development Derivative Liability
In August 2020, we entered into the Funding Agreement with Blackstone Life
Sciences, prompting our adoption of a new accounting policy associated with the
development derivative liability. Please read Note 2 and Note 10 to our
condensed consolidated financial statements included in Part I, Item 1,
"Financial Statements (Unaudited)," of this Quarterly Report on Form 10-Q for a
discussion of the policy and the accounting implications of this agreement,
respectively.
Our critical accounting policies are described in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section of our
Annual Report on Form 10-K for the year ended December 31, 2019, which we filed
with the SEC on February 13, 2020. There have been no significant changes to our
critical accounting policies since the beginning of this fiscal year other than
with respect to the liability related to the sale of future royalties and the
development derivative liability described above.
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Results of Operations
The following data summarizes the results of our operations:
                                                        Three Months Ended September 30,                                                          Nine Months Ended September 30,
(In thousands, except
percentages)                        2020                 2019              Dollar Change            % of Change               2020                2019              Dollar Change            % of Change
Total revenues                 $    125,853          $   70,061          $       55,792                      80  %       $   329,291          $  148,069          $      181,222                     122  %

Operating costs and expenses $ 351,052 $ 286,360 $ 


     64,692                      23  %       $   963,507          $  789,427          $      174,080                      22  %
Loss from operations           $   (225,199)         $ (216,299)         $       (8,900)                      4  %       $  (634,216)         $ (641,358)         $        7,142                      (1) %

Total other (expense) income $ (27,253) $ 7,370 $ 


    (34,623)                   (470) %       $    22,215          $   32,688          $      (10,473)                    (32) %
Net loss                       $   (253,291)         $ (208,535)         $      (44,756)                     21  %       $  (614,741)         $ (609,931)         $       (4,810)                      1  %


Discussion of Results of Operations
Revenues
Total revenues consist of the following:
                                                              Three Months Ended September 30,                                                            Nine Months Ended September 30,
(In thousands, except percentages)         2020                  2019             Dollar Change            % of Change                2020                 2019             Dollar Change            % of Change
Net product revenues               $     99,206               $ 46,066          $       53,140                     115  %       $   248,677            $ 110,588          $      138,089                     125  %
Net revenues from collaborations         26,647                 23,995                   2,652                      11  %            80,614               37,481                  43,133                     115  %
Total                              $    125,853               $ 70,061          $       55,792                      80  %       $   329,291            $ 148,069          $      181,222                     122  %


Net product revenues
Net product revenues consist of the following, by product and region:
                                                      Three Months Ended                                                                    Nine Months Ended
                                                         September 30,                                                                        September 30,
(In thousands, except
percentages)                2020              2019             Dollar Change            % of Change              2020               2019             Dollar Change            % of Change
ONPATTRO
United States            $ 39,027          $ 33,591          $        5,436                      16  %       $ 108,491          $  80,543          $       27,948                      35  %
Europe                     30,478            10,857                  19,621                     181  %          74,664             28,311                  46,353                     164  %
Rest of World (primarily
Japan)                     13,011             1,618                  11,393                     704  %          32,560              1,734                  30,826                    1778  %
Total                    $ 82,516          $ 46,066          $       36,450                      79  %       $ 215,715          $ 110,588          $      105,127                      95  %

GIVLAARI
United States            $ 12,108          $      -          $       12,108                        N/A       $  26,043          $       -          $       26,043                        N/A
Europe                      4,582                 -                   4,582                        N/A           6,919                  -                   6,919                        N/A

Total                    $ 16,690          $      -          $       16,690                        N/A       $  32,962          $       -          $       32,962                        N/A

Total net product
revenues                 $ 99,206          $ 46,066          $       53,140                     115  %       $ 248,677          $ 110,588          $      138,089                     125  %



Net product revenues increased during the three and nine months ended
September 30, 2020, as compared to the same periods in the prior year, as a
result of the continued, global expansion of ONPATTRO, in addition to sales
generated from our second marketed product, GIVLAARI, following commercial
launch in the U.S. in the fourth quarter of 2019 and initial European launch in
the second quarter of 2020.
We expect net product revenues to increase for the twelve-month period ending
December 31, 2020, as compared to the same period in 2019, as we continue to add
new patients onto ONPATTRO and GIVLAARI therapy, as well as launch our approved
products into additional markets, assuming regulatory approvals.
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Net revenues from collaborations
Net revenues from collaborations consist of the following:
                                                      Three Months Ended September 30,                                                        Nine Months Ended September 30,
(In thousands, except                                                      Dollar
percentages)                          2020                2019             Change             % of Change                 2020                  2019             Dollar Change            % of Change
Regeneron                        $     14,874          $ 15,261          $   (387)                     (3) %       $    49,790               $ 15,961          $       33,829                     212  %
Vir                                     8,512             5,869             2,643                      45  %            21,476                  7,888                  13,588                     172  %
MDCO                                    1,091               528               563                     107  %             6,029                  2,273                   3,756                     165  %
Sanofi                                    420             1,882            (1,462)                    (78) %               793                 10,382                  (9,589)                    (92) %
Other                                   1,750               455             1,295                     285  %             2,526                    977                   1,549                     159  %
Total                            $     26,647          $ 23,995          $  2,652                      11  %       $    80,614               $ 37,481          $       43,133                     115  %


Net revenues from collaborations increased during the three months ended
September 30, 2020, as compared to the same period in the prior year, primarily
due to an increase in revenue recognized in connection with our collaboration
agreement with Vir as a result of increased reimbursable activities associated
with the development of RNAi therapeutics targeting SARS-CoV-2.
Net revenues from collaborations increased during the nine months ended
September 30, 2020, as compared to the same period in the prior year, primarily
due to the increase in revenue recognized in connection with our collaboration
agreements with Regeneron and Vir as a result of increased reimbursable
activities and the achievement of milestones, respectively, offset by a decrease
in reimbursable activities in connection with our collaboration agreements with
Sanofi Genzyme.
We expect net revenues from collaborations to increase for the twelve-month
period ending December 31, 2020, as compared to the same period in 2019,
primarily due to increased reimbursable activities and anticipated achievement
of milestones under our collaborations with Regeneron, Vir, and MDCO.
Operating Costs and Expenses
Operating costs and expenses consist of the following:
                                                              Three Months Ended September 30,                                                            Nine Months Ended September 30,
(In thousands, except percentages)        2020                   2019             Dollar Change            % of Change                2020                 2019             Dollar Change            % of Change
Cost of goods sold                 $     21,797              $   5,213          $       16,584                     318  %       $    55,028            $  12,886          $       42,142                     327  %
Research and development                161,783                160,796                     987                       1  %           486,350              453,813                  32,537                       7  %
Selling, general and
administrative                          167,472                120,351                  47,121                      39  %           422,129              322,728                  99,401                      31  %
Total                              $    351,052              $ 286,360          $       64,692                      23  %       $   963,507            $ 789,427          $      174,080                      22  %


Cost of goods sold. Cost of goods sold includes the cost of producing and
distributing inventories that are related to product revenues, costs related to
sales of product supply under our collaboration agreements, third-party
royalties and amortization of licensing rights. Based on our inventory policy,
we record costs associated with the manufacturing of our products as research
and development expense until we determine it is probable that these costs will
be recovered through commercial sale (zero-cost inventory).
Cost of goods sold increased during the three and nine months ended
September 30, 2020, as compared to the same periods in the prior year, due to
the increase in third-party royalties and sales of capitalized inventory. During
the three and nine months ended September 30, 2020, product sold and recognized
as revenue was substantially from capitalized inventory, whereas during the
three and nine months ended September 30, 2019, all units of product sold and
recognized as revenue were zero-cost inventory. We will continue to sell our
zero-cost inventory of GIVLAARI throughout the remainder of 2020.
We anticipate variability in our cost of goods sold as a percentage of net
product revenues due to the timing of manufacturing runs and utilization and the
depletion of zero-cost inventories, as well as future product launches. We
expect that cost of goods sold will increase for the twelve-month period ending
December 31, 2020, as compared to the same period in 2019, primarily as a result
of an expected increase in net product sales as well as the sale of capitalized
inventory.
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Table of Contents Research and development. Research and development expenses consist of the following:


                                                               Three Months Ended September 30,

Nine Months Ended September 30,


                                                                                       Dollar
(In thousands, except percentages)             2020                   2019             Change             % of Change                 2020                  2019             Dollar Change            % of Change
Clinical trial and manufacturing       $     54,705               $  46,417          $  8,288                      18  %       $    155,757             $ 133,064          $       22,693                      17  %
Compensation and related                     47,982                  41,486             6,496                      16  %            145,459               113,173                  32,286                      29  %
External services                            17,512                  20,703            (3,191)                    (15) %             53,450                51,311                   2,139                       4  %
Facilities-related                           18,256                  13,050             5,206                      40  %             51,658                38,455                  13,203                      34  %
Stock-based compensation                     13,703                  22,737            (9,034)                    (40) %             45,542                54,144                  (8,602)                    (16) %
Lab supplies, materials and other             9,625                   8,416             1,209                      14  %             32,071                27,848                   4,223                      15  %
License Fees                                      -                   7,987            (7,987)                   (100) %              2,413                35,818                 (33,405)                    (93) %
Total                                  $    161,783               $ 160,796          $    987                       1  %       $    486,350             $ 453,813          $       32,537                       7  %


For the three months ended September 30, 2020, research and development expenses
were relatively flat, as compared to the same period in the prior year,
primarily due to the following:
•Increased clinical trial and manufacturing expenses associated with material
manufactured for clinical and preclinical activities;
•Increased compensation and related expenses as a result of increased headcount
to support long-term strategic growth; and
•Increased facilities-related expenses as a result of costs recognized in
connection with placing portions of our cGMP manufacturing facility into
service.
Offset by:
•Decreased stock-based compensation primarily due to the achievement of a
performance-based milestone related to positive top-line Phase 3 results in the
third quarter of 2019; and
•License fees associated with regulatory filings in 2019.
For the nine months ended September 30, 2020, the increase in research and
development expenses, as compared to the same period in the prior year, was
primarily related to the following:
•Increased compensation and related expenses as a result of increased headcount
to support long-term strategic growth;
•Increased clinical trials and manufacturing and lab supplies, materials and
other expenses as a result of increased preclinical and clinical services
related to the advancement of our early- and late-stage programs to support our
long-term strategic goals; and
•Increased facilities-related expenses as a result of costs recognized in
connection with placing portions of our cGMP manufacturing facility into
service.
Partially offset by:
•Decreased license fees associated with the execution of our collaboration
agreement with Regeneron and regulatory milestones occurring in 2019 with no
corresponding activity in 2020.
During the three and nine months ended September 30, 2020 and 2019, in
connection with advancing activities under our collaboration agreements, we
incurred research and development expenses, primarily related to external
development and manufacturing services. The following table summarizes research
and development expenses incurred, for which we recognize net revenue, that are
directly attributable to our collaboration agreements, by collaboration partner:
                                   Three Months Ended September 30,                 Nine Months Ended September 30,
(In thousands)                        2020                    2019                    2020                    2019
Regeneron                      $         12,565          $     11,114          $         44,108          $     12,105
Vir                                       4,903                 7,256                    11,782                 8,386
MDCO                                         67                 6,737                     1,609                 8,484
Sanofi                                    1,009                 4,960                     1,633                13,040
Total                          $         18,544          $     30,067          $         59,132          $     42,015


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Table of Contents Selling, general and administrative. Selling, general and administrative expenses consist of the following:


                                                                   Three Months Ended September 30,                                                             Nine Months Ended September 30,
(In thousands, except percentages)             2020                   2019             Dollar Change            % of Change                 2020                  2019             Dollar Change            % of Change

Compensation and related                $     53,532              $  36,991          $       16,541                      45  %       $    148,502             $ 107,706          $       40,796                      38  %
Consulting and professional services          40,008                 39,670                     338                       1  %            120,318               100,307                  20,011                      20  %
Stock-based compensation                      23,561                 23,272                     289                       1  %             60,055                54,500                   5,555                      10  %
Facilities-related                            11,299                  9,123                   2,176                      24  %             32,695                26,188                   6,507                      25  %
Other                                         39,072                 11,295                  27,777                     246  %             60,559                34,027                  26,532                      78  %
Total                                   $    167,472              $ 120,351          $       47,121                      39  %       $    422,129             $ 322,728          $       99,401                      31  %


For the three and nine months ended September 30, 2020, the increase in selling,
general and administrative expenses, as compared to the same periods in the
prior year, was primarily related to the following:
•Increased compensation and related and consulting and professional services
expenses as a result of increased headcount to support long-term strategic
growth and potential additional product launches in 2020 and thereafter, as well
as the continued commercialization of ONPATTRO and GIVLAARI; and
•Increased other expenses primarily due to a change in an estimated accrual for
our contingent liability related to our arbitration with Ionis Pharmaceuticals,
Inc., or Ionis.
We expect that research and development expenses combined with selling, general
and administrative expenses will increase for the twelve-month period ending
December 31, 2020, as compared to the same period in 2019, as we continue to
develop our pipeline, advance our product candidates, including partnered
programs, into later-stage development, prepare regulatory submissions and
build-out of our global commercial infrastructure and field team to support
ONPATTRO, GIVLAARI and potentially additional product launches. However, we
expect that certain expenses will be variable depending on the timing of
manufacturing batches, clinical trial enrollment and results, regulatory review
of our product candidates and programs, and stock-based compensation expenses
due to our determination regarding the probability of vesting for
performance-based awards.
Total Other (Expense) Income. Total other (expense) income consists of the
following:
                                                            Three Months Ended September 30,                                                            Nine Months Ended September 30,
(In thousands, except
percentages)                              2020                  2019            Dollar Change            % of Change                 2020                 2019             Dollar Change            % of Change
Interest expense                  $    (28,731)              $     -          $      (28,731)                       N/A       $    (55,979)            $      -          $      (55,979)                       N/A
Interest income                          2,072                 9,889                  (7,817)                    (79) %             10,717               26,195                 (15,478)                    (59) %
Other (expense) income                    (594)               (2,519)                  1,925                     (76) %             67,477               (2,929)                 70,406                  (2,404) %
Change in fair value of liability
obligation                                   -                     -                       -                        N/A                  -                9,422                  (9,422)                   (100) %
Total                             $    (27,253)              $ 7,370          $      (34,623)                   (470) %       $     22,215             $ 32,688          $      (10,473)                    (32) %


For the three months ended September 30, 2020, total other expense increased, as
compared to the same period in the prior year, primarily due to $28.7 million of
interest expense associated with the sale of future royalties and a $7.8 million
decrease in interest income as a result of Federal interest rate cuts.
For the nine months ended September 30, 2020, total other income decreased, as
compared to the same period in the prior year, due to $56.0 million of interest
expense associated with the sale of future royalties, a $15.5 million decrease
of interest income as a result of Federal interest rate cuts and a $9.4 million
gain in 2019 as a result of the final mark-to-market adjustment of a liability
obligation, for which there was no corresponding gain in 2020, offset by an
increase in other income due to realized and unrealized gains in marketable
equity securities of $66.6 million.
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  Table of Contents
Liquidity and Capital Resources
The following table summarizes our cash flow activities:
                                                                 Nine Months Ended September 30,
(In thousands)                                                     2020                    2019
Net loss                                                    $

(614,741) $ (609,931) Non-cash adjustments to reconcile net loss to net cash used in operating activities:

                                             150,133               136,767
Changes in operating assets and liabilities                          (27,209)              390,717
Net cash used in operating activities                               (491,817)              (82,447)
Net cash used in investing activities                               (337,630)             (196,827)
Net cash provided by financing activities                            777,029               782,842

Effect of exchange rate changes on cash, cash equivalents and restricted cash

                                                    1,946                  (449)

Net (decrease) increase in cash, cash equivalents and restricted cash

                                                      (50,472)              503,119

Cash, cash equivalents and restricted cash, beginning of period

                                                               549,628               422,631

Cash, cash equivalents and restricted cash, end of period $ 499,156 $ 925,750




Since we commenced operations in 2002, we have generated significant losses. As
of September 30, 2020, we had an accumulated deficit of $4.34 billion. As of
September 30, 2020, we had cash, cash equivalents and marketable securities of
$1.83 billion, compared to $1.54 billion as of December 31, 2019.
Operating activities
Net cash used in operating activities increased during the nine months ended
September 30, 2020, compared to the same period in 2019, primarily due to the
receipt of $400.0 million in May 2019 for the upfront payment associated with
our strategic collaboration with Regeneron.
Investing activities
Net cash used in investing activities increased during the nine months ended
September 30, 2020, compared to the same period in the prior year, primarily due
to an increase in the purchase of marketable debt securities and a decrease in
the proceeds from the sales and maturities of marketable securities.
Financing activities
Net cash provided by financing activities decreased during the nine months ended
September 30, 2020, compared to the same period in the prior year, primarily due
to proceeds of $400.0 million from our issuance of common stock to Regeneron in
April 2019 and $381.9 million received from our January 2019 underwritten public
offering, offset by $500.0 million received from our sale of the MDCO royalty
interest in April 2020 and an increase in the proceeds from the issuance of
common stock in connection with stock option exercises and other types of equity
during the nine months ended September 30, 2020.
Operating Capital Requirements
We currently have programs focused on a number of therapeutic areas and, as of
September 30, 2020, have two globally marketed products, ONPATTRO and GIVLAARI.
However, our ongoing development efforts may not be successful and we may not be
able to commence sales of any other products in the future. In addition, we
anticipate that we will continue to generate significant losses for the
foreseeable future as a result of planned expenditures for research and
development activities relating to our research platform, our drug development
programs, including clinical trial and manufacturing costs, the establishment of
late-stage clinical and commercial capabilities, including global operations,
continued management and growth of our intellectual property including our
patent portfolio, collaborations and general corporate activities.
Based on our current operating plan, we believe that our cash, cash equivalents
and marketable securities as of September 30, 2020, together with the cash we
expect to generate from product sales, and under our current alliances, as well
as the funds due or available to us as a result of the strategic financing
collaboration with Blackstone, will be sufficient to enable us to advance our
long-term strategic goals for multiple years from the filing of this Quarterly
Report on Form 10-Q.
Although we believe the strategic financing collaboration with Blackstone will
enable us to achieve a self-sustainable financial profile without the need for
further equity financing, in the future, we may seek additional funding through
new collaborative arrangements, public or private debt financings, royalty or
other monetization transactions or a combination of one or more of these funding
sources. Additional funding may not be available to us on acceptable terms or at
all. Moreover, the terms of any additional financing may adversely affect the
holdings or the rights of our stockholders.
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  Table of Contents
Contractual Obligations and Commitments
The disclosure of our contractual obligations and commitments is set forth under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Contractual Obligations" in our Annual Report on Form 10-K
for the year ended December 31, 2019. In April 2020, we entered into a purchase
and sale agreement with Blackstone, resulting in an initial recognition of $1.00
billion liability related to the sale of future royalties. In August 2020, we
entered into the Funding Agreement with Blackstone, resulting in the recognition
of a $5.4 million development derivative liability. Please read Note 5 and Note
10, respectively, to our condensed consolidated financial statements included in
Part I, Item 1, "Financial Statements (Unaudited)" of this Quarterly Report on
Form 10-Q for a description of these agreements. As a result, we expect our
contractual obligations through 2036 will increase from the amounts previously
disclosed in our 2019 Annual Report on Form 10-K due to payments under these
agreements.
Recent Accounting Pronouncements
Please read Note 2 to our condensed consolidated financial statements included
in Part I, Item 1, "Financial Statements (Unaudited)," of this Quarterly Report
on Form 10-Q for a description of recent accounting pronouncements applicable to
our business.

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