10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number 000-50743

ALNYLAM PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	77-0602661
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

300 Third Street, Cambridge, MA 02142

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 551-8200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	The Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨	Accelerated filer    þ	Non-accelerated filer    ¨	Smaller reporting company    ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ

The aggregate market value of the registrant’s common stock, $0.01 par value per share (“Common Stock”), held by non-affiliates of the registrant, based on the last sale price of the Common Stock at the close of business on June 30, 2012, was $532,319,660. For purposes hereof, shares of Common Stock held by each executive officer and director of the registrant and holder of ten percent or more of the outstanding Common Stock have been excluded from the foregoing calculation because such persons and entities may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

At January 31, 2013, the registrant had 61,866,821 shares of Common Stock, $0.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its 2013 annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year end of December 31, 2012, are incorporated by reference into Part II, Item 5 and Part III of this Form 10-K.

ALNYLAM PHARMACEUTICALS, INC.

ANNUAL REPORT ON FORM 10-K

For the Year Ended December 31, 2012

TABLE OF CONTENTS

PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	48
ITEM 1B.	UNRESOLVED STAFF COMMENTS	74
ITEM 2.	PROPERTIES	74
ITEM 3.	LEGAL PROCEEDINGS	74
ITEM 4.	MINE SAFETY DISCLOSURES	75
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	76
ITEM 6.	SELECTED CONSOLIDATED FINANCIAL DATA	78
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	79
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	102
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	103
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	147
ITEM 9A.	CONTROLS AND PROCEDURES	147
ITEM 9B.	OTHER INFORMATION	147
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	147
ITEM 11.	EXECUTIVE COMPENSATION	147
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	148
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	148
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	148
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	148
SIGNATURES		149

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This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements relating to historical matters should be considered forward-looking statements. When used in this report, the words “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “will,” “plan,” “target,” “goal” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our actual results could differ materially from those discussed in the forward-looking statements as a result of a number of important factors, including the factors discussed in this annual report on Form 10-K, including those discussed in Item 1A of this report under the heading “Risk Factors,” and the risks discussed in our other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. We explicitly disclaim any obligation to update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

PART I

ITEM 1. BUSINESS

Overview

We are a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. RNAi is a naturally occurring biological pathway within cells for selectively silencing and regulating the expression of specific genes. Since many diseases are caused by the inappropriate activity of specific genes, the ability to silence genes selectively through RNAi could provide a new way to treat a wide range of human diseases. We believe that drugs that work through RNAi have the potential to become a broad new class of drugs, like small molecule, protein and antibody drugs. Using our intellectual property and the expertise we have built in RNAi, we are developing a set of biological and chemical methods and know-how that we apply in a systematic way to develop RNAi therapeutics for a variety of diseases.

Our core product strategy, which we refer to as “Alnylam 5x15,” is focused on the development and commercialization of novel RNAi therapeutics for the treatment of genetically defined targets for diseases with high unmet medical need. Under our core product strategy, we expect to have five RNAi therapeutic programs in clinical development, including programs in advanced stages, on our own or with one or more collaborators, by the end of 2015. As part of this strategy, our goal is to develop product candidates with the following shared characteristics: a genetically defined target and disease; the potential to have a significant impact in high unmet need patient populations; the ability to leverage our existing RNAi delivery platform; the opportunity to monitor an early biomarker in Phase I clinical trials for human proof of concept; and the existence of clinically relevant endpoints for the filing of a new drug application, or NDA, with a focused patient database and possible accelerated paths for commercialization. We are currently advancing five core programs in clinical or pre-clinical development: ALN-TTR, comprised of ALN-TTR02 and ALN-TTRsc, for the treatment of transthyretin-mediated amyloidosis, or ATTR; ALN-AT3 for the treatment of hemophilia and rare bleeding disorders, or RBD; ALN-AS1 for the treatment of acute intermittent porphyria, or AIP; ALN-PCS for the treatment of hypercholesterolemia; and ALN-TMP for the treatment of hemoglobinopathies, including beta-thalassemia. We are also advancing other early stage programs, including ALN-AAT, an RNAi therapeutic targeting the mutant Z-allele in alpha-1-antitrypsin deficiency, or AAT deficiency, for the treatment of AAT deficiency-associated liver disease. We intend to focus on developing and commercializing ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 on our own in North and South America, Europe and other parts of the world. In February 2013, we entered into a global alliance with The Medicines Company, or MedCo, to advance our ALN-PCS program. We also intend to enter into global alliances to advance our ALN-TMP, ALN-AAT and potentially other programs.

While focusing our efforts on our core product strategy, we also intend to continue to advance additional development programs through existing or future alliances. We have two partner-based programs in clinical development, including ALN-RSV01 for the treatment of respiratory syncytial virus, or RSV, infection, and ALN-VSP for the treatment of liver cancers, as well as one candidate in pre-clinical development, ALN-HTT for the treatment of Huntington’s disease, or HD.

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We also continue to work internally and with third-party collaborators with the goal of developing new technologies to deliver our RNAi therapeutics both directly to specific sites of disease, and systemically by intravenous or subcutaneous administration. We have numerous RNAi therapeutic delivery collaborations and intend to continue to collaborate with academic and corporate third parties, as well as government entities, to evaluate different delivery options.

We believe that the strength of our intellectual property portfolio relating to the development and commercialization of small interfering RNAs, or siRNAs, as therapeutics provides us a leading position with respect to this therapeutic modality. Our intellectual property portfolio includes ownership of, or exclusive rights to, issued patents and pending patent applications claiming fundamental features of siRNAs and RNAi therapeutics as well as those claiming crucial chemical modifications and promising delivery technologies. We believe that no other company possesses a portfolio of such broad and exclusive rights to the patents and patent applications required for the commercialization of RNAi therapeutics. Given the importance of our intellectual property portfolio to our business operations, we intend to vigorously enforce our rights and defend against challenges that have arisen or may arise in this area.

In addition, our expertise in RNAi therapeutics and broad intellectual property estate have allowed us to form alliances with leading pharmaceutical and life sciences companies, including Isis Pharmaceuticals, Inc., or Isis, Medtronic, Inc., or Medtronic, Novartis Pharma AG, or Novartis, Biogen Idec Inc., or Biogen Idec, F. Hoffmann-La Roche Ltd, or Roche (which assigned its rights and obligations to Arrowhead Research Corporation, or Arrowhead during 2011), Takeda Pharmaceutical Company Limited, or Takeda, Kyowa Hakko Kirin Co., Ltd., or Kyowa Hakko Kirin, Cubist Pharmaceuticals, Inc., or Cubist, Ascletis Pharmaceuticals (Hangzhou) Co., Ltd., or Ascletis, Monsanto Company, or Monsanto, Genzyme Corporation, or Genzyme, and MedCo. We have previously entered, and in the future, we may enter, into contracts with government agencies. We also have established collaborations with and, in some instances, received funding from major medical and disease associations, including CHDI Foundation, Inc., or CHDI. Finally, to further enable the field and monetize our intellectual property rights, we also grant licenses to biotechnology companies for the development and commercialization of RNAi therapeutics for specified targets in which we have no direct strategic interest under our InterfeRx™ program, and to research companies that commercialize RNAi reagents or services under our research product licenses.

We also seek to form or advance new ventures and opportunities in areas outside our primary focus on RNAi therapeutics. In 2007, we and Isis established Regulus Therapeutics Inc., or Regulus, a company focused on the discovery, development and commercialization of microRNA therapeutics. In October 2012, Regulus completed its initial public offering and currently, we own 17% of Regulus’ outstanding common stock. Through an internal effort we refer to as Alnylam Biotherapeutics, we are advancing the application of RNAi technology to improve the manufacturing processes for biologics, including recombinant proteins and monoclonal antibodies. We have formed, and may form additional, collaborations through this effort with third-party biopharmaceutical companies. In October 2011, we entered into a collaboration with GlaxoSmithKline, or GSK, for influenza vaccine production, with our VaxiRNA™ platform, an RNAi technology developed under our Alnylam Biotherapeutics initiative, for the enhanced production of viruses used in the manufacture of vaccine products. Given the broad applications for RNAi technology, in addition to our efforts on Alnylam Biotherapeutics and VaxiRNA, we believe new ventures and opportunities will be available to us.

Recent Developments

In December 2012, we filed an automatically effective shelf registration statement with the Securities and Exchange Commission, or SEC, for an indeterminate number of shares. In January 2013, we sold an aggregate of 9,200,000 shares of our common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of the offering, we received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million. We intend to use these proceeds for general corporate purposes, ultimately focused on advancing our clinical pipeline, in particular our ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 programs, as well as for potential acquisitions of new businesses, technologies or products, working capital, capital expenditures and general and administrative expenses.

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On February 4, 2013, we and MedCo entered into a license and collaboration agreement pursuant to which we granted to MedCo an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9, or PCSK9, including ALN-PCS02 and ALN-PCSsc, for the treatment of hypercholesterolemia and other human diseases. These RNAi therapeutics are referred to as licensed products under the MedCo agreement. ALN-PCS02 is an intravenously administered RNAi therapeutic, for which we have completed a Phase I clinical trial, and ALN-PCSsc is a subcutaneously administered RNAi therapeutic currently in pre-clinical development.

In consideration for the rights granted to MedCo under the MedCo agreement, MedCo paid us an upfront cash payment of $25.0 million. In addition, MedCo is required to make payments to us upon the achievement of specified clinical development, regulatory approval and commercialization milestones totaling up to $180.0 million, and to pay us scaled double-digit royalties based on annual worldwide net sales, if any, of licensed products by MedCo, its affiliates and sublicensees, subject to reduction under specified circumstances. A description of our agreement with MedCo is included below under the heading “Strategic Alliances.”

On February 6, 2013, Cubist notified us that it would not exercise its opt-in right for our ALN-RSV01 program for the treatment of RSV in lung transplant patients under our license and collaboration agreement. In light of this determination, we and Cubist mutually agreed to terminate our license and collaboration agreement. As a result of the termination, the parties have no further rights and obligations under the license and collaboration agreement, notwithstanding anything to the contrary in the agreement. A description of our agreement with Cubist is included below under the heading “Strategic Alliances.”

On February 19, 2013, we and Genzyme entered into an amendment to our license and collaboration agreement to remove a specified provision relating to the termination of clinical development by us or Genzyme under certain circumstances. A description of our agreement with Genzyme is included below under the heading “Strategic Alliances.”

RNA Interference

RNAi is a natural biological pathway that occurs within cells and can be harnessed to selectively silence the activity of specific genes. The discovery of RNAi first occurred in plants and worms in 1998, and two of the scientists who made this discovery, Dr. Andrew Fire and Dr. Craig Mello, received the 2006 Nobel Prize for Physiology or Medicine.

Opportunity for Therapeutics Based on RNAi

Beginning in 1999, our scientific founders described and provided evidence that the RNAi mechanism occurs in mammalian cells and that its immediate trigger is a type of molecule known as an siRNA. They showed that laboratory-synthesized siRNAs could be introduced into the cell and suppress production of specific target proteins by cleaving and degrading the messenger RNA, or mRNA, of the specific gene that encodes that specific protein. Because it is possible to design and synthesize siRNAs specific to any gene of interest, the entire human genome is accessible to RNAi, and we therefore believe that RNAi therapeutics have the potential to become a broad new class of drugs.

In May 2001, one of our scientific founders, Dr. Thomas Tuschl, published the first scientific paper demonstrating that siRNAs can be synthesized in the laboratory using chemical or biochemical methods and, when introduced or delivered into mammalian cells, can silence the activity of a specific gene. Since the Tuschl publication and issuance of the seminal Tuschl II patent, which is licensed exclusively to us for therapeutic applications, the use of siRNAs has been broadly adopted by academic and industrial researchers for the fundamental study of the function of genes. This has resulted in a significant number of publications focused on the use of RNAi and has made the Tuschl publication one of the most cited papers in basic biologic research. Reflecting this, siRNAs are a growing segment of the market for research reagents and related products and services.

Beyond its use as a basic research tool, we believe that RNAi can form the basis of a broad new class of drugs for the treatment of genetically defined targets for diseases with high unmet medical need. Drugs based on the RNAi mechanism could offer numerous opportunities and benefits, which may include:

• Ability to target proteins that cannot be targeted effectively by existing drug classes.    Over the last decade, the understanding of human disease has advanced enormously, and many proteins that play

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fundamental roles in human disease have been identified. Paradoxically, greater than 80% of these key proteins cannot be targeted effectively with existing drug approaches like small molecules or proteins such as monoclonal antibodies. These so called “undruggable” targets are potentially accessible to siRNAs as they are made by mRNAs that can be targeted with RNAi.

• Ability to treat a broad range of diseases.    The ability to make siRNAs that target virtually any gene to suppress the production of virtually any protein whose presence or activity causes disease suggests a broad potential for application in a wide range of diseases.

• Inherently potent and natural mechanism of action.    We expect the inherent catalytic nature of the RNAi mechanism to allow for a high degree of potency and durability of effect for RNAi-based therapeutics, which we believe distinguishes RNAi from other approaches. In addition, since RNAi therapeutics harness a natural mechanism for gene silencing, we believe that this approach will demonstrate improved safety and tolerability as compared with other RNA-targeting approaches.

• Simplified discovery of product candidates.    In contrast to the often arduous and slow drug discovery process for proteins and small molecules, the identification of siRNA product candidates has been, and we expect will continue to be, much simpler, quicker and less costly because it involves relatively standard processes that are directed by the known gene target sequences and can be applied in a similar fashion to many successive product candidates.

We have reported on our advances in developing siRNAs as potential drugs in a large number of peer-reviewed publications and meetings, including publications by Alnylam scientists in the journals Nature, Nature Medicine, Nature Biotechnology, Cell and Proceedings of the National Academy of Sciences, or PNAS.

Our Product Platform

Our product platform provides a capability for a systematic approach to identifying RNAi therapeutic product candidates through sequence selection, potency selection, stabilization by chemical modification, improvement of biodistribution and cellular uptake by various chemical conjugates and formulations. Key to the therapeutic application of siRNAs is the ability to successfully deliver siRNAs to target tissues and achieve cellular uptake of the siRNA into the inside of the cell where the RNAi machinery, called RNA-induced silencing complex, or RISC, is active. We have employed two predominant approaches for delivery of RNAi therapeutics: first, a formulation-based approach with lipid nanoparticles, or LNPs; and, second, a conjugate-based approach involving the modification of siRNAs with small chemical groups, such as triantennary N-acetylgalactosamine, or GalNAc, conjugates. We have demonstrated the ability to achieve delivery of siRNAs to cells in the liver with both intravenous administration using LNPs and subcutaneous administration using GalNAc conjugates. Specifically, we have demonstrated RNAi therapeutic activity with these delivery approaches in multiple species, including humans. We have also demonstrated RNAi therapeutic activity towards multiple disease genes expressed in the liver, including results from our Phase I clinical trials for ALN-TTR01, ALN-TTR02 and ALN-PCS, as well as in biopsy results from our Phase I clinical trial for ALN-VSP. In some tissues, including the respiratory tract and central nervous system, we have employed a direct RNAi delivery approach, which employs the direct or local application of siRNAs, to achieve cellular uptake and gene silencing.

We believe that we have continued to make considerable progress in developing our product platform and to make further advances relating to the delivery of RNAi therapeutics, both internally and together with our collaborators. With the progress we have made to date and expect to make in the future, we believe we are well positioned to pursue multiple therapeutic opportunities.

Our Product Pipeline

Our core product strategy is focused on the development and commercialization of novel RNAi therapeutics for the treatment of genetically defined targets for diseases with high unmet medical need. Under our core product strategy, we expect to have five RNAi therapeutic programs in clinical development, including programs in advanced stages, on our own or with one or more collaborators, by the end of 2015. As part of this strategy, our goal is to develop product candidates with the following shared characteristics: a genetically defined target

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and disease; the potential to have a significant impact in high unmet need patient populations; the ability to leverage our existing RNAi delivery platform; the opportunity to monitor an early biomarker in Phase I clinical trials for human proof of concept; and the existence of clinically relevant endpoints for the filing of an NDA, with a focused patient database and possible accelerated paths for commercialization. Our core programs currently in clinical or pre-clinical development are: ALN-TTR, including ALN-TTR02 and ALN-TTRsc, for the treatment of ATTR; ALN-AT3 for the treatment of hemophilia and RBD; ALN-AS1 for the treatment of AIP; ALN-PCS for the treatment of hypercholesterolemia; and ALN-TMP for the treatment of hemoglobinopathies, including beta-thalassemia. We intend to focus on developing and commercializing ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 on our own in North and South America, Europe and other parts of the world. In February 2013, we entered into a global alliance with MedCo to advance our ALN-PCS program. We also intend to enter into global alliances to advance our ALN-TMP, ALN-AAT and potentially other programs.

While focusing our efforts on our core product strategy, we also intend to continue to advance additional development programs through existing or future alliances. We have two partner-based programs in clinical development, including ALN-RSV01 for the treatment of RSV and ALN-VSP for the treatment of liver cancers, as well as one candidate in pre-clinical development, ALN-HTT for the treatment of HD.

During 2012, we elected to suspend active resource allocation toward the advancement of ALN-HPN, an RNAi therapeutic targeting the hepcidin pathway for the treatment of refractory anemia, in order to focus on other higher priority pipeline programs; we may advance this program further in a potential alliance.

The following is a summary of our product development programs and our partner-based clinical development programs as of January 31, 2013:

We have spent substantial funds over the past three years to develop our product pipeline and expect to continue to do so in the future. We incurred research and development costs of $86.6 million in 2012, $99.3 million in 2011, and $106.4 million in 2010.

Core Product Development Programs

Our core product development programs are described in more detail below.

ALN-TTR — TTR-Mediated Amyloidosis (ATTR)

Our most advanced core product development program, ALN-TTR, targets the transthyretin, or TTR, gene for the treatment of ATTR. ATTR is an inherited, progressively debilitating and fatal disease caused by a mutation in the TTR gene, of which over 100 mutations have been identified. TTR protein is produced primarily

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in the liver and is normally a carrier for thyroid hormone and retinol binding protein. We believe TTR is a suitable target for an RNAi therapeutic formulated to maximize delivery to liver cells, which are the primary source of TTR synthesis. Mutations in TTR result in the accumulation of toxic deposits of the wild-type and mutant protein in several body organs and tissues, including the peripheral nervous system, heart and/or gastrointestinal tract, which leads to familial amyloidotic polyneuropathy, or FAP, and/or familial amyloidotic cardiomyopathy, or FAC. FAP is associated with severe pain and loss of autonomic nervous system function, whereas FAC is associated with heart failure. ALN-TTR targets wild-type and all known mutant forms of TTR, including the V30M mutation, which is the major mutation of ATTR, particularly in FAP, and therefore is a potential therapeutic for the treatment of all forms of ATTR, including FAP and FAC. ATTR represents a major unmet medical need with significant morbidity and mortality as an orphan, or rare, disease. Based on our analysis of the available patient and market data, we estimate that FAP affects approximately 10,000 people worldwide and FAC affects at least 40,000 people worldwide. ATTR patients with FAP have a mean life expectancy of five to 15 years from symptom onset, and the only treatment options are liver transplantation and tafamidis, a small molecule stabilizer of the TTR protein for early-stage FAP patients that has been approved in the European Union, or EU. The mean survival for FAC patients is approximately 2.5 years following diagnosis, and there are no approved therapies. Although limited treatment options are available, there remains a significant need for novel therapeutics to treat patients with ATTR.

In May 2012, we reported final clinical results from our multinational ALN-TTR01 Phase I clinical trial showing that ALN-TTR01 was generally safe and well tolerated and resulted in statistically significant lowering of both wild-type and mutant TTR serum levels in ATTR patients. ALN-TTR01 employs a first-generation LNP formulation, and the ALN-TTR01 Phase I clinical trial has provided proof-of-concept data for our ALN-TTR program.

We are advancing ALN-TTR02 as our lead product candidate in our ALN-TTR program. ALN-TTR02 uses the same siRNA as ALN-TTR01, and a second generation LNP delivery technology. In July 2012, we reported clinical results from our ALN-TTR02 Phase I clinical trial, which was conducted in the United Kingdom as a randomized, single-blind, placebo-controlled, single-ascending dose study; 17 healthy volunteer subjects were enrolled. The primary objective of the clinical trial was to evaluate the safety and tolerability of a single intravenous dose of ALN-TTR02, with subjects enrolled into five sequential cohorts of increasing doses ranging from 0.01 to 0.50 mg/kg. Secondary objectives of this clinical trial included the assessment of clinical activity as measured by effects on serum TTR levels through at least day 56 following a single dose. Preliminary data from this study showed that administration of ALN-TTR02 resulted in robust knockdown of serum TTR protein levels of up to 94%; the overall results were highly statistically significant (p<0.00001 by ANOVA). Suppression of TTR, the disease-causing protein in ATTR, was found to be rapid, dose dependent, durable and specific after a single dose, with a nearly 80% level of TTR suppression sustained at one month after just a single dose.

ALN-TTR02 was found to be generally safe and well tolerated in this Phase I clinical trial, consistent with our broader clinical experience with LNP-formulated siRNAs. There were no serious adverse events or discontinuations in the study related to ALN-TTR02, and there were no significant adverse events associated with ALN-TTR02 up through 0.30 mg/kg. A moderate acute infusion reaction was observed in one subject receiving ALN-TTR02 at 0.50 mg/kg who was able to complete dosing with slowing of the infusion rate. There were no laboratory test abnormalities, including no changes in liver function tests, cytokines or C-reactive protein.

In June 2012, we reported the initiation of a Phase II clinical trial of ALN-TTR02. The Phase II clinical trial is designed as an open-label, multi-center, multi-dose, dose-escalation trial expected to enroll approximately 20 ATTR patients. Patients are being enrolled into cohorts of increasing doses and are receiving ALN-TTR02 once every four weeks for two cycles. The primary objectives of this clinical trial are to evaluate the safety and tolerability of multiple doses of ALN-TTR02 and to measure clinical activity based on serial measurement of circulating serum TTR levels. Assuming positive results from the Phase II clinical trial, we expect to initiate a Phase III pivotal trial of ALN-TTR02 in ATTR patients with FAP.

The Committee for Orphan Medicinal Products, or COMP, of the European Medicines Agency, or EMA, adopted a positive opinion for ALN-TTR01 designation as an orphan medicinal product for the treatment of FAP.

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In April 2011, the European Commission, or EC, officially designated ALN-TTR01 as an orphan drug. This designation also applies to ALN-TTR02. Orphan Drug Designation by the EC provides regulatory and financial incentives for companies developing orphan drugs to develop and market therapies that treat a life-threatening or chronically debilitating condition affecting no more than five in 10,000 persons in the EU. In addition to a ten-year period of marketing exclusivity in the EU after product approval, Orphan Drug Designation provides companies with protocol assistance from the EMA during the product development phase, direct access to centralized marketing authorization and reduced regulatory fees. In addition, in June 2012, we reported that the U.S. Food and Drug Administration, or FDA, provided Orphan Drug Designation to ALN-TTR02 as a therapeutic for the treatment of FAP. The FDA’s Orphan Drug Designation program provides orphan status to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than 200,000 people in the United States.

In addition to ALN-TTR02, we are also advancing ALN-TTRsc, which utilizes our GalNAc conjugate delivery technology enabling subcutaneous dose administration. In February 2013, we received acceptance from the U.K. Medicines and Healthcare products Regulatory Agency, or MHRA, to initiate a Phase I clinical trial of ALN-TTRsc. The Phase I clinical trial is designed as a randomized, double-blind, placebo-controlled, single- and multi-dose, dose escalation study, enrolling up to 40 healthy volunteer subjects. The primary objective of the study is to evaluate the safety and tolerability of ALN-TTRsc. In addition, the study will evaluate the clinical activity of ALN-TTRsc as measured by effects on serum TTR levels. Assuming positive results from the Phase I clinical trial, our goal is to initiate an exploratory Phase II clinical trial of ALN-TTRsc in ATTR patients with FAC, ultimately leading to a Phase III clinical trial in FAC patients. Pre-clinical studies have shown that once-weekly subcutaneous dosing with ALN-TTRsc enables robust and sustained silencing of TTR over a multi-week period.

As with ALN-TTR02, we intend to directly commercialize ALN-TTRsc in North and South America, Europe and other parts of the world. In October 2012, we announced that we and Genzyme entered into a license and collaboration agreement pursuant to which we granted to Genzyme an exclusive license in Japan and the Asia-Pacific region, known as the Genzyme territory, to develop and commercialize RNAi therapeutics targeting TTR, including ALN-TTR02 and ALN-TTRsc, for the treatment of ATTR and other human diseases. We retain all development and commercialization rights worldwide outside of the Genzyme territory. The Genzyme agreement is described below under the heading “Strategic Alliances.”

Our preliminary Phase I clinical trial data and pre-clinical findings demonstrate the potential benefit of an RNAi therapeutic targeting TTR for the treatment of ATTR. Moreover, siRNA treatment may provide benefits to ATTR patients not observed with liver transplantation or administration of tafamidis based on the ability to simultaneously reduce the expression of both mutant and wild-type TTR, both of which have a role in disease progression. ATTR is also one example of a number of orphan indications where there is a significant unmet need and the potential for early biomarker data in clinical trials, enabling rapid proof-of-concept and a clear opportunity for a large therapeutic impact in patients.

ALN-AT3 — Hemophilia and Rare Bleeding Disorders (RBD)

ALN-AT3 is an RNAi therapeutic targeting antithrombin, or AT, a genetically defined target, for the treatment of hemophilia and RBD. Hemophilia is a hereditary disorder caused by deficiencies of certain blood clotting factors, resulting in recurrent bleeds into joints, muscles and other major internal organs. Hemophilia A is defined by loss-of-function mutations in factor VIII, and there are more than 40,000 registered hemophilia A patients in the United States and Europe. Hemophilia B, defined by loss-of-function mutations in factor IX, affects more than 9,500 registered patients in the United States and Europe. Standard treatment for hemophilia patients involves replacement of the missing clotting factor either as prophylaxis or on-demand therapy. However, a significant number of hemophilia A patients will develop an antibody to their replacement factor – a very serious complication as these ‘inhibitor’ patients become refractory to standard replacement therapy. Based on our analysis of the available patient and market data, we estimate that there are approximately 2,000 inhibitor patients in major markets and approximately 5,000 inhibitor patients worldwide. RBD are defined by congenital deficiencies of other blood coagulation factors including factors II, V, VII, X, and XI. Based on our analysis of

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the available patient and market data, we estimate that there are approximately 1,000 RBD patients worldwide with severe bleeding complications who are in need of routine prophylaxis. There exists a significant need for novel therapeutics to treat severe hemophilia patients and patients with RBD.

ALN-AT3 is a novel therapeutic approach aimed at re-balancing the coagulation cascade and normalizing hemostasis in severe hemophilia A and B patients, including patients with inhibitors against their replacement factor. ALN-AT3 also has potential as a treatment for RBD patients and patients with other bleeding disorders. In December 2012, we presented pre-clinical data showing that subcutaneous administration of ALN-AT3 in non-human primates, or NHPs, resulted in potent, dose-dependent and durable knockdown in serum AT, resulting in significant increases in thrombin generation. Specifically, a single subcutaneous dose of ALN-AT3 led to potent knockdown of serum AT, with an ED50 of approximately one mg/kg. AT suppression was durable, with effects lasting greater than six weeks after a single dose. In addition, weekly subcutaneous doses of ALN-AT3 in NHPs led to sustained AT knockdown of approximately 80% and greater than 90% at 0.5 mg/kg and 1.5 mg/kg, respectively. These data enable an estimation of an ED50 dose for weekly subcutaneous administration at 0.15-0.3 mg/kg at a volume of injection for human administration expected to be less than 0.5 mL/injection. Moreover, increased thrombin generation was closely correlated with AT reduction, with an up to four-fold increase in peak thrombin at 90% AT reduction. ALN-AT3 utilizes our GalNAc-siRNA conjugate delivery technology, enabling subcutaneous dose administration with potential for a once-weekly or twice-monthly dosing regimen. We plan to file an investigational new drug application, or IND, for ALN-AT3 and to initiate a Phase I clinical trial during 2013. We intend to directly commercialize ALN-AT3 in North and South America, Europe and other parts of the world, and we intend to seek a partner for this program in Japan and other Asian territories.

ALN-AS1 — Acute Intermittent Porphyria (AIP)

ALN-AS1 is an RNAi therapeutic targeting aminolevulinate synthase 1, or ALAS-1, for the treatment of AIP. AIP is an ultra-rare autosomal dominant disease caused by loss of function mutations in porphobilinogen deaminase, or PBGD, an enzyme in the heme biosynthesis pathway. Exposure of AIP patients to certain drugs, dieting or hormonal changes can trigger strong induction of ALAS-1, another enzyme in the heme biosynthesis pathway, which can lead to accumulation of toxic intermediates upstream of PBGD that precipitate attack symptoms. Patients with AIP can suffer acute and/or recurrent life-threatening attacks with severe abdominal pain, peripheral and autonomic neuropathy, and neuropsychiatric manifestations, and possible death if left untreated. Based on our analysis of the available patient and market data, we estimate that approximately 5,000 patients in the United States and Europe suffer acute porphyria attacks annually, and we believe approximately 500 of those patients are afflicted with recurrent debilitating attacks. Treatment options for AIP patients suffering from an acute attack are limited; some patients are given intravenous heme analogues that must be administered through a central venous catheter, but these have a slow onset and can result in severe thrombophlebitis, iron overload and resistance to treatment over time. Currently, there is no approved prophylactic treatment available to prevent recurrent attacks, which often occur monthly in women associated with menses. There exists a significant need for therapies for AIP patients.

ALN-AS1 is a GalNAc conjugate siRNA targeting ALAS-1 administered subcutaneously. Inhibition of ALAS-1 is known to reduce the accumulation of heme precursors that cause the clinical manifestations of AIP. ALN-AS1 has the potential to be a therapy for the treatment of acute porphyria attacks, as well as a prophylactic approach for the prevention of recurrent attacks. We expect to select a final development candidate during 2013, with the goal of advancing ALN-AS1 into the clinic. We intend to directly commercialize ALN-AS1 in North and South America, Europe and other parts of the world, and we intend to seek a partner for this program in Japan and other Asian territories.

ALN-PCS — Hypercholesterolemia

ALN-PCS is a systemically delivered RNAi therapeutic targeting PCSK9 for the treatment of hypercholesterolemia. PCSK9 is a protein involved in the regulation of low-density lipoprotein, or LDL, receptor levels on hepatocytes and the metabolism of LDL cholesterol, or LDL-c, which is commonly referred to as “bad”

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cholesterol. PCSK9 is produced by the liver and circulates in the bloodstream. Both intracellular and extracellular PCSK9 reduce the liver’s capacity to absorb LDL-c by decreasing LDL receptor levels. Published studies indicate that, if PCSK9 activity could be reduced, the liver’s uptake of LDL-c should increase and blood cholesterol levels should decrease. In fact, published case reports have shown individuals with loss-of-function genetic mutations in PCSK9 have decreased blood cholesterol levels. In turn, these individuals have been shown to have a dramatically reduced risk of coronary artery disease, or CAD, including myocardial infarction or heart attack. In addition, studies have shown that PCSK9 levels are increased by statin therapy, limiting their effect, suggesting that the introduction of a PCSK9 inhibitor to statin therapy may result in even further reductions in LDL-c levels. Some forms of hypercholesterolemia can be treated through dietary restrictions, lifestyle modifications (e.g., exercise and smoking cessation) and medicines such as statins. However, a large proportion of patients with hypercholesterolemia, including genetic familial hypercholesterolemia patients, acute coronary syndrome patients, high-risk patient populations (e.g., patients with CAD, diabetics, symptomatic carotid artery disease) and other patients that are statin intolerant, are not achieving target LDL-c goals with statin therapy. Severe forms of hypercholesterolemia are estimated to affect more than 500,000 patients worldwide, and as a result, there is a significant need for novel therapeutics to treat patients with hypercholesterolemia whose disease is inadequately managed by existing therapies.

In April 2012, we reported clinical data from our Phase I clinical trial of ALN-PCS02. ALN-PCS02 employs the same LNP formulation used for ALN-TTR02. The Phase I clinical trial was conducted in the United Kingdom as a randomized, single-blind, placebo-controlled, single-ascending dose study in healthy volunteer subjects with elevated baseline LDL-c (greater than 116mg/dL). The primary objective of the clinical trial was to evaluate the safety and tolerability of a single dose of ALN-PCS02. Secondary objectives included assessment of pharmacodynamic effects of the drug on plasma PCSK9 protein levels and evaluation of clinical efficacy as measured by LDL-c levels. The clinical trial was performed in the absence of statins or other lipid lowering therapy. A total of 32 subjects were enrolled into six sequential dose cohorts ranging from 0.015 to 0.400 mg/kg in a three-to-one randomization of drug to placebo.

In this clinical trial, as reported in April 2012, administration of ALN-PCS02 resulted in rapid, dose-dependent and durable reductions in LDL-c of up to 50% relative to baseline and placebo, with a statistically significant mean reduction of 41% (p<0.01) at the 0.400 mg/kg dose level. In addition, ALN-PCS administration resulted in rapid, dose-dependent and durable knockdown of PCSK9 protein levels in plasma with a maximal 84% reduction relative to baseline and placebo, with a statistically significant mean reduction of 68% in the highest dose group of 0.400 mg/kg (p<0.0001). There was also a dose-dependent increase in the proportion of subjects who achieved “target” levels of LDL-c of less than 100 mg/dL (p<0.05). We believe the effects of a single dose of ALN-PCS02 support a once-monthly dose administration regimen for future studies.

ALN-PCS02 was found to be safe and well tolerated in this study and there were no serious adverse events related to study drug administration. There were no drug-related discontinuations and no liver enzyme elevations. A mild, transient rash, observed in 16 subjects, including four who received placebo, is believed to be related to steroid pre-medication provided to subjects receiving both ALN-PCS, as well as those receiving placebo. There were no significant changes compared to baseline in levels of high-density lipoprotein, or HDL, also referred to as “good” cholesterol, consistent with the phenotype observed in human PCSK9 loss-of-function mutations.

We are also developing ALN-PCSsc, a subcutaneously administered RNAi therapeutic currently in pre-clinical development. We have presented pre-clinical data from our ALN-PCSsc program demonstrating potent knockdown of the PCSK9 target gene with an ED₅₀ of less than 0.3 mg/kg after a single subcutaneous dose.

In February 2013, we and MedCo entered into a license and collaboration agreement pursuant to which we granted to MedCo an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting PCSK9, including ALN-PCS02 and ALN-PCSsc, for the treatment of hypercholesterolemia and other human diseases. A description of our agreement with MedCo is included below under the heading “Strategic Alliances.”

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ALN-TMP — Hemoglobinopathies

ALN-TMP is a systemically delivered RNAi therapeutic targeting transmembrane protease, serine 6, or Tmprss6, for the treatment of hemoglobinopathies, including beta-thalassemia. Hemoglobinopathies are genetic disorders defined by mutations in the globin genes that assemble to form hemoglobin, and are associated with chronic anemia, extra-medullary hematopoiesis and iron overload. Tmprss6, a genetically validated target expressed on hepatocytes, functions by cleaving hemojuvelin, resulting in reduced hepcidin levels and increased iron mobilization. By silencing Tmprss6 with RNAi, hepcidin levels would be expected to increase and iron absorption and mobilization would be decreased.

Pre-clinical animal model studies with ALN-TMP have demonstrated corrective effects on iron overload in addition to broader disease modifying effects including improvements in hemoglobin levels, spleen histopathology and globin gene expression. In December 2012, we presented pre-clinical data showing that systemic administration of ALN-TMP resulted in disease modifying effects in a model of beta-thalassemia. In addition, ALN-TMP demonstrated pre-clinical efficacy in a model of hereditary hemochromatosis. In the pre-clinical studies, ALN-TMP administration resulted in a greater than 80% silencing of Tmprss6 mRNA levels and a greater than two-fold elevation of Hamp1, the gene that encodes for hepcidin, a liver hormone that negatively regulates iron transport and absorption. Pre-clinical ALN-TMP administration resulted in an approximately 30% decrease in serum iron and non-heme liver iron, as well as a similar reduction in transferrin saturation. In a mouse model of beta-thalassemia, ALN-TMP reduced the severity of anemia as evidenced by an approximately one g/dL increase in total hemoglobin. Moreover, pre-clinical treatment with ALN-TMP was found to significantly attenuate extra-medullary hematopoiesis, including a two-to-three fold reduction in spleen size. Pre-clinical treatment with ALN-TMP also decreased ineffective erythropoiesis, with a three-to-four fold decrease in reticulocyte count, an approximate 30% increase in red blood cell count, or RBC, and a normalization of RBC morphology and lifespan. Finally, pre-clinical ALN-TMP administration was found to restore the ratio of alpha globin to beta globin, thereby correcting the genetic defect associated with ß-thalassemia with possible implications for the treatment of other hemoglobinopathies. We plan to partner our ALN-TMP program prior to initiating a Phase I clinical trial.

Partner-Based Product Development Programs

While focusing our core efforts on advancing our product development programs as described above, we also intend to continue to advance additional product development programs through existing or future alliances, including the clinical and pre-clinical programs described below.

ALN-RSV — Respiratory Syncytial Virus (RSV) Infection

ALN-RSV is an RNAi therapeutic for the treatment of RSV infection. RSV is a highly contagious virus that causes infections in both the upper and lower respiratory tract. RSV infects nearly every child by the age of two years and is responsible for a significant percentage of hospitalizations of infants, children with lung or congenital heart disease, the elderly and adults with immune- compromised systems, including lung transplant recipients. A study published in 2005 in the New England Journal of Medicine estimates that over 170,000 elderly adults are hospitalized with RSV each year. In addition, experts estimate that the overall prevalence of lung transplants in the United States is between 8,000 to 10,000, and the annual incidence of RSV infection in lung transplant recipients can be up to ten percent.

In February 2008, we reported positive results from the GEMINI study, a double-blind, placebo-controlled, randomized Phase II clinical trial designed to evaluate the safety, tolerability and anti-viral activity of ALN-RSV01 in 88 adult subjects experimentally infected with RSV. In this clinical trial, ALN-RSV01 was found to be safe and well tolerated and demonstrated statistically significant reduction (40%) in viral infection rate (p<0.01) and a 95% increase in infection-free patients (p<0.01), as compared to placebo. In July 2009, we reported results from a Phase IIa clinical trial assessing the safety and tolerability of aerosolized ALN-RSV01 versus placebo in a randomized, double-blind trial of 24 adult lung transplant patients naturally infected with RSV. This clinical trial achieved its primary objective of demonstrating the safety and tolerability of ALN-RSV01. In particular, there were no drug-related serious adverse events or discontinuations. Prospectively defined clinical secondary

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endpoints at 90 days included recovery of lung function as measured by spirometry and clinical determination of new or progressive bronchiolitis obliterans syndrome, or BOS, an irreversible loss of function in the transplanted lung associated with approximately 50% mortality within five years. Based on the data from this small trial, ALN-RSV01 treatment was associated with a statistically significant decrease in the total incidence of new or progressive BOS at 90 days compared to placebo (p=0.02), with 50% of the placebo patients showing new or progressive BOS as compared with only 7.1% of the ALN-RSV01-treated patients.

In September 2012, we reported complete results from an international multi-center, randomized, double-blind, placebo-controlled Phase IIb clinical trial with ALN-RSV01 for the treatment of RSV infection in lung transplant patients. RSV infection in lung transplant patients represents a significant unmet medical need due to the risk of developing new or progressive BOS. The objective of this Phase IIb clinical trial was to repeat and extend the clinical results observed in the Phase IIa clinical trial described above. The primary endpoint of the clinical trial was designed as a reduction in the incidence of new or progressive BOS at 180 days after RSV infection. The clinical trial enrolled 87 patients who were randomized in a one-to-one, drug-to-placebo ratio. Based on local study site diagnosis of RSV infection, a total of 45 patients were randomized to receive ALN-RSV01 and 42 patients were randomized to receive placebo, defining the overall intent-to-treat study cohort, or ITT. Following central laboratory testing by PCR analysis, 10 patients could not be confirmed as infected for RSV; these patients happened to include nine patients randomized to receive placebo and one patient randomized to receive ALN-RSV01. Accordingly, a total of 77 patients (placebo, n=33; ALN-RSV01, n=44) comprised the “intent-to-treat,” or ITTc, analysis population. Baseline characteristics were generally well balanced between treatment groups. The study did not achieve the primary endpoint of reduced BOS in an ITTc analysis of confirmed RSV infected patients (p=0.058), but achieved statistically significant reductions in prospectively defined analyses of ITTc patients with their “last observation carried forward,” with a p-value of 0.028, and of ITTc patients treated “per protocol,” with a p-value of 0.025. In all analyses, ALN-RSV01 treatment was associated with a clinically meaningful treatment effect, with a reduction of over 50% in the incidence of day 180 BOS as compared with placebo. These results replicated the findings from our Phase IIa clinical trial of ALN-RSV01 in the same clinical setting.

ALN-RSV01 was found to be generally safe and well tolerated in the Phase IIb clinical trial, with a comparable incidence of reported adverse events in placebo and study drug treatment arms. There were three deaths in the study, two in placebo and one in ALN-RSV01, all of which were determined to be unrelated to treatment.

We have a collaboration with Kyowa Hakko Kirin for the development and commercialization of RNAi products for the treatment of RSV in Asia. We also had an agreement with Cubist, pursuant to which Cubist had the right to opt into collaborating with us on ALN-RSV01, subject to certain conditions. In February 2013, Cubist notified us that it would not exercise its opt-in right for ALN-RSV01. In light of this determination, we and Cubist mutually agreed to terminate our agreement.

During 2012, we met with the FDA and European regulatory authorities regarding the results of the ALN-RSV01 Phase IIb clinical trial and obtained preliminary guidance on the design of a potential Phase III clinical trial. We intend to seek another partner to advance the ALN-RSV01 program into a Phase III clinical trial and intend to finalize plans with the regulatory authorities and a new partner, if and when identified.

ALN-VSP — Liver Cancer

ALN-VSP is a systemically delivered RNAi therapeutic for the treatment of advanced solid tumors with liver involvement. Cancer affecting the liver, known as either primary or secondary liver cancer, is associated with one of the poorest survival rates in oncology and represents a major unmet medical need affecting a large number of patients worldwide. Primary liver cancer, also known as hepatocellular carcinoma, is one of the most common cancers worldwide. Secondary liver cancer, also known as metastatic liver cancer, is cancer that spreads to the liver from another part of the body like the colon, stomach, pancreas, breast, lung or skin. Worldwide, more than 500,000 people are diagnosed with primary or secondary liver cancer each year. ALN-VSP contains two siRNAs formulated using a first-generation LNP formulation. ALN-VSP is designed to target two genes

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critical in the growth and development of cancer, kinesin spindle protein, or KSP and vascular endothelial growth factor, or VEGF. KSP is a key component of the cellular machinery that mediates chromosome separation during cell division, which is critical for tumor proliferation. VEGF is a potent angiogenic factor that drives the development of blood vessels that are critical to ensuring adequate blood supply to the growing tumor.

In August 2011, we announced the completion of a Phase I clinical trial for ALN-VSP, which was our first systemically delivered RNAi therapeutic to enter clinical development. This Phase I clinical trial was a multi-center, open label, dose escalation study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of intravenous ALN-VSP in patients with advanced solid tumors with liver involvement. We completed enrollment in this clinical trial during the first quarter of 2011 and reported study results in June 2011. ALN-VSP was administered to 41 patients at doses ranging from 0.1 to 1.5 mg/kg and was generally well tolerated. Results from pharmacodynamic measurements provide evidence for anti-VEGF and anti-KSP pharmacology, and tumor biopsy data demonstrated both pharmacologically relevant tissue levels of ALN-VSP and human proof-of-concept for an RNAi mechanism of action.

In June 2012, we announced results from the extension study of our Phase I clinical trial of ALN-VSP. The extension study included patients enrolled in the ALN-VSP Phase I clinical trial who achieved stable disease or better after four months of treatment; patients were eligible to continue on the extension study until disease progression. The main objectives included continued evaluation of safety and tolerability and assessment of disease response. Seven of 37 patients, or 18.9%, evaluable for response went onto the extension study. At the time of enrollment, six patients had stable disease and one had an unconfirmed partial response. For these patients treated on both the Phase I clinical trial and extension study, the average length of time on treatment was 11.3 months, with a range of five to 27 months. The results from the extension study demonstrated disease control lasting more than six months in the majority of patients treated on the extension study, including one complete response in an endometrial cancer patient who had multiple liver metastases. In this study, chronic dosing of up to 27 months with ALN-VSP was found to be generally safe and well tolerated.

In July 2012, we formed a collaboration with Ascletis, a privately held U.S.-China joint venture pharmaceutical company, for the development of ALN-VSP. Under the collaboration agreement, we granted Ascletis exclusive rights to develop and commercialize ALN-VSP in China, including Hong Kong and Macau, and Taiwan. Ascletis’ initial focus will be on advancing ALN-VSP into a Phase II clinical trial for the treatment of hepatocellular carcinoma. Under the collaboration agreement, Ascletis is required to pay us development and commercial milestone payments and royalties on net sales in the Ascletis territory, if any. We retain all rights to develop and commercialize ALN-VSP in the rest of the world. We may use the data generated in China by Ascletis under this strategic collaboration for development of ALN-VSP in the rest of the world and Ascletis may potentially receive sublicense payments based on any such future collaborations we may enter into to develop and/or commercialize ALN-VSP. We plan to partner our ALN-VSP program prior to initiating a Phase II clinical trial outside of the Ascletis territory.

Other Partner-Based Programs

In addition to ALN-RSV and ALN-PCS, we are also supporting the development of ALN-HTT, a novel drug-device product incorporating an RNAi therapeutic candidate targeting the huntingtin gene, delivered using an implantable infusion device, for the treatment of HD, in collaboration with Medtronic and CHDI. ALN-HTT is currently in pre-clinical development.

Our ALN-HTT-related agreements with Medtronic and CHDI are described below under “Strategic Alliances.”

Discovery Programs

In addition to our core development efforts on ATTR, hemophilia and RBD, AIP, hypercholesterolemia and hemoglobinopathies, including beta-thalassemia, and our additional partner-based programs in RSV, liver cancer and HD, we are conducting additional research activities to discover novel RNAi therapeutic product candidates

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that we can partner with third parties with a focus on genetically defined targets and diseases. These include ALN-AAT, an RNAi therapeutic targeting AAT deficiency for the treatment of AAT deficiency-associated liver disease, amongst others programs.

Our Collaboration and Licensing Strategy

Our business strategy is to develop and commercialize a pipeline of RNAi therapeutic products directed toward genetically defined targets for diseases with high unmet medical need. 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 RNAi therapeutic programs.

Our collaboration strategy is to form worldwide or specific geographic collaborations relating to RNAi therapeutic programs in our pipeline. Specifically, we intend to focus on developing and commercializing ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 on our own in North and South America, Europe and other parts of the world, and have sought, or may seek, alliances for development and commercialization of these product candidates in Japan and other Asian territories. We intend to enter into global alliances to advance our ALN-TMP, ALN-AAT and potentially other programs. For example, during 2012, we established product alliances with Genzyme for the development and commercialization of ALN-TTR in Japan and the Asia-Pacific region, and Ascletis for the development and commercialization of ALN-VSP in China and certain other territories. In addition, in early 2013, we established a worldwide alliance with MedCo for the development and commercialization of ALN-PCS. We may also enter into RNAi platform and/or multi-target discovery alliances. For example, we have entered into a broad, non-exclusive platform license agreement with Takeda, under which we are also collaborating with Takeda on RNAi drug discovery for one or more disease targets. In addition, we have formed a platform alliance with Monsanto in the field of agriculture.

We also seek to form or advance new ventures and opportunities in areas outside our primary focus on RNAi therapeutics. In 2007, we and Isis formed Regulus to capitalize on our technology and intellectual property in the field of microRNA therapeutics. In October 2012, Regulus completed its initial public offering and currently, we own 17% of Regulus’ outstanding common stock. Through an internal effort we refer to as Alnylam Biotherapeutics, we are advancing the application of RNAi technology to improve the manufacturing processes for biologics, including recombinant proteins and monoclonal antibodies. We have formed, and may form additional, collaborations through this effort with third-party biopharmaceutical companies. During 2011, we also announced our progress on VaxiRNA, an RNAi technology developed under our Alnylam Biotherapeutics initiative, for the enhanced production of viruses used in the manufacture of vaccine products, and entered into a collaboration with GSK for influenza vaccine production. Given the broad applications for RNAi technology, in addition to our efforts on Alnylam Biotherapeutics and VaxiRNA, we believe new ventures and opportunities will be available to us.

To generate revenues from our intellectual property rights, we also grant licenses to biotechnology companies under our InterfeRx program for the development and commercialization of RNAi therapeutics for specified targets in which we have no direct strategic interest. We also license key aspects of our intellectual property to companies active in the research products and services market, which includes the manufacture and sale of reagents. We expect our InterfeRx and research product licenses to generate modest near-term revenues that we can re-invest in the development of our proprietary RNAi therapeutics pipeline. As of January 31, 2013, we had granted such licenses, on both an exclusive and non-exclusive basis, to approximately 20 companies.

Since delivery of RNAi therapeutics remains a major objective of our research activities, we also look to form collaboration and licensing arrangements with other companies and academic institutions to gain access to delivery technologies. For example, we have entered into agreements with Arrowhead, Tekmira Pharmaceuticals Corporation, or TPC, Protiva Biotherapeutics, Inc., a wholly owned subsidiary of TPC, and together with TPC, referred to as Tekmira, the Massachusetts Institute of Technology, or MIT, The University of British Columbia, or UBC, and AlCana Technologies, Inc., or AlCana, among others, related to various delivery technologies. We have also entered into license agreements with Isis, Max Planck Innovation GmbH (formerly known as Garching Innovation GmbH), or Max Planck Innovation, Tekmira, MIT, Cancer Research Technology Limited, or CRT, Whitehead Institute for Biomedical Research, or Whitehead, The University of Texas Southwestern Medical

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Center, or UTSW, as well as a number of other entities, to obtain rights to intellectual property in the field of RNAi. Finally, we have sought, and may seek in the future, funding for the development of our proprietary RNAi therapeutics pipeline from the government and foundations.

Strategic Alliances

We have formed, and intend to continue to form, strategic alliances to gain access to the financial, technical, clinical and commercial resources necessary to develop and market RNAi therapeutics. We expect these alliances to provide us with financial support in the form of upfront cash payments, license fees, equity investments, research and development funding, milestone payments and/or royalties or profit sharing based on sales of RNAi therapeutics.

Platform Alliances.

Roche/Arrowhead.    In July 2007, we and, for limited purposes, Alnylam Europe AG, or Alnylam Europe, entered into a license and collaboration agreement with Roche. Under the license and collaboration agreement, which became effective in August 2007, we granted Roche a non-exclusive license to our intellectual property, including delivery-related intellectual property existing as of the date of the license and collaboration agreement, to develop and commercialize therapeutic products that function through RNAi, subject to our existing contractual obligations to third parties. In November 2010, Roche announced the discontinuation of certain activities in research and early development, including its RNAi research efforts. In October 2011, Arrowhead announced its acquisition of RNA therapeutics assets from Roche, including the license and collaboration agreement. As a result of the assignment, Arrowhead owns all of the rights and obligations of Roche under the license and collaboration agreement. The license is initially limited to four therapeutic areas, and may be expanded to include additional therapeutic areas upon payment to us by Arrowhead of an additional $50.0 million for each additional therapeutic area, if any.

In consideration for the rights we granted under the license and collaboration agreement, Roche paid us $273.5 million in upfront cash payments. In addition, in exchange for our contributions under the collaboration agreement, for each RNAi therapeutic product developed by Arrowhead, its affiliates or sublicensees under the collaboration agreement, we are entitled to receive milestone payments upon achievement of specified development, regulatory and commercialization events, totaling up to an aggregate of $100.0 million per therapeutic target, together with a single-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments for each therapeutic target include up to $17.5 million for the achievement of specified development milestones, up to $62.5 million for the achievement of specified regulatory milestones and up to $20.0 million for the achievement of specified commercialization milestones. We could potentially earn the next development milestone payment of $1.0 million under the license and collaboration agreement based upon the initiation of the first Phase I clinical trial by Arrowhead for an RNAi therapeutic 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 or royalty payments from Arrowhead.

The term of the license and collaboration agreement generally ends upon the later of ten years from the first commercial sale of a licensed product and the expiration of the last-to-expire patent covering a licensed product. We estimate that our fundamental RNAi patents covered under the license and collaboration agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. Arrowhead may terminate the license and collaboration agreement, on a licensed product-by-licensed product, licensed patent-by-licensed patent, and country-by-country basis, upon 180-days’ prior written notice to us, but is required to continue to make milestone and royalty payments to us if any royalties were payable on net sales of a terminated licensed product during the previous 12 months. The license and collaboration agreement may also be terminated by either party in the event the other party fails to cure a material breach under the license and collaboration agreement.

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Takeda.    In May 2008, we entered into a license and collaboration agreement with Takeda to pursue the development and commercialization of RNAi therapeutics. Under the Takeda agreement, we granted to Takeda a non-exclusive, worldwide, royalty-bearing license to our intellectual property, including delivery-related intellectual property, controlled by us as of the date of the Takeda agreement or during the five years thereafter, to develop, manufacture, use and commercialize RNAi therapeutics, subject to our existing contractual obligations to third parties. The license initially is limited to the fields of oncology and metabolic disease and may be expanded at Takeda’s option to include other therapeutic areas, subject to specified conditions. Under the Takeda agreement, Takeda will be our exclusive platform partner in the Asian territory, as defined in the agreement, through May 2013.

In consideration for the rights granted to Takeda under the Takeda agreement, Takeda agreed to pay us $150.0 million in upfront and near-term technology transfer payments. In addition, we have the option, exercisable until the start of Phase III development, to opt-in under a 50-50 profit sharing agreement to the development and commercialization in the United States of up to four Takeda licensed products, and would be entitled to opt-in rights for two additional products for each additional field expansion, if any, elected by Takeda under the Takeda agreement. In June 2008, Takeda paid us an upfront payment of $100.0 million and agreed to pay us an additional $50.0 million upon achievement of specified technology transfer milestones. We have received payment of the entire $50.0 million of technology transfer milestones. If Takeda elects to expand its license to additional therapeutic areas, Takeda will be required to pay us $50.0 million for each additional field selected, if any. In addition, for each RNAi therapeutic product developed by Takeda, its affiliates and sublicensees, we are entitled to receive specified development, regulatory and commercialization milestone payments, totaling up to $171.0 million per product, together with a double-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments per product include up to $26.0 million for the achievement of specified development milestones, up to $40.0 million for the achievement of specified regulatory milestones and up to $105.0 million for the achievement of specified commercialization milestones. We could potentially earn the next milestone payment of $2.0 million under the Takeda agreement based upon the achievement of a specified pre-clinical event by Takeda for an RNAi therapeutic product. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any additional milestone payments or any royalty payments from Takeda.

Takeda also has the option, subject to certain conditions, to collaborate with us on the research and development of RNAi drug delivery technology for targets agreed to by the parties. In addition, through May 2013, Takeda has a right of first negotiation for the development and commercialization of our RNAi therapeutic products in the Asian territory, excluding our ALN-RSV, ALN-TTR and ALN-PCS programs. In addition to the 50-50 profit sharing option, we have a similar right of first negotiation to participate with Takeda in the development and commercialization of licensed products in the United States. The collaboration is governed by a joint technology transfer committee, a joint research collaboration committee and a joint delivery collaboration committee, each of which is comprised of an equal number of representatives from each party.

The term of the Takeda agreement generally ends upon the later of (i) the expiration of our last-to-expire patent covering a licensed product and (ii) the last-to-expire term of a profit sharing agreement in the event we elect to enter into such an agreement. We estimate that our fundamental RNAi patents covered under the Takeda agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. The Takeda agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Takeda may terminate the agreement on a licensed product-by-licensed product or country-by-country basis upon 180-days’ prior written notice to us, provided, however, that Takeda is required to continue to make royalty payments to us for the duration of the royalty term with respect to a licensed product.

Monsanto.    In August 2012, we and Monsanto entered into a license and collaboration agreement, pursuant to which we granted to Monsanto a worldwide, exclusive, royalty bearing right and license, including the right to grant sublicenses, to our RNAi platform technology and intellectual property controlled by us as of the date of the Monsanto agreement or during the 30 months thereafter, in the field of agriculture. The Monsanto

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agreement also includes the transfer of technology from us to Monsanto and a collaborative research project. Under the Monsanto agreement, Monsanto will be our exclusive collaborator in the agriculture field for a ten-year period.

In consideration for the rights granted to Monsanto under the Monsanto agreement, Monsanto paid us $29.2 million in upfront cash payments. Monsanto is also required to make near-term milestone payments to us upon the achievement of specified technology transfer and patent-related milestones. We are also entitled to receive additional funding for collaborative research efforts. In the aggregate, we can earn up to $5.0 million in potential future milestone payments and research funding under the Monsanto alliance. In December 2012, we received $1.5 million of the $5.0 million in potential milestone payments from Monsanto based upon the achievement of a specified patent-related event. In addition, Monsanto is required to pay to us a percentage of specified fees from certain sublicense agreements Monsanto may enter into that include access to our intellectual property, as well as low single-digit royalty payments on worldwide, net sales by Monsanto, its affiliates and sublicensees of certain licensed products, as defined in the Monsanto agreement, if any. We could potentially earn the next milestone payment of $2.5 million under the Monsanto agreement based upon the completion of technology transfer activities. Due to the uncertainty of the application of RNAi technology in the field of agriculture, we may not receive any additional milestone payments or any royalty payments from Monsanto.

The term of the Monsanto agreement generally ends upon the expiration of the last-to-expire patent licensed under the agreement. We estimate that our fundamental RNAi patents licensed under the Monsanto agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. After August 27, 2013, Monsanto may terminate the Monsanto agreement in its entirety upon 30-days’ prior written notice to us, provided, however, that Monsanto is required to continue to make royalty payments to us if any royalties were payable on net sales of a licensed product during the previous 24 months. The Monsanto agreement may also be terminated by either party in the event the other party fails to cure a material breach under the Monsanto agreement.

Under the terms of the Monsanto agreement, in the event that during the exclusivity period we cease to own or otherwise exclusively control certain licensed patent rights in the agriculture field, for any reason other than Monsanto’s breach of the Monsanto agreement or its negligence or willful misconduct, resulting in the loss of exclusivity with respect to Monsanto’s rights to such patent rights, and such loss of exclusivity has a material adverse effect on the licensed products, then we would be required to pay Monsanto up to $5.0 million as liquidated damages, and Monsanto’s royalty obligations to us under the Monsanto agreement would be reduced or, under certain circumstances, terminated. We have the right to cure any such loss of patent rights under the Monsanto agreement.

Discovery and Development Alliances.

Isis.    In April 2009, we and Isis amended and restated our existing strategic collaboration and license agreement, originally entered into in March 2004, to extend the broad cross-licensing arrangement regarding double-stranded RNAi that was established in 2004, pursuant to which Isis granted us licenses to its current and future patents and patent applications relating to chemistry and to RNA-targeting mechanisms for the research, development or commercialization of double-stranded RNA, or dsRNA, products. We have the right to use Isis technologies in our development programs or in collaborations and Isis agreed not to grant licenses under these patents to any other organization for the discovery, development and commercialization of dsRNA products designed to work through an RNAi mechanism, except in the context of a collaboration in which Isis plays an active role. We granted Isis non-exclusive licenses to our current and future patents and patent applications relating to RNA-targeting mechanisms and to chemistry for research use. We also granted Isis the non-exclusive right to develop and commercialize dsRNA products developed using RNAi technology against a limited number of targets. In addition, we granted Isis non-exclusive rights to research, develop and commercialize single-stranded RNA products. In August 2012, we and Isis amended the amended and restated Isis agreement to provide for the discovery, development and commercialization of dsRNA products by us or our sublicensees in the field of agriculture.

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We agreed to pay Isis milestone payments, totaling up to approximately $3.4 million, upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product that we or a collaborator develops using Isis intellectual property. In addition, we agreed to pay to Isis a percentage of specified fees from strategic collaborations we may enter into that include access to Isis’ intellectual property. Isis agreed to pay us, per therapeutic target, a license fee of $0.5 million, and milestone payments totaling approximately $3.4 million, payable upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product developed by Isis or a collaborator that utilizes our intellectual property. Isis has the right to elect up to ten non-exclusive target licenses under the agreement and has the right to purchase one additional non-exclusive target per year during the term of the collaboration. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any milestone or royalty payments under this alliance.

As part of the amended and restated Isis agreement, we and Isis established a collaborative effort focused on single-stranded RNAi, or ssRNAi, technology, and we obtained from Isis a co-exclusive, worldwide license to research, develop and commercialize ssRNAi products. We paid Isis $11.0 million in license fees upon signing the agreement in connection with the ssRNAi research program. In addition, we were obligated to fund research activities conducted by both us and Isis at a minimum of $3.0 million a year for three years. In November 2010, we exercised our right to terminate the ssRNAi collaborative effort, and all licenses to ssRNAi products granted by Isis to us, and any obligation thereunder requiring us to provide further research funding or pay additional license fees, milestone payments, royalties or sublicense payments to Isis for such ssRNAi products, also terminated. The termination of this collaborative effort did not affect the remainder of the amended and restated Isis agreement, including our licenses to Isis’ current and future patents and patent applications relating to dsRNAs, which remains in effect.

The term of the Isis agreement generally ends upon the expiration of the last-to-expire patent licensed thereunder, whether such patent is a patent licensed by us to Isis, or vice versa. As the license will include additional patents, if any, filed to cover future inventions, if any, the date of expiration cannot be determined at this time.

Novartis.    In the second half of 2005, we entered into a series of transactions with Novartis, which included a stock purchase agreement, an investor rights agreement and a research collaboration and license agreement. In October 2010, the research program under the collaboration and license agreement was substantially completed in accordance with the terms of such agreement, subject to certain surviving rights and obligations of the parties.

In consideration for the rights granted to Novartis under the collaboration and license agreement, Novartis made an upfront payment of $10.0 million to us in October 2005, partly to reimburse prior costs incurred by us to develop in vivo RNAi technology. We also received research funding and development milestone payments from Novartis.

In September 2010, Novartis exercised its right under the collaboration and license agreement to select 31 designated gene targets, for which Novartis has exclusive rights to discover, develop and commercialize RNAi therapeutic products using our intellectual property and technology, including delivery-related intellectual property and related technology. Under the terms of the collaboration and license agreement, for any RNAi therapeutic products Novartis develops against these targets, we are entitled to receive milestone payments upon achievement of certain specified development and annual net sales events, up to an aggregate of $75.0 million per therapeutic product, as well as royalties on annual net sales of any such 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 or royalty payments from Novartis. Novartis’ right of first offer with respect to an exclusive license for additional targets has terminated. At January 31, 2013, Novartis owned 6.5% of our outstanding common stock.

Product Alliances.

Medtronic.    In July 2007, we entered into an amended and restated collaboration agreement with Medtronic to pursue the development of therapeutic products for the treatment of neurodegenerative disorders which can be addressed by the delivery of siRNAs to the human nervous system through implantable infusion

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systems. We are responsible for supplying the siRNA component and Medtronic is responsible for supplying the device component of any product resulting from the collaboration.

With respect to the initial product development program focused on our RNAi therapeutic candidate, ALN-HTT for HD, through July 2012, each party was funding 50% of the development efforts for the United States, subject to the funding reimbursement received from CHDI described below. In connection with our January 2012 strategic corporate restructuring, we determined to align our resources to focus on our lead programs. In April 2012, as part of this alignment of resources, we exercised our option under the Medtronic agreement to opt-out of the 50-50 expense/profit share arrangement of the ALN-HTT drug-device development program and to move to a royalty and milestone licensing structure. Medtronic has the right to continue development of the ALN-HTT program and has assumed responsibility for future development plans. We are transitioning the program to Medtronic, and intend to continue to supply ALN-HTT for the program, as well as provide technical support to Medtronic, as requested. If Medtronic continues the program, we would be compensated for the supply of ALN-HTT, and would be entitled to certain development milestone payments, as well as royalties on annual net sales, if any.

In addition, we and Medtronic may jointly agree to collaborate on additional product development programs for the treatment of other neurodegenerative diseases under the amended and restated collaboration agreement, which remains in effect.

The amended and restated collaboration agreement expires, on a product-by-product and country-by-country basis, upon expiration of the royalty term for the applicable product. The royalty term is the longer of a specified number of years from the first commercial sale of the applicable product and the expiration of the last-to-expire of specified patent rights. Royalties are paid at a lower level during any part of a royalty term in which specified patent coverage does not exist. Either party may terminate the amended and restated collaboration agreement on 60 days’ prior written notice if the other party materially breaches the agreement in specified ways and fails to cure the breach within the 60-day notice period. Either party may also terminate the agreement in the event that specified pre-clinical testing does not yield results meeting specified success criteria.

In November 2010, we, Medtronic and CHDI formed a collaboration in connection with the ALN-HTT program for HD. CHDI is a not-for-profit virtual biotech company that is exclusively dedicated to rapidly discovering and developing therapies that slow the progression of HD. Under this collaboration, CHDI agreed to initially fund approximately 50% of the costs of the ALN-HTT program up to the point at which an IND or comparable foreign regulatory application could be filed. We and Medtronic agreed to repay CHDI for this funding, with interest, in the event that a product is ultimately commercialized from the funded research. CHDI is not entitled to receive milestone or royalty payments independent of our and Medtronic’s repayment obligations, nor does it have any other rights to any product developed through the funded research. In connection with our opt-out under the Medtronic agreement, in May 2012, CHDI notified us and Medtronic that it would cease further funding of the program pursuant to the terms of the CHDI agreement. We continue to be obligated to repay CHDI for our pro-rata share of funding received through the effective date of our opt-out under the Medtronic agreement, with interest, in the event that a product is ultimately commercialized from the funded research.

Kyowa Hakko Kirin.    In June 2008, we entered into a license and collaboration agreement with Kyowa Hakko Kirin, under which we granted Kyowa Hakko Kirin an exclusive license to our intellectual property in Japan and other markets in Asia for the development and commercialization of an RNAi therapeutic for the treatment of RSV infection. The Kyowa Hakko Kirin agreement covers ALN-RSV01, as well as additional RSV-specific RNAi therapeutic compounds that comprise the ALN-RSV program. We retain all development and commercialization rights worldwide outside of the licensed territory.

Under the terms of the Kyowa Hakko Kirin agreement, in June 2008, Kyowa Hakko Kirin paid us an upfront cash payment of $15.0 million. In addition, Kyowa Hakko Kirin is required to make payments to us upon achievement of specified development and sales milestones totaling up to $78.0 million, and royalty payments based on annual net sales, if any, of RNAi therapeutics for the treatment of RSV by Kyowa Hakko Kirin, its affiliates and sublicensees in the licensed territory. Due to the uncertainty of pharmaceutical development and the

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high historical failure rates generally associated with drug development, we may not receive any milestone or royalty payments from Kyowa Hakko Kirin.

Under the agreement, Kyowa Hakko Kirin is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of RSV in Japan and the rest of the licensed territory. We are responsible for supply of the product to Kyowa Hakko Kirin under a supply agreement unless Kyowa Hakko Kirin elects, prior to the first commercial sale of the product in the licensed territory, to manufacture the product itself or arrange for a third party to manufacture the product.

The term of the Kyowa Hakko Kirin agreement generally ends on a country-by-country basis upon the later of (1) the expiration of our last-to-expire patent covering a licensed product and (2) the tenth anniversary of the first commercial sale in the country of sale. We estimate that our principal patents covered under the Kyowa Hakko Kirin agreement will expire both in and outside the United States generally between 2016 and 2025. These patent rights are subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. Additional patent filings relating to the collaboration may be made in the future. The Kyowa Hakko Kirin agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Kyowa Hakko Kirin may terminate the agreement without cause upon 180 days’ prior written notice to us, subject to certain conditions.

Genzyme.    In October 2012, we and Genzyme entered into a license and collaboration agreement pursuant to which we granted to Genzyme an exclusive license in Japan and the Asia-Pacific region, known as the Genzyme territory, to develop and commercialize RNAi therapeutics targeting TTR for the treatment of ATTR and other human diseases. The Genzyme agreement covers ALN-TTR02 and ALN-TTRsc, and may in the future cover additional TTR-specific RNAi therapeutic compounds that comprise our TTR program, which we refer to together as Licensed Products, subject, in the case of improvement products, as defined in the Genzyme agreement, to specified additional terms and conditions. We retain all development and commercialization rights worldwide outside of the Genzyme territory.

In consideration for the rights granted to Genzyme under the Genzyme agreement, Genzyme paid us an upfront cash payment of $22.5 million. Upon achievement of certain milestones, we will be entitled to receive milestone payments, up to an aggregate of $50.0 million, including up to $25.0 million in specified development milestones and $25.0 million in specified regulatory milestones. In addition, we will be entitled to tiered royalties expected to yield an effective royalty rate percentage ranging from the mid-teens to mid-twenties based on annual net sales, if any, of Licensed Products in the Genzyme territory by Genzyme, its affiliates and sublicensees. We could potentially earn the next development milestone payment of $7.0 million under the Genzyme agreement based upon the completion of a successful Phase II ALN-TTR clinical trial, as defined in the Genzyme agreement. 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 Genzyme.

Under the Genzyme agreement, the parties will collaborate in the development of Licensed Products, with Genzyme assuming primary responsibility for the development and commercialization of Licensed Products in the Genzyme territory and us retaining primary responsibility for the development and commercialization of Licensed Products in the rest of the world. The collaboration between Genzyme and us is governed by a joint steering committee that will be comprised of an equal number of representatives from each party. Under the agreement, Genzyme is establishing a development plan for the ALN-TTR program relating to the development activities to be undertaken in the Genzyme territory. Genzyme is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of ATTR in the Genzyme territory. We and Genzyme intend to enter into a supply agreement to provide for supply of Licensed Products to Genzyme for clinical trials, and, at Genzyme’s request, commercial sales. Genzyme may elect, at any time during the term of the Genzyme agreement, to manufacture Licensed Products itself or arrange for a third party to manufacture the product.

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Genzyme also has a right of first negotiation in the event that we desire to grant any third party rights to develop and/or commercialize a Licensed Product for the treatment of ATTR or other human diseases outside of the Genzyme territory.

We have agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of our ongoing litigation matters. Unless terminated earlier in accordance with the terms of the agreement, the Genzyme agreement expires on a Licensed Product-by-Licensed Product and country-by-country basis upon the latest to occur of (1) the expiration of the last valid claim of our patents or joint patents covering a Licensed Product, (2) the expiration of the regulatory exclusivity, as defined in the Genzyme agreement, and (3) twenty-five years from first commercial sale of such Licensed Product in such country. We estimate that our fundamental RNAi patents covering ALN-TTR compounds under the Genzyme agreement will expire both in and outside of the United States generally between 2016 and 2021. We also estimate that our patents covering ALN-TTR compounds under the Genzyme agreement in the United States and elsewhere will expire in 2032. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future. Either party may terminate the Genzyme agreement in the event the other party fails to cure a material breach or in the event that development ends after a specified time period without regulatory approval of a Licensed Product. We may terminate the agreement upon patent-related challenges by Genzyme. Genzyme has the right to terminate the agreement without cause at any time upon six months’ prior written notice. Genzyme may also terminate the agreement upon forty-five days prior written notice if Genzyme determines that specified success criteria have not been met following the completion of a Phase II clinical trial.

During the period from the effective date of the Genzyme agreement until the first commercial sale of a Licensed Product in a country in the Genzyme territory, and thereafter during any period during which Genzyme is paying us any royalties on net sales of any Licensed Product in such country, neither party will, alone or with an affiliate or agreed upon third party, develop or commercialize in such country, any product for the treatment of ATTR, other than a Licensed Product or an agreed complementary product, without the prior written agreement of the other party.

The Genzyme agreement originally provided that if development of a Licensed Product was terminated by us or Genzyme under certain limited circumstances, Genzyme would have the right to terminate the Genzyme agreement and we would be required to refund amounts paid by Genzyme to us under the agreement prior to such termination. On February 19, 2013, we and Genzyme agreed to amend the Genzyme agreement to remove this provision.

The Medicines Company.    On February 4, 2013, we and MedCo entered into a license and collaboration agreement pursuant to which we granted to MedCo an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting PCSK9, including ALN-PCS02 and ALN-PCSsc, for the treatment of hypercholesterolemia and other human diseases. In consideration for the rights granted to MedCo under the MedCo agreement, MedCo paid us an upfront cash payment of $25.0 million. In addition, MedCo is required to make payments to us upon the achievement of specified clinical development, regulatory approval and commercialization milestones totaling up to $180.0 million, and to pay us scaled double-digit royalties based on annual worldwide net sales, if any, of licensed products by MedCo, its affiliates and sublicensees, subject to reduction under specified circumstances. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any milestone or royalty payments from MedCo.

Under the MedCo agreement, we and MedCo will collaborate in the further development of licensed products. We will retain responsibility for the development of licensed products until Phase I completion, as defined in the MedCo agreement, at our cost, up to an agreed upon initial development cost cap. MedCo will assume all other responsibility for the development and commercialization of licensed products, at its sole cost. Initially the collaboration will include the development of both ALN-PCS02 and ALN-PSCsc in parallel, provided that we and MedCo intend to select one of ALN-PCS02 or ALN-PSCsc for ongoing development at a

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specified development stage, in accordance with the terms of the MedCo agreement. The collaboration between us and MedCo will be governed by a joint steering committee that will be comprised of an equal number of representatives from each party.

We will be solely responsible for obtaining supply of finished product reasonably required for the conduct of our obligations under the initial development plan through Phase I completion, and supplying MedCo with finished product reasonably required for the first Phase II clinical trial of a licensed product conducted by MedCo, at our expense, provided such costs do not exceed the development costs cap, subject to certain exceptions. After such time, MedCo will have the sole right and responsibility to manufacture and supply licensed product for development and commercialization under the MedCo development plan, subject to the terms of the MedCo agreement. We and MedCo intend to enter into a supply and technical transfer agreement to provide for supply of licensed products to MedCo within a specified time following the effective date of the MedCo agreement.

Unless terminated earlier in accordance with the terms of the agreement, the MedCo agreement expires on a licensed product-by-licensed product and country-by-country basis upon expiration of the last royalty term for any licensed product in any country, where a royalty term is defined as the latest to occur of (1) the expiration of the last valid claim of patent rights covering a licensed product, (2) the expiration of the Regulatory Exclusivity, as defined in the MedCo agreement, and (3) the twelfth anniversary of the first commercial sale of the licensed product in such country. We estimate that our fundamental RNAi patents covering licensed products under the MedCo agreement will expire both in and outside of the United States generally between 2015 and 2023. We also estimate that our ALN-PCS product-specific patents covering licensed products under the MedCo agreement in the United States and elsewhere will expire at the end of 2033. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future.

Either party may terminate the MedCo agreement in the event the other party fails to cure a material breach or upon patent-related challenges by the other party. We may terminate the agreement in the event that a lead licensed product has not been designated by the joint steering committee within a designated time period. In addition, MedCo has the right to terminate the agreement without cause at any time upon four months’ prior written notice.

During the term of the MedCo agreement, neither party will, alone or with an affiliate or third party, research, develop or commercialize, or grant a license to any third party to research, develop or commercialize, in any country, any product directed to the PCSK9 gene, other than a licensed product, without the prior written agreement of the other party, subject to the terms of the MedCo agreement.

Cubist.    In January 2009, we entered into a license and collaboration agreement with Cubist to develop and commercialize therapeutic products based on certain of our RNAi technology for the treatment of RSV. Licensed products initially included ALN-RSV01, as well as several other second-generation RNAi-based RSV inhibitors. In November 2009, we and Cubist entered into an amendment to our license and collaboration agreement, which provided that we and Cubist would focus our collaboration and joint development efforts on ALN-RSV02, a second-generation compound, intended for use in pediatric patients. In December 2010, we and Cubist jointly made a portfolio decision to put the development of ALN-RSV02 on hold. Pursuant to the terms of the amendment, we continued to develop ALN-RSV01 for adult transplant patients at our sole discretion and expense and Cubist had the right to opt into collaborating with us on ALN-RSV01, subject to specified conditions.

In February 2013, Cubist notified us that it would not exercise its opt-in right for ALN-RSV01. In light of this determination, we and Cubist mutually agreed to terminate the license and collaboration agreement effective as of February 6, 2013. As of the effective date, the parties have no further rights and obligations under the license and collaboration agreement, notwithstanding anything to the contrary in the agreement. We intend to seek another partner to advance the ALN-RSV01 program into a Phase III clinical trial.

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Intellectual Property Licenses

In December 2002, we entered into a co-exclusive license with Max Planck Innovation for the worldwide rights to use and sublicense certain patented technology to develop and commercialize therapeutic products and related applications. We also obtained the rights to use, without the right to sublicense, the technology for all diagnostic uses other than for the purposes of therapeutic monitoring. We were also given the right to acquire the remaining 50% exclusive rights, which right we exercised upon our acquisition of Ribopharma AG in July 2003. In June 2005, we entered into an amendment to our agreement with Max Planck Innovation that secured our exclusivity to use and sublicense certain patented technology to develop and commercialize therapeutic products and related applications.

We are not obligated to pay any development or sales milestone payments to Max Planck Innovation, however, we will be required to pay Max Planck Innovation future single-digit royalties on net sales of all therapeutic and prophylactic products developed with the technology, if any.

Our agreements with Max Planck Innovation generally remain in effect until the expiration of the last-to-expire patent licensed thereunder. We estimate that the principal issued patents covered under the Max Planck Innovation agreements will expire both in and outside the United States during 2021, subject to any potential patent term extensions, restoration and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. We may terminate the agreements without cause with six months’ prior notice to Max Planck Innovation, and Max Planck Innovation may terminate the agreements in the event that we materially breach our obligations thereunder. Max Planck Innovation also has the right to terminate the agreements in the event that we, independently or through a third party, attack the validity of any of the licensed patents.

Delivery-Related Licenses and Collaborations

We are working internally and with third-party collaborators with the goal of developing new technologies to achieve effective and safe delivery of RNAi therapeutics to a broad spectrum of organ and tissue types. In connection with these efforts, we have entered into a number of agreements to evaluate and gain access to certain delivery technologies. In some instances, we are providing or have previously provided funding to support the advancement of these delivery technologies. During 2012, we continued to make advances relating to the delivery of RNAi therapeutics, both internally and together with our collaborators.

Arrowhead.    In January 2012, we and Arrowhead entered into collaboration and joint licensing agreements, pursuant to which we received a license from Arrowhead to utilize their dynamic polyconjugate, or DPC, delivery technology for an RNAi therapeutic product. Arrowhead is eligible to receive from us milestone payments and royalties, if any, on sales of product resulting from the license. In addition, we granted Arrowhead a license under our intellectual property that enables the discovery, development and commercialization of an RNAi therapeutic targeting the hepatitis B virus, or HBV. We are eligible to receive from Arrowhead milestone payments and royalties, if any, on sales of any product resulting from the license.

MIT.    In November 2011, we extended for an additional three years, through May 2015, the term of our agreement with the David H. Koch Institute for Integrative Cancer Research at MIT, under which we are sponsoring an exclusive research program focused on the discovery of new materials and formulations for the delivery of RNAi therapeutics. We and MIT have published data describing advancements in the discovery and development of LNPs based on novel “lipidoid” formulations for the systemic delivery of RNAi therapeutics. Lipidoids are lipid-like materials discovered for the delivery of RNAi therapeutics, and were originally described by us and our collaborators at MIT. Lipidoid formulations represent one of several approaches we are pursuing for systemic delivery of RNAi therapeutics under our research agreement with MIT.

Tekmira.    In November 2012, we, TPC and Protiva agreed to restructure our existing contractual relationship. In connection with this restructuring, the parties entered into a cross-license agreement, and agreed to terminate certain prior agreements, including: the May 2008 amended and restated license and collaboration

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between us and TPC, the May 2008 amended and restated cross-license agreement between us and Protiva, and the January 2009 manufacturing agreement between us and TPC.

Under the 2012 cross-license agreement, the parties have consolidated certain intellectual property related to LNP technology for the systemic delivery of RNAi therapeutics. Specifically, certain patents and patent applications, including the MC3 lipid family, were assigned by us to TPC. We retain rights to use this intellectual property for the research, development and commercialization of RNAi therapeutic products, including the rights to sublicense this intellectual property on a product-by-product basis. Tekmira has also granted us a worldwide license to its LNP technology for the research, development and commercialization of LNP-based RNAi therapeutics, which license shall be exclusive for up to eight targets designated by us, and otherwise shall be non-exclusive. We have the right to sublicense on a product-by-product basis.

In addition, we elected to buy out our manufacturing obligations to TPC with respect to our LNP-based pipeline programs. Pursuant to the terms of the 2012 cross-license agreement, we made a one-time payment of $30.0 million to TPC for the termination of, and our release from, all of our obligations under the manufacturing agreement, including without limitation the obligations to obtain materials and/or services from TPC. We also have the right to manufacture and have manufactured our LNP-based RNAi therapeutics, which right may be sublicensed to our collaborators.

Further, as part of this restructuring, we elected to buy-down certain future potential milestone and royalty payments due to Tekmira for certain of our RNAi therapeutics, formulated using LNP technology. Specifically, pursuant to the cross-license agreement, we made a one-time payment of $35.0 million to TPC, which amount constituted payment for the termination of the 2008 license agreements with TPC and Protiva and the parties’ rights and obligations thereunder, as well as the buy-down of certain milestone payments and the significant reduction of royalty rates for ALN-VSP, ALN-PCS and ALN-TTR. Under the 2012 cross-license agreement, we will be obligated to pay TPC an aggregate of $10.0 million in contingent milestone payments related to advancement of ALN-VSP and ALN-TTR, which now represent the only potential milestones due to Tekmira for ALN-VSP, ALN-PCS and ALN-TTR LNP-based RNAi therapeutics. Specifically, we will be obligated to pay TPC a $5.0 million milestone payment upon each of (i) the initiation of a Phase III clinical trial of an LNP-based ALN-TTR therapeutic product, and (ii) the manufacture of ALN-VSP clinical trial material for use in China.

Consistent with the prior license agreements, under the 2012 cross-license agreement, we are obligated to pay TPC up to an aggregate of $16.0 million in milestone payments for any future RNAi therapeutic formulated using Tekmira LNP technology, excluding ALN-VSP, ALN-PCS and ALN-TTR, together with low single-digit royalty payments on annual product sales, if any.

Under the 2012 cross-license Agreement, Tekmira maintains the three exclusive and five non-exclusive licenses previously granted by us under the prior license agreements to research, develop and commercialize RNAi therapeutics directed to up to eight gene targets. In addition, we granted Tekmira a non-exclusive license for two additional gene targets, on the same terms and conditions as the prior non-exclusive licenses. Tekmira also acquired from AlCana its existing options for three additional non-exclusive licenses, which have been included under the 2012 cross-license agreement. Tekmira may sublicense these rights on a product-by-product basis. We waived our right under the prior license agreements to opt-in to the Tekmira research program directed to polo-like kinase 1, or PLK1. Under the 2012 cross-license agreement, we are eligible to receive from Tekmira up to an aggregate of $8.5 million in milestone payments for RNAi therapeutics directed to nine of the targets for which we have granted licenses to Tekmira, together with single-digit royalties on annual product sales, if any, of RNAi therapeutic products directed to all thirteen of the targets for which we have granted licenses to Tekmira. 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 Tekmira.

The term of the 2012 cross-license agreement generally ends upon the expiration of the last-to-expire royalty term. Royalties are payable on a product-by-product and country-by-country basis commencing on the first commercial sale of a product in a country and continuing during any period in which (a) in the case of us, a valid claim within the Tekmira Royalty-Bearing Patents (as defined in the 2012 cross-license agreement) covers our applicable product in such country of sale, or (b) in the case of Tekmira products, a valid claim within our

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patents covers the applicable Tekmira product in such country of sale. We estimate that our fundamental RNAi patents covered under the 2012 cross-license agreement will expire both in and outside the United States generally between 2019 and 2021, and that the Tekmira LNP patents covered under the 2012 cross-license agreement will expire both in and outside the United States generally between 2020 and 2030, subject in each case to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. Either party may terminate a license it granted to the other in the event that the other party fails to cure a material breach of its obligations relating to that license. Furthermore, either party may terminate the 2012 cross-license agreement in the event the other party fails to cure a material breach of an obligation under the agreement. In addition, either party may terminate the 2012 cross-license agreement upon patent-related challenges by the other party.

UBC and AlCana.    In July 2009, we entered into a research agreement with UBC and AlCana that was focused on the discovery of novel lipids, such as the MC3 lipid, employed in second-generation LNP formulations for the systemic delivery of RNAi therapeutics. Pursuant to the terms of the research agreement, we funded collaborative research through July 2012, which was conducted by our scientists, together with scientists at UBC and AlCana. Under the research agreement, UBC and AlCana are eligible to receive up to an aggregate of $1.3 million in milestone payments from us for each licensed product (as defined in the research agreement) directed to a particular target (as defined in the research agreement), together with single-digit royalty payments on annual product sales, if any.

Concurrent with the execution of the research agreement, we also entered into a supplemental agreement with TPC, Protiva, UBC and AlCana, which contains additional terms regarding the intellectual property rights arising out of the research agreement. In connection with 2012 cross-license agreement with Tekmira described above, we and Tekmira agreed to supersede the rights and obligations under the supplemental agreement as between ourselves, with the rights and obligations set forth in the 2012 cross-license agreement.

Other Opportunities.    We are pursuing additional approaches for delivery that include other lipid-based formulations, mimetic lipoprotein particles and siRNA conjugation strategies, among others. In addition, we have other RNAi therapeutic delivery collaborations and intend to continue to collaborate with academic and corporate third parties, as well as government entities, to evaluate and gain access to different delivery technologies.

microRNA Therapeutics

Regulus.    In September 2007, we and Isis established Regulus, a company focused on the discovery, development and commercialization of microRNA therapeutics. Regulus leverages our and Isis’ technologies, know-how and intellectual property relating to microRNA therapeutics.

Regulus, which initially was established as a limited liability company, converted to a C corporation as of January 2, 2009 and changed its name to Regulus Therapeutics Inc. In consideration for our and Isis’ initial interests in Regulus, we and Isis each granted Regulus exclusive licenses to our intellectual property for certain microRNA therapeutics as well as certain patents in the microRNA field. Regulus operates as an independent company with a separate board of directors, scientific advisory board and management team, some of whom have options to purchase common stock of Regulus. Members of the board of directors of Regulus who are our employees or Isis’ employees have not been eligible to receive options to purchase Regulus common stock. In October 2012, Regulus completed an underwritten initial public offering, raising $50.9 million in gross proceeds, including proceeds from the exercise by the underwriters of the over-allotment option. Currently, we own approximately 17% of Regulus’ outstanding common stock.

Regulus is exploring therapeutic opportunities that arise from microRNA dysregulation. Since microRNAs are believed to regulate broad networks of genes and biological pathways, microRNA therapeutics define a new and potentially high-impact strategy to target multiple nodes on disease pathways. microRNAs are small non-coding RNAs that regulate the expression of other genes. More than 500 microRNAs have been identified to date in humans, each of which is believed to interact with a specific set of genes that control key aspects of cell biology. Since microRNAs may act as master regulators of the genome and are often found to be dysregulated in disease, microRNAs potentially represent an exciting new platform for drug discovery and development. Regulus

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is advancing microRNA therapeutics in several areas including oncology, fibrosis, hepatitis C virus, or HCV, and metabolic diseases.

Regulus has entered into a number of strategic alliances with leading pharmaceutical companies, including GSK, Sanofi, Biogen Idec and AstraZeneca. Each of Alnylam and Isis is entitled to receive specified sublicense income in connection with certain collaborative agreements entered into by Regulus, as well as royalties on net sales, if any, of certain products developed by Regulus or its collaborators, in each case subject to the terms and conditions of the license and collaboration agreement among Regulus, Isis and Alnylam.

Alnylam Biotherapeutics

Since 2009, we have advanced our efforts regarding the application of RNAi technologies to improve the manufacturing processes for biologics, including recombinant proteins and monoclonal antibodies. These applications of RNAi technology, which we are advancing in an internal effort we refer to as Alnylam Biotherapeutics, have the potential to create new business opportunities. In particular, we are advancing RNAi technologies to improve the quantity and quality of biologics manufacturing processes using mammalian cell culture, such as Chinese hamster ovary, or CHO, cells. This RNAi technology potentially could be applied to the improvement of manufacturing processes for existing marketed drugs, new drugs in development and for the emerging biosimilars market. We have developed proprietary delivery lipids that enable the efficient delivery of siRNAs into CHO cells when grown in suspension culture, as well as other cell systems that are used for the manufacture of biologics. Studies have demonstrated that silencing certain target genes involved in certain CHO cell apoptotic and metabolic pathways resulted in improved cell viability as compared with untreated cells. Additional studies demonstrated the ability to target a viral infection of CHO cells and alter glycosylation pathways. We have formed several collaborations around our Alnylam Biotherapeutics initiative with leading biotechnology and pharmaceutical companies and may seek additional collaborations with established biologic manufacturers, selling licenses, products and services.

VaxiRNA™

We are also applying RNAi technology to improve the manufacturing processes for vaccines in an effort called VaxiRNA. The VaxiRNA platform stems from work we have performed as part of our Alnylam Biotherapeutics efforts. With VaxiRNA, we are using siRNAs that silence specific genes in vaccine production systems, such as cells or chicken eggs, which limit or prevent the efficient growth of viruses used in the manufacture of vaccine products. New innovations in vaccine manufacturing are needed to enable the scale and speed of global immunization for a number of pathogens. In October 2011, we formed a VaxiRNA collaboration with GSK for influenza vaccine production. Under the terms of the agreement, GSK has agreed to provide research funding and certain success-based milestone payments to us. If successfully applied in the manufacture of commercial product, we will also have the right to receive payments on unit product sales, if any. In addition, GSK has obtained an option for VaxiRNA applications toward two additional vaccine products. In 2012, we received a $3.2 million development milestone payment from GSK under this agreement related to progress in our collaboration.

Licenses

To further enable the field and monetize our intellectual property rights, we have established our InterfeRx program and our research reagents and services licensing program.

InterfeRx Program.    Our InterfeRx program consists of the licensing of our intellectual property to others for the development and commercialization of RNAi therapeutic products relating to specific targets outside our direct strategic focus. We expect to receive license fees, annual maintenance fees, milestone payments and royalties on sales of any resulting RNAi therapeutic products. Generally, we do not expect to collaborate with our InterfeRx licensees in the development of RNAi therapeutic products, but may do so in certain circumstances. To date, we have granted InterfeRx licenses to several companies, including Quark Pharmaceuticals, Inc., or Quark, Calando Pharmaceuticals, Inc., or Calando, and Tekmira. In general, these licenses allow the licensees to

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discover, develop and commercialize RNAi therapeutics for a limited number of targets in return for upfront, milestone, license maintenance and/or royalty payments to us. In some cases, we also retained a right to negotiate the ability to co-promote and/or co-commercialize the licensed product, and in one case, we included the rights to discover, develop and commercialize RNAi therapeutics utilizing expressed RNAi (i.e., RNAi mediated by siRNAs generated from DNA constructs introduced into cells). In addition, Sylentis, S.A.U., or Sylentis, and Benitec Ltd., or Benitec, each have an option to take an InterfeRx license, subject to certain conditions. We have granted InterfeRx licenses or options relating to approximately 23 gene targets and, as of January 31, 2013, 11 of these targets have been selected by InterfeRx partners.

Research Reagents and Services.    We have granted approximately 14 licenses to our intellectual property for the development and commercialization of research reagents and services, and intend to enter into additional licenses on an ongoing basis. Our target licensees are vendors that provide siRNAs and related products and services for use in biological research. We offer these licenses in return for an initial license fee, annual renewal fees and royalties from sales of siRNA research reagents and services. No single research reagent or research services license is material to our business.

Patents and Proprietary Rights

We have devoted considerable effort and resources to establish what we believe to be a strong intellectual property position relevant to RNAi therapeutic products and delivery technologies. In this regard, we have amassed a portfolio of patents, patent applications and other intellectual property covering:

• fundamental aspects of the structure and uses of siRNAs, including their use as therapeutics, and RNAi-related mechanisms;

• chemical modifications to siRNAs that improve their suitability for therapeutic and other uses;

• siRNAs directed to specific targets as treatments for particular diseases;

• delivery technologies, such as in the field of cationic liposomes; and

• all aspects of our specific development candidates.

We believe that no other company possesses a portfolio of such broad and exclusive rights to the patents and patent applications required for the commercialization of RNAi therapeutics. Our intellectual property estate for RNAi therapeutics includes over 1,800 active cases and over 700 granted or issued patents, of which over 300 are issued or granted in the United States, the EU, including by the European Patent Office, or EPO, and Japan. Given the importance of our intellectual property portfolio to our business operations, we intend to vigorously enforce our rights and defend against challenges that have arisen or may arise in this area.

Intellectual Property Related to Fundamental Aspects and Uses of siRNA and RNAi-related Mechanisms

In this category, we include United States and foreign patents and patent applications that claim key aspects of siRNA architecture and RNAi-related mechanisms. Specifically included are patents and patent applications covering targeted cleavage of mRNA directed by RNA-like oligonucleotides and dsRNAs of particular lengths and particular structural features, such as blunt and/or overhanging ends. Our strategy has been to secure exclusive rights where possible and appropriate to key patents and patent applications that we believe cover fundamental aspects of RNAi. The following table lists patents and/or patent applications to which we have secured rights that we regard as being fundamental for the use of siRNAs as therapeutics.

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Patent Licensor/Owner	Subject Matter	First Priority Date	Inventors	Status	Expiration Date*	Alnylam Rights
Isis	Inactivation of target mRNA	6/6/1996 (EP) and 6/6/1997 (U.S.)	S. Crooke	U.S. 5,898,031, U.S. 6,107,094, U.S. 7,432,250 & U.S. 7,695,902 EP 0928290 Additional applications pending in the U.S. and several foreign jurisdictions	6/6/2016 6/6/2017	Exclusive rights for therapeutic purposes related to siRNAs**
Carnegie Institution of Washington	Double-stranded RNAs to induce RNAi	12/23/1997	A. Fire, C. Mello	U.S. 6,506,559, U.S. 7,560,438 & U.S. 7,538,095 Additional applications pending in the U.S. and several foreign jurisdictions	12/18/2018	Non-exclusive rights for therapeutic purposes
Medical College of Georgia Research Institute, Inc.	Methods for inhibiting gene expression using double-stranded RNA	1/28/1999	Y. Li, M. Farrell, M. Kirby	AU 776150 (Australia) Additional applications pending in the U.S., Europe and Canada	1/28/2020	Exclusive rights
Alnylam	Small double-stranded RNAs as therapeutic products	1/30/1999	R. Kreutzer, S. Limmer	EP 1214945 (opposed), EP 1550719 (revoked/under appeal), CA 2359180 (Canada), AU 778474 (Australia), ZA 2001/5909 (South Africa), DE 20023125 U1, DE 10066235 & DE 10080167 (Germany) Additional applications pending in the U.S. and several foreign jurisdictions	1/29/2020	Owned
Alnylam	Medicament for inhibiting the expression of a target gene and medicament for treating a tumor disease	1/9/2001	R. Kreutzer, S. Limmer, H-P.Vornlocher, P. Hadwiger, A. Geick, M. Ocker, C. Herold, D. Schuppan	EP 1349927 (opposed and maintained in amended form)	1/9/2022	Owned
Alnylam	Method for inhibiting the expression of a target gene	1/9/2001	R. Kreutzer, S. Limmer, P. Hadwiger	EP 1352061 (opposed, maintained and under appeal)	1/9/2022	Owned
Alnylam	Composition and methods for inhibiting a target nucleic acid with double-stranded RNA	4/21/1999	C. Pachuk, C. Satishchandran	AU 781598 (Australia) Additional applications pending in the U.S. and several foreign jurisdictions	4/19/2020	Owned
Cancer Research Technology Limited	RNAi uses in mammalian oocytes, preimplantation embryos and somatic cells	11/19/1999	M. Zernicka- Goetz, F. Wianny, M.J. Evans, D.M. Glover	EP 1230375 (revoked/under appeal), SG 89569 (Singapore), AU 774285 (Australia) Additional applications pending in the U.S. and several foreign jurisdictions	11/17/2020	Exclusive rights for therapeutic purposes
Massachusetts Institute of Technology, Whitehead Institute for Biomedical Research, Max Planck Gesellschaft, University of Massachusetts ***	Mediation of RNAi by small RNAs 21-23 base pairs long	3/30/2000	D.P. Bartel, P.A. Sharp, T. Tuschl, P.D. Zamore	U.S. 12/897,744 (allowed) & U.S. 12/897,754 (allowed) EP 1309726 (opposed and maintained in amended form/under appeal), AU 2001249622 (Australia), NZ 522045 (New Zealand), KR 08724437 & KR 10-0909681 (Korea) Additional applications pending in the U.S. and several foreign jurisdictions	3/30/2021	Non-exclusive rights for therapeutic purposes***

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Patent Licensor/Owner	Subject Matter	First Priority Date	Inventors	Status	Expiration Date*	Alnylam Rights
Massachusetts Institute of Technology, Whitehead Institute, University of Massachusetts, Max Planck Gesellschaft (U.S.)**** Max Planck Gesellschaft (ex-U.S.), European Molecular Biology Laboratory (ex-U.S.)*****	Synthetic and chemically modified siRNAs as therapeutic products	12/1/2000 (EP), 4/24/2004 and 4/27/2004	T. Tuschl, S. Elbashir, W. Lendeckel, M. Wilm#, R. Lührmann# #EMBL inventors	U.S. 7,056,704, U.S. 7,078,196, U.S. 8,329,463, U.S. 8,372,968 & U.S. 8,362,231 EP 1407044 (opposed and maintained in amended form/under appeal), EP 1873259, AU 2002235744 (Australia), ZA 2003/3929 (South Africa), SG 96891 (Singapore), NZ 52588 (New Zealand), JP 4 095 895 (opposed and maintained in amended form/under appeal), JP 4 494 392 (Japan), RU 2322500 (Russia), CN 1568373 (China) Additional applications pending in the U.S. and several foreign jurisdictions	11/29/2021	Exclusive rights for therapeutic purposes****
Alnylam	Methods for inhibiting a target nucleic acid via the introduction of a vector encoding a double-stranded RNA	1/31/2001	T. Giordano, C. Pachuk, C. Satishchandran	AU 785395 (Australia) Additional applications pending in the U.S., Australia and Canada	1/31/2021	Owned
Cold Spring Harbor Laboratory	RNAi uses in mammalian cells	3/16/2001	D. Beach, G. Hannon	Pending in the U.S. and several foreign jurisdictions	03/16/2021	Non-exclusive rights for therapeutic purposes
Stanford University	RNAi uses in vivo in mammalian liver	7/23/2001	M.A. Kay, A.P. McCaffrey	AU 2002326410 (Australia) Additional applications pending in the U.S. and several foreign jurisdictions	7/23/2021	Exclusive rights for therapeutic purposes

    * For applications filed after June 7, 1995, the patent term generally is 20 years from the earliest application filing date. However, under the Drug Price Competition and Patent Term Extension Act of 1984, known as the Hatch-Waxman Act, we may be able to apply for patent term extensions for our U.S. patents. We cannot predict whether or not any patent term extensions will be granted or the length of any patent term extension that might be granted.

  ** We hold co-exclusive therapeutic rights with Isis. However, Isis has agreed not to license such rights to any third party, except in the context of a collaboration in which Isis plays an active role.

*** We hold exclusive rights to the interest owned by three co-owners. The University of Massachusetts, or UMass, has licensed its interest separately to third parties.

**** We hold exclusive rights to the interest owned by all co-owners in the U.S., subject to the right of UMass to sublicense the U.S. Tuschl II patent family to Merck & Co., Inc., or Merck.

***** European Molecular Biology Laboratory, or EMBL, has a limited ownership interest in certain ex-US cases in this family with no rights to control or otherwise affect patent prosecution.

We believe that we have a strong portfolio of broad rights to fundamental RNAi patents and patent applications. Many of these rights are exclusive, which we believe prevents potential competitors from commercializing products in the field of RNAi without taking a license from us. In securing these rights, we have focused on obtaining the strongest rights for those intellectual property assets we believe will be most important in providing competitive advantage with respect to RNAi therapeutic products.

We believe that the Crooke patent series, issued in several countries around the world, covers the use of modified oligonucleotides to achieve enzyme-mediated cleavage of a target mRNA. We have obtained rights to the Crooke patents for use with dsRNA products, through a license agreement with Isis. Under the terms of our amended and restated Isis agreement, Isis agreed not to grant licenses under these patents to any other organization for dsRNA products designed to work through an RNAi mechanism, except in the context of a collaboration in which Isis plays an active role.

Through our acquisition of Ribopharma AG, now known as Alnylam Europe, we own the entire Kreutzer-Limmer patent portfolio, which includes pending applications in the United States and many countries worldwide. The first patent to issue in the Kreutzer-Limmer series (EP 1144623) was granted in Europe in 2002, and specifically covered the use of small dsRNAs as therapeutics. This patent was revoked on appeal. The second

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European Kreutzer-Limmer patent (EP 1214945) to issue in the series was granted in Europe in 2005. This patent covers methods using, medicaments comprising and uses of dsRNA structures of 15 to 49 successive nucleotide pairs in length. In January 2009, the Opposition Division of the EPO ruled in favor of the opposing parties in an opposition proceeding related to the second Kreutzer-Limmer patent. We appealed this decision, and in May 2010, the Board of Appeals of the EPO ruled in our favor, rejecting the Opposition Division’s ruling that the second Kreutzer-Limmer patent was invalid. The patent was sent back to the Opposition Division to address the remaining grounds asserted by the opponents. In December 2008, the EPO granted a third patent in the Kreutzer-Limmer series (EP 1550719). This patent covers therapeutic dsRNAs which are 15 to 21 consecutive nucleotide pairs in length. The third Kreutzer-Limmer patent was opposed and revoked in July 2012. We have appealed this decision. We have also received grants for patents in the Kreutzer-Limmer series in several other countries, as reflected in the table above. The decision with respect to EP 1144623 will only affect the granted or pending claims of other members of the Kreutzer-Limmer patent series to the extent the same issue arises in the formal examination or post-grant review proceedings of the other members of the series. In the event this happens, we believe that the ruling in the EP 1144623 proceeding would be controlling. In March 2010, the EPO issued a further patent designating Kreutzer and Limmer (among others) as inventors (EP 1349927). This patent covers methods and medicaments having dsRNAs that are less than 25 nucleotides in length having a 3’ nucleotide overhang on the antisense strand which inhibit anti-apoptotic genes in tumor cells. This fourth Kreutzer-Limmer patent had also been opposed and in December 2012, the EPO limited the claims to dsRNAs specific for members of the BCL-2 gene family, a family of anti-apoptotic genes implicated in cancer.

The Glover patent series has resulted in several patent grants, including in Europe (EP 1230375). The European Glover patent was revoked in July 2008 during opposition proceedings and our appeal of this decision is pending. Broad claims from this patent cover dsRNAs of any length or structure as mediators of RNAi in mammalian systems. We have an exclusive license to the Glover patent for therapeutic uses from Cancer Research Technology Limited.

The Tuschl patent applications filed by Whitehead, MIT, UMass and Max Planck Gesellschaft zur Foerderung der Wissenschaften e.V. on the invention by Dr. Tuschl and his colleagues, which we call the Tuschl I patent series, cover compositions and methods important for RNAi discovery. While none of the applications in this family have been granted in the United States, the EPO granted patent EP 1309726, which has been opposed. This patent consists of 19 claims broadly covering in vitro RNAi methods, including methods of reducing the expression of a gene, including those of mammalian or viral origin, with dsRNAs between 21 and 23 nucleotides in length. In addition, the patent also includes claims covering methods of examining the function of a gene, as well as the use of both unmodified and chemically modified dsRNAs. This patent was opposed and claims in the main request were maintained. This ruling is under appeal. The Tuschl I series has also been granted in New Zealand (NZ 522045) and Korea (KR 08724437 and 10-0909681). We are the exclusive licensee of the ownership interests of the Max Planck Society, MIT and Whitehead in the Tuschl I patent series for RNAi therapeutics.

The Tuschl patent applications filed by Max Planck Gesellschaft zur Foerderung der Wissenschaften e.V. on the invention by Dr. Tuschl and his colleagues, which we call the Tuschl II patent series, cover what we believe are key structural features of siRNAs. Specifically, the Tuschl II patents and patent applications include claims directed to synthetic siRNAs and the use of chemical modifications to stabilize siRNAs. In June 2006, the United States Patent and Trademark Office, or USPTO, issued U.S. Patent No. 7,056,704 and in July 2006, the USPTO issued U.S. Patent No. 7,078,196, each covering methods of making dsRNAs having a 3’ overhang structure. In December 2012, the USPTO granted U.S. Patent No. 8,329,463 with claims directed to in vitro methods of use of dsRNA of 19 to 23 nucleotides with a 3’overhang of from one to three nucleotides. In January 2013, the USPTO granted U.S. Patent No. 8,362,231 with claims directed to dsRNA compositions consisting of 19 to 23 nucleotides with a 3’ overhang of from 1 to 3 nucleotides that contains at least one nucleotide analogue, and in February, 2013, the USPTO granted U.S. Patent No. 8,372,968 with claims directed to dsRNA compositions consisting of 19 to 25 nucleotides with a 3’ overhang of from one to five nucleotides. In September 2007, the EPO granted broad claims for the Tuschl II patent in Europe (EP 1407044). Five parties filed Notices of Opposition in the EPO against EP 1407044. In December 2010, the Opposition Division of the EPO ruled in our favor maintaining the patent in amended form. All of the opponents have appealed the decision of the Opposition

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Division. The Japanese Patent Office has granted the Tuschl II patent in Japan (JP 4 095 895 and JP 4 494 392) and the Chinese Patent Office has granted the Tuschl II patent in China (CN 1568373). JP 4 095 895 was the subject of an Invalidation Trial which was requested by a Japanese company. The Japanese court ruled that claims directed to dsRNA of 19 to 23 nucleotides with a 3’ overhang of from 1 to 3 nucleotides be maintained with the additional feature that the 3’ overhang is stabilized against degradation. We have appealed the inclusion of this additional feature. We have also received grants for patents in the Tuschl II series in several other countries, as reflected in the table above. We have obtained an exclusive license to claims in the Tuschl II patent series uniquely covering the use of RNAi for therapeutic purposes.

The Fire and Mello patent owned by the Carnegie Institution covers the use of dsRNAs to induce RNAi. The Carnegie Institution has made this patent broadly available for licensing and we, like many companies, have taken a non-exclusive license to the patent for therapeutic purposes. We believe, however, that the claims of the Fire and Mello patent do not cover the structural features of dsRNAs that are important for the biological activity of siRNAs in mammalian cells. We believe that these specific features are the subjects of the Crooke, Kreutzer-Limmer, Glover and Tuschl II patents and patent applications for which we have secured exclusive rights.

The other pending patent applications listed in the table above either provide further coverage for structural features of siRNAs or relate to the use of siRNAs in mammalian cells. For some of these, we have exclusive rights, and for others, we have non-exclusive rights. In addition, in December 2008, we acquired the intellectual property assets of Nucleonics, Inc., a privately held biotechnology company. This acquisition included over 100 active patent filings, including 15 patents that have been granted worldwide, of which five have been granted in the United States and Europe. With this acquisition, we obtained patents and patent applications with early priority dates, notably the “Li & Kirby,” “Pachuk I” and “Giordano” patent families, that cover broad structural features of RNAi therapeutics, thus extending the breadth of our fundamental intellectual property.

Intellectual Property Related to Chemical Modifications

Our amended and restated collaboration and license agreement with Isis provides us with rights to practice the inventions covered by over 200 issued patents worldwide, as well as rights based on future chemistry patent applications through April 2014 for use with dsRNA products. These patents will expire both in and outside the United States generally between 2011 and 2029, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. These inventions cover chemical modifications we may wish to incorporate into dsRNA therapeutic products designed to work through an RNAi mechanism. Under the terms of our amended and restated license agreement, Isis agreed not to grant licenses under these patents to any other organization for dsRNA products designed to work through an RNAi mechanism, except in the context of a collaboration in which Isis plays an active role.

In addition to licensing these intellectual property rights from Isis, we are also working to develop our own proprietary chemical modifications that may be incorporated into siRNAs to endow them with drug-like properties. We have filed a large number of patent applications relating to these novel and proprietary chemical modifications.

With the combination of the technology we have licensed from Isis, U.S. Patent No. 7,078,196, a patent in the Tuschl II patent series, and our own patent application filings, we possess issued claims that cover methods of making siRNAs that incorporate any of various chemical modifications, including the use of phosphorothioates, 2’-O-methyl, and/or 2’-fluoro modifications. These modifications are believed to be important for achieving “drug-like” properties for RNAi therapeutics. We hold exclusive worldwide rights to these claims for RNAi therapeutics.

Intellectual Property Related to the Delivery of siRNAs to Cells

We are pursuing internal research and collaborative approaches regarding the delivery of siRNAs to mammalian cells. These approaches include exploring technology that may allow delivery of siRNAs to cells through the use of cationic lipids, cholesterol and carbohydrate conjugation, peptide and antibody-based targeting, and polymer conjugations. Our collaborative efforts include working with academic and corporate

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third parties to examine specific embodiments of these various approaches to delivery of siRNAs to appropriate cell tissue, and in-licensing of the most promising technology. For example, we have obtained an exclusive license from UBC and Tekmira in the field of RNAi therapeutics to intellectual property covering cationic liposomes and their use to deliver nucleic acid to cells. The issued United States patents and foreign counterparts, including the Semple (U.S. Patent No 6,858,225) and Wheeler (U.S. Patent Nos. 5,976,567 and 6,815,432) patents, cover compositions, methods of making and methods of using cationic liposomes to deliver agents, such as nucleic acid molecules, to cells. These patents will expire both in and outside the United States on October 30, 2017, January 6, 2015 and June 7, 2015, respectively, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available.

In addition, in April 2012, the USPTO granted U.S. Patent No. 8,158,601, which includes 30 claims covering composition of matter and formulations of the MC3 lipid, as well as methods of using these compositions and formulations. The patent lists inventors who are, or were, our employees as well as employees of AlCana. MC3 is being utilized in our ALN-TTR02 and ALN-PCS development programs and may potentially be utilized in other development programs. We assigned this patent, amongst other patents and patent applications relating to lipids and LNP technology, to Tekmira in connection with our November 2012 restructuring and cross-license agreement. We retain rights to use this intellectual property for the research, development and commercialization of RNAi therapeutic products, including the rights to sublicense this intellectual property on a product-by-product basis. A description of our 2012 restructuring and cross-license agreement with Tekmira is set forth above under “Strategic Alliances—Delivery-Related Licenses and Collaborations – Tekmira.”

Intellectual Property Related to siRNAs Directed to Specific Targets

We have filed a number of patent applications claiming specific siRNAs directed to various gene targets that correlate to specific diseases. While there may be a significant number of competing applications filed by other organizations claiming siRNAs to treat the same gene target, we were among the first companies to focus and file on RNAi therapeutics, and thus, we believe that a number of our patent applications may predate competing applications that others may have filed. Reflecting this, in August 2005, the EPO granted a broad patent, which we call the Kreutzer-Limmer II patent, with 103 allowed claims on therapeutic compositions, methods and uses comprising siRNAs that are complementary to mRNA sequences in over 125 disease target genes. In July 2009, the EPO ruled in our favor in an opposition proceeding related to the Kreutzer-Limmer II patent. The decision has been appealed by the opponents. The Kreutzer-Limmer II patent will expire on January 9, 2022, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. Some of these claimed gene targets are being pursued by our development and pre-clinical programs, such as those expressed by viral pathogens including RSV and influenza virus. In addition, the claimed targets include oncogenes, cytokines, cell adhesion receptors, angiogenesis targets, apoptosis and cell cycle targets, and additional viral disease targets, such as hepatitis C virus and HIV. The Kreutzer-Limmer II patent series is pending in the United States and many foreign countries. Moreover, a patent in the Tuschl II patent series, U.S. Patent No. 7,078,196, claims methods of preparing siRNAs that mediate cleavage of an mRNA in mammalian cells and, therefore, covers methods of making siRNAs directed toward any and all target genes. We hold exclusive worldwide rights to these claims for RNAi therapeutics.

In addition, during 2011, the USPTO declared an interference between our issued patent covering ALN-VSP, our RNAi therapeutic undergoing clinical testing for the treatment of liver cancers, and a pending third-party application assigned to Protiva. In connection with the settlement of all outstanding litigation with Tekmira in November of 2012, the interference was settled and the Protiva application was assigned to us. A description of our settlement with Tekmira is set forth in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K.

With respect to specific siRNAs, we believe that patent coverage will result from demonstrating that particular compositions exert suitable biological and therapeutic effects. Accordingly, we are focused on achieving such demonstrations for siRNAs in key therapeutic programs.

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Intellectual Property Related to Our Development Candidates

As our development pipeline matures, we have made and plan to continue to make patent filings that claim all aspects of our development candidates, including dose, method of administration and manufacture.

Intellectual Property Challenges

As the field of RNAi therapeutics is maturing, patent applications are being fully processed by national patent offices around the world. There is uncertainty about which patents will issue, and, if they do, as to when, to whom, and with what claims. It is likely that there will be significant litigation and other proceedings, such as interference, reexamination and opposition proceedings, in various patent offices relating to patent rights in the RNAi field. For example, as noted above, various third parties have initiated oppositions to patents in our Kreutzer-Limmer and Tuschl II series in the EPO, as well as in other jurisdictions. We expect that additional oppositions will be filed in the EPO and elsewhere, and other challenges will be raised relating to other patents and patent applications in our portfolio. In many cases, the possibility of appeal exists for either us or our opponents, and it may be years before final, unappealable rulings are made with respect to these patents in certain jurisdictions. Given the importance of our intellectual property portfolio to our business operations, we intend to vigorously enforce our rights and defend against challenges that have arisen or may arise in this area. A description of ongoing legal matters relating to certain aspects of our intellectual property portfolio is set forth in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K.

Competition

The pharmaceutical marketplace is extremely competitive, with hundreds of companies competing to discover, develop and market new drugs. We face a broad spectrum of current and potential competitors, ranging from very large, global pharmaceutical companies with significant resources, to other biotechnology companies with resources and expertise comparable to our own and to smaller biotechnology companies with fewer resources and expertise than we have. We believe that for most or all of our drug development programs, there will be one or more competing programs under development at other companies. In many cases, the companies with competing programs will have access to greater resources and expertise than we do and may be more advanced in those programs.

The competition we face can be grouped into three broad categories:

• other companies working to develop RNAi and microRNA therapeutic products;

• companies developing technology known as antisense, which, like RNAi, attempts to silence the activity of specific genes by targeting the mRNAs copied from them; and

• marketed products and development programs for therapeutics that treat the same diseases for which we may also be developing treatments.

We are aware of several other companies that are working to develop RNAi therapeutic products. Some of these companies are seeking, as we are, to develop chemically synthesized siRNAs as drugs. Others are following a gene therapy approach, with the goal of treating patients not with synthetic siRNAs but with synthetic, exogenously-introduced genes designed to produce siRNA-like molecules within cells.

Companies working on chemically synthesized siRNAs include Merck, through its subsidiary Sirna Therapeutics, Inc., or Sirna, Novartis, Takeda, Kyowa Hakko Kirin, Marina Biotech, Inc., Arrowhead and its subsidiary, Calando, Quark, Silence Therapeutics plc, Tekmira, Sylentis and Dicerna Pharmaceuticals, Inc. Many of these companies have licensed our intellectual property. Benitec is working on gene therapy approaches to RNAi therapeutics.

Companies working on microRNA therapeutics include Rosetta Genomics, Santaris Pharma A/S, or Santaris, miRagen Therapeutics, Inc., Mirna Therapeutics, Inc. and Asuragen, Inc.

Antisense technology uses short, single-stranded, DNA-like molecules to block mRNAs encoding specific proteins. While we believe that RNAi drugs may potentially have significant advantages over antisense

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oligonucleotides, or ASOs, including greater potency and specificity, others are developing ASO drugs that are currently at a more advanced stage of development than RNAi drugs. For example, Isis has developed an ASO drug, Vitravene^®, which was approved by the FDA in 1998, but is no longer available in the U.S. Isis also has several ASO product candidates in clinical development, including mipomersen, which is a lipid-lowering drug being developed by Isis in collaboration with Genzyme. In December 2012, the Committee for Medicinal Products for Human Use, or CHMP, recommended against approval of the drug in Europe for familial hypercholesterolemia. In January 2013, the FDA approved mipomersen for the treatment of patients with homozygous familial hypercholesterolemia, or HoFH. In addition, a number of other companies have product candidates in various stages of pre-clinical and clinical development. Included in these companies are Santaris and AVI BioPharma, Inc. Because of their later stage of development, ASOs, rather than siRNAs, may become the preferred technology for drugs that target mRNAs in order to turn off the activity of specific genes.

The competitive landscape continues to expand and we expect that additional companies will initiate programs focused on the development of RNAi therapeutic products using the approaches described above as well as potentially new approaches that may result in the more rapid development of RNAi therapeutics or more effective technologies for RNAi drug development or delivery.

Competing Drugs for Our RNAi Therapeutics in Clinical Development

TTR-Mediated Amyloidosis (ATTR).    Until recently, liver transplantation was the only available treatment option for FAP. Only a subset of FAP patients with early stage disease qualify for this costly and invasive procedure and, even following liver transplantation, the disease continues to progress for many patients, presumably due to normal TTR being deposited into preexisting fibrils. Moreover, there is a shortage of donors to provide healthy livers for transplantation. In November 2011, Pfizer received marketing approval from the EC for tafamidis for the treatment of transthyretin amyloidosis in adult patients with stage 1 symptomatic polyneuropathy to delay peripheral neurologic impairment. Tafamidis has orphan drug status in the EU for the treatment of FAP associated with ATTR. Tafamidis is intended to stabilize wild-type and variant TTR, to prevent dissociation of the TTR protein and thereby inhibit the formation of TTR oligomers and amyloid fibrils. The only currently available treatments for FAC are aimed at relief of symptoms, such as diuretics, or water pills, to treat the swelling of the ankles, one of the symptoms of FAC.

There are a few drugs in clinical development for the treatment of ATTR. Researchers at Boston University, in collaboration with the National Institute of Neurological Disorders and Stroke, are currently conducting a Phase II/III clinical trial for diflunisal for the treatment of FAP. Diflunisal is a commercially available non-steroidal anti-inflammatory agent that has been found to stabilize TTR in vitro. In addition, Isis, together with its partner GSK, is developing ISIS-TTR_Rx, an ASO designed to treat patients with FAP. Isis has completed a Phase I clinical trial evaluating the safety and activity of six subcutaneous doses of ISIS-TTR_Rx over four weeks in healthy volunteers. Isis reported that in this clinical trial, ISIS-TTR_Rx produced significant reductions of approximately 80% in TTR protein at the highest dose studied, and reported that ISIS-TTR_Rx was generally well tolerated with no significant adverse events, although Isis has also reported the occurrence of injection site reactions and flu-like symptoms for ISIS-TTR_Rx. Isis has announced that ISIS-TTR_Rx was granted fast track designation by the FDA for the treatment of patients with FAP, and that it is planning to initiate a Phase II/III clinical trial in the first quarter of 2013.

Hypercholesterolemia.    The current standard of care for patients with hypercholesterolemia includes the use of several agents. Front line therapy consists of HMG CoA reductase inhibitors, commonly known as statins, which block production of cholesterol by the liver and increase clearance of LDL-c from the bloodstream. These include atorvastatin, simvastatin, rosuvastatin and pravastatin. A different class of compounds, which includes ezetimibe and ezetimibe/simvastatin, function by blocking cholesterol uptake from the diet and are utilized on their own or in combination with statins. Aegerion Pharmaceuticals, Inc. is developing lomitapide, an microsomal triglyceride protein, or MTP, inhibitor for the treatment of dyslipidemia. In December 2012, the FDA approved lomitapide for use in patients with homozygous familial hypercholesterolemia.

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With regard to future therapies in clinical development, mipomersen is a lipid-lowering drug targeting apolipoprotein B-100 being developed by Isis in collaboration with Genzyme. In July 2011, Genzyme submitted a marketing authorization application for mipomersen in Europe. In December 2012, the CHMP recommended against approval of the drug in Europe for familial hypercholesterolemia. In January 2013, the FDA approved mipomersen for the treatment of patients with HoFH.

Isis and Genzyme have evaluated mipomersen in four positive Phase III clinical trials in which its primary endpoints were met. In all four Phase III clinical trials, treatment with mipomersen lowered LDL-c and had a beneficial impact on other atherogenic lipids. A weekly injectable therapeutic, mipomersen is being developed primarily for patients at significant cardiovascular risk who are unable to achieve target cholesterol lowering levels with statins alone or who are intolerant of statins. In addition, several anti-PCSK9 antibodies have advanced into clinical development, including REGN727/SAR236553, which is being developed by Regeneron Pharmaceuticals, Inc., or Regeneron, in collaboration with Sanofi. Data reported from one REGN727/SAR236553 Phase II clinical trial in patients with severe hypercholesterolemia have demonstrated mean reductions in LDL-c from baseline ranging from approximately 30% to greater than 65% depending on the dosing regimen of REGN727/SAR236553 compared to a mean reduction of 10% with placebo (p<0.05 for all dose groups). Regeneron announced the launch of ODYSSEY OUTCOMES, an 18,000 patient Phase III clinical trial designed to test the efficacy and safety of REGN727 added to maximal doses of statins in reducing cardiovascular morbidity and mortality in patients with recent acute coronary syndrome, a population at high risk of cardiovascular events despite best contemporary therapy. Amgen Inc., Eli Lilly and Company and Pfizer also have anti-PCSK9 antibodies in clinical development and we are aware of several additional similar compounds in advanced pre-clinical development.

RSV.    The only product currently approved for the treatment of RSV infection is ribavirin, which is marketed by Valeant. This is approved only for treatment of hospitalized infants and young children with severe lower respiratory tract infections due to RSV. While it is also used to treat RSV infection in lung transplant patients, no randomized controlled trials of ribavirin have been conducted in the lung transplant patient population. Ribavirin has been reported to have limited efficacy and limited anti-viral activity against RSV. Moreover, administration of inhaled ribavarin is complicated and requires elaborate environmental reclamation devices because of potential harmful effects on health care personnel exposed to the drug.

Other current RSV therapies consist of primarily treating the symptoms or preventing the viral infection in premature infants by using the prophylactic drug palivizumab, which is marketed by MedImmune, LLC, the worldwide biologics unit for AstraZeneca PLC. Palivizumab is a neutralizing monoclonal antibody that prevents the virus from infecting the cell by blocking the RSV F protein. Palivizumab is injected intramuscularly to premature infants once a month during the RSV season to prevent infection. MedImmune has also initiated a Phase I/IIa clinical trial of a live, attenuated intranasal vaccine in development to help prevent severe RSV infections and has several ongoing Phase I clinical trials to evaluate a second live, attenuated intranasal vaccine in development to help prevent severe lower respiratory tract disease caused by RSV or parainfluenza virus 3.

Liver Cancer.    There are a variety of surgical procedures, chemotherapeutics, radiation and other approaches that are used in the management of both primary and secondary liver cancer. However, for the majority of patients the prognosis remains poor with fatal outcomes within several months of diagnosis. In November 2007, the United States Food and Drug Administration, or FDA approved sorafenib for the treatment of un-resectable liver cancer. Sorafenib is the product of Onyx Pharmaceuticals, Inc., developed in collaboration with Bayer Pharmaceuticals Corporation.

There are also a large number of drugs in various stages of clinical development as cancer therapeutics, although the efficacy and safety of these newer drugs are difficult to ascertain at this point of development.

Other Competition

Finally, for many of the diseases that are the subject of our RNAi therapeutics pre-clinical development and discovery programs, there are already drugs on the market or in development. However, notwithstanding the availability of these drugs or drug candidates, we believe there currently exists sufficient unmet medical need to warrant the advancement of RNAi therapeutic programs.

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Regulatory Matters

The research, testing, manufacture and marketing of drug products and their delivery systems are extensively regulated in the United States and the rest of the world. In the United States, drugs are subject to rigorous regulation by the FDA. The Federal Food, Drug, and Cosmetic Act and other federal and state statutes and regulations govern, among other things, the research, development, testing, approval, manufacture, storage, record keeping, reporting, packaging, labeling, promotion and advertising, marketing and distribution of pharmaceutical products. Failure to comply with the applicable regulatory requirements may subject a company to a variety of administrative or judicially-imposed sanctions and the inability to obtain or maintain required approvals to test or market drug products. These sanctions could include, among other things, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, clinical holds, injunctions, fines, civil penalties or criminal prosecution.

The steps ordinarily required before a new pharmaceutical product may be marketed in the United States include non-clinical laboratory tests, animal tests and formulation studies, the submission to the FDA of an IND, which must become effective prior to commencement of clinical testing, approval by an independent review board, or IRB, at each clinical site before each trial may be initiated, completion of adequate and well-controlled clinical trials to establish that the drug product is safe and effective for the indication for which FDA approval is sought, submission to the FDA of an NDA, review and recommendation by an advisory committee of independent experts (particularly for new chemical entities), satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice, or cGMP, requirements, satisfactory completion of an FDA inspection of the major investigational sites to ensure data integrity and assess compliance with good clinical practices, or GCP, requirements, and FDA review and approval of the NDA. Satisfaction of FDA pre-market approval requirements typically takes several years, but may vary substantially depending upon the complexity of the product and the nature of the disease. Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures on a company’s activities. Success in early stage clinical trials does not necessarily assure success in later stage clinical trials. Data obtained from clinical activities, including the data derived from our clinical trials for ALN-TTR01, ALN-TTR02, ALN-TTRsc, ALN-PCS, ALN-RSV01 and ALN-VSP, is not always conclusive and may be subject to alternative interpretations that could delay, limit or even prevent regulatory approval. Even if a product receives regulatory approval, later discovery of previously unknown problems with a product, including new safety risks, may result in restrictions on the product or even complete withdrawal of the product from the market.

Non-clinical tests include laboratory evaluation of product chemistry and formulation, as well as animal testing to assess the potential safety and efficacy of the product. The conduct of the non-clinical tests and formulation of compounds for testing must comply with federal regulations and requirements. The results of non-clinical testing are submitted to the FDA as part of an IND, together with manufacturing information, analytical and stability data, a proposed clinical trial protocol and other information.

A 30-day waiting period after the filing of an IND is required prior to such application becoming effective and the commencement of clinical testing in humans. If the FDA has not commented on, or questioned, the application during this 30-day waiting period, clinical trials may begin. If the FDA has comments or questions, these must be resolved to the satisfaction of the FDA prior to commencement of clinical trials. The IND review process can result in substantial delay and expense. We, an IRB, or the FDA may, at any time, suspend, terminate or impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA.

Clinical trials involve the administration of an investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted in compliance with federal regulations and requirements, including GCPs, under protocols detailing, among other things, the objectives of the trial and the safety and effectiveness criteria to be evaluated. Each protocol involving testing on human subjects in the United States must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it

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commences at that institution, and the IRB must conduct continuing review. The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDA regulations.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, which may overlap or be combined. In Phase I, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to primarily assess safety, tolerability, pharmacokinetics, pharmacological actions and metabolism associated with increasing doses. Phase II usually involves trials in a limited patient population, to assess the optimum dosage, identify possible adverse effects and safety risks, and provide preliminary support for the efficacy of the drug in the indication being studied.

If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase II clinical trials, Phase III clinical trials may be undertaken to further evaluate clinical efficacy and to further test for safety in an expanded patient population, typically at geographically dispersed clinical trial sites, to establish the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. Phase I, Phase II or Phase III testing of any drug candidates may not be completed successfully within any specified time period, if at all. The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted in the United States. The FDA may, at its discretion, reevaluate, alter, suspend or terminate the testing based upon the data accumulated to that point and the FDA’s assessment of the risk/benefit ratio to the subject. The FDA, an IRB, or a clinical trial sponsor may suspend or terminate clinical trials at any time for various reasons, including a finding that the subjects or patients are being exposed to an unacceptable health risk. The FDA can also request that additional clinical trials be conducted as a condition to product approval. Finally, sponsors are required to publicly disseminate information about ongoing and completed clinical trials on a government website administered by the National Institutes of Health, or NIH, and are subject to civil monetary penalties and other civil and criminal sanctions for failing to meet these obligations. After successful completion of the required clinical testing, generally an NDA is prepared and submitted to the FDA.

We believe that any RNAi product candidate we develop, whether for the treatment of ATTR, hemophilia and RBD, AIP, hypercholesterolemia, hemoglobinopathies, including beta-thalassemia, RSV, liver cancers, HD or the various indications targeted in our pre-clinical discovery programs, will be regulated as a new drug by the FDA. FDA approval of an NDA is required before marketing of a new drug may begin in the United States. The NDA must include the results of extensive pre-clinical, clinical and other testing, as described above, a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls, proposed labeling and other information. In addition, an NDA for a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration must contain data assessing the safety and efficacy for the claimed indication in all relevant pediatric subpopulations, and support dosing and administration for each pediatric subpopulation for which the drug is shown to be safe and effective. In some circumstances, the FDA may grant deferrals for the submission of some or all pediatric data, or full or partial waivers. The cost of preparing and submitting an NDA is substantial. Under federal law, NDAs are subject to substantial application user fees and the sponsor of an approved NDA is also subject to annual product and establishment user fees.

The FDA conducts a preliminary review of all NDAs within the first 60 days after submission before accepting them for filing to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. The FDA has agreed to specified performance goals regarding the timing of its review of NDAs, although the FDA does not always meet these goals. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may also refer applications for novel drug products or drug products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The FDA normally also will conduct a pre-approval inspection to ensure the manufacturing facility, methods and controls are adequate to preserve the drug’s identity, strength, quality, purity and stability, and are in compliance with regulations governing cGMPs. In addition, the FDA often will conduct

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a bioresearch monitoring inspection of the clinical trial sites involved in conducting pivotal studies to ensure data integrity and compliance with applicable GCP requirements.

If the FDA evaluation of the NDA and the inspections of manufacturing facilities and clinical trial sites are favorable, the FDA may issue an approval letter, which authorizes commercial marketing of the drug with specific prescribing information for a specific indication. As a condition of NDA approval, the FDA may require post-approval testing, including Phase IV trials, and surveillance to monitor the drug’s safety or efficacy and may impose other conditions, including labeling restrictions, which can materially impact the potential market and profitability of the drug. In addition, the FDA may impose distribution and use restrictions and other limitations on labeling and communication activities with respect to an approved drug product through a Risk Evaluation and Mitigation Strategy, or REMS, plan. Once granted, product approvals may be further limited or withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

While we believe that any RNAi therapeutic we develop will be regulated as a new drug under the Federal Food, Drug, and Cosmetic Act, the FDA may decide to regulate certain RNAi therapeutic products as biologics under the Public Health Service Act. Biologics must have a biologics license application, or BLA, approved prior to commercialization. Like NDAs, BLAs are subject to user fees. To obtain BLA approval, an applicant must provide non-clinical and clinical evidence and other information to demonstrate that the biologic product is safe, pure and potent, and like NDAs, must complete clinical trials that are typically conducted in three sequential phases (Phase I, II and III). Additionally, the applicant must demonstrate that the facilities in which the product is manufactured, processed, packaged or held meet standards, including cGMPs and any additional standards in the license designed to ensure its continued safety, purity and potency. Biologics establishments are subject to pre-approval inspections. The review process for BLAs is also time consuming and uncertain, and BLA approval may be conditioned on post-approval testing and surveillance and subject to distribution and use restrictions, or other limitations, through a REMS plan. Once granted, BLA approvals may be suspended or revoked under certain circumstances, such as if the product fails to conform to the standards established in the license.

Once an NDA or BLA is approved, a product will be subject to certain post-approval requirements, including requirements for adverse event reporting, submission of periodic reports, recordkeeping, product sampling and distribution. Additionally, the FDA also strictly regulates the promotional claims that may be made about prescription drug products and biologics. In particular, the FDA generally prohibits pharmaceutical companies from promoting their drugs or biologics for uses that are not approved by the FDA as reflected in the product’s approved labeling, although recent court decisions suggest that such promotion may be protected speech under the First Amendment in certain circumstances. In addition, the FDA requires substantiation of any safety or effectiveness claims, including claims that one product is superior in terms of safety or effectiveness to another. Superiority claims generally must be supported by two adequate and well-controlled head-to-head clinical trials. To the extent that market acceptance of our products may depend on their superiority over existing therapies, any restriction on our ability to advertise or otherwise promote claims of superiority, or requirements to conduct additional expensive clinical trials to provide proof of such claims, could negatively affect the sales of our products or our costs. We must also notify the FDA of any change in an approved product beyond variations already allowed in the approval. Certain changes to the product, its labeling or its manufacturing require prior FDA approval and may require the conduct of further clinical investigations to support the change, which may require the payment of additional, substantial user fees. Such approvals may be expensive and time-consuming and, if not approved, the FDA will not allow the product to be marketed as modified.

If the FDA’s evaluation of the NDA or BLA submission or manufacturing facilities is not favorable, the FDA may refuse to approve the NDA or BLA or issue a complete response letter. The complete response letter describes the deficiencies that the FDA has identified in an application and, when possible, recommends actions that the applicant might take to place the application in condition for approval. Such actions may include, among other things, conducting additional safety or efficacy studies after which the sponsor may resubmit the application for further review. Even with the completion of this additional testing or the submission of additional requested information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. With limited exceptions, the FDA may withhold approval of an NDA or BLA regardless of prior advice it may have provided or commitments it may have made to the sponsor.

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Some of our product candidates may need to be administered using specialized drug delivery systems. We may rely on drug delivery systems that are already approved to deliver drugs like ours to similar physiological sites or, in some instances, we may need to modify the design or labeling of the legally available device for delivery of our product candidate. In such an event, the FDA may regulate the product as a combination product or require additional approvals or clearances for the modified device. In addition, to the extent the delivery device is owned by another company, we would need that company’s cooperation to implement the necessary changes to the device and to obtain any additional approvals or clearances. Obtaining such additional approvals or clearances, and cooperation of other companies, when necessary, could significantly delay, and increase the cost of obtaining marketing approval, which could reduce the commercial viability of a product candidate. To the extent that we rely on previously unapproved drug delivery systems, we may be subject to additional testing and approval requirements from the FDA above and beyond those described above.

Once an NDA is approved, the product covered thereby becomes a listed drug that can, in turn, be relied upon by potential competitors in support of approval of an abbreviated new drug application, or ANDA, or 505(b)(2) application upon expiration of certain patent and non-patent exclusivity periods, if any. An approved ANDA generally provides for marketing of a drug product that has the same active ingredients in the same strength, dosage form and route of administration as the listed drug and has been shown through appropriate testing (unless waived) to be bioequivalent to the listed drug. There is no requirement, other than the requirement for bioequivalence testing (which may be waived by the FDA), for an ANDA applicant to conduct or submit results of non-clinical or clinical tests to prove the safety or effectiveness of its drug product. Drugs approved in this way are commonly referred to as generic equivalents to the listed drug, are listed as such by the FDA and can often be substituted by pharmacists under prescriptions written for the original listed drug. A 505(b)(2) application is a type of NDA that relies, in part, upon data the applicant does not own and to which it does not have a right of reference. Such applications typically are submitted for changes to previously approved drug products.

Federal law provides for a period of three years of exclusivity following approval of a listed drug that contains a previously approved active ingredient but is approved in, among other things, a new dosage, dosage form, route of administration or combination, or for a new use, if the FDA determines that new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are essential to the approval of the application. This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving ANDAs or 505(b)(2) applications for generic versions of the original, unmodified drug product. Federal law also provides a period of up to five years exclusivity following approval of a drug containing no previously approved active moiety, which is the molecule or ion responsible for the action of the drug substance, during which ANDAs and 505(b)(2) applications referencing the protected listed drug cannot be submitted unless the submission accompanies a challenge to a listed patent, in which case the submission may be made four years following the original product approval. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the pre-clinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

Additionally, in the event that the sponsor of the listed drug has properly informed the FDA of patents covering its listed drug, applicants submitting an ANDA or 505(b)(2) application referencing the listed drug are required to make one of four patent certifications for each listed patent, except for patents covering methods of use for which the ANDA or 505(b)(2) applicant is not seeking approval. If an applicant certifies its belief that one or more listed patents are invalid, unenforceable, or not infringed (and thereby indicates it is seeking approval prior to patent expiration), it is required to provide notice of its filing to the NDA sponsor and the patent holder within certain time limits. If the patent holder then initiates a suit for patent infringement against the ANDA or 505(b)(2) applicant within 45 days of receipt of the notice, the FDA cannot grant effective approval of the ANDA or 505(b)(2) application until either 30 months have passed or there has been a court decision or settlement order holding or stating that the patents in question are invalid, unenforceable or not infringed. If the patent holder does not initiate a suit for patent infringement within the 45 days, the ANDA or 505(b)(2) application may be approved immediately upon successful completion of FDA review, unless blocked by another

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listed patent or regulatory exclusivity period. If the ANDA or 505(b)(2) applicant certifies that it does not intend to market its generic product before some or all listed patents on the listed drug expire, then the FDA cannot grant effective approval of the ANDA or 505(b)(2) application until those patents expire. The first of the ANDA applicants submitting substantially complete applications certifying that one or more listed patents for a particular product are invalid, unenforceable, or not infringed may qualify for an exclusivity period of 180 days running from when the generic product is first marketed, during which subsequently submitted ANDAs containing similar certifications cannot be granted effective approval. The 180-day generic exclusivity can be forfeited in various ways, including if the first applicant does not market its product within specified statutory timelines. If more than one applicant files a substantially complete ANDA on the same day, each such first applicant will be entitled to share the 180-day exclusivity period, but there will only be one such period, beginning on the date of first marketing by any of the first applicants.

In addition, once a BLA is approved, the product covered thereby becomes a “reference product” that can, in turn, be relied upon by potential competitors in support of approval of an abbreviated BLA following periods of data and marketing exclusivity. Biological products that are considered to be reference products are granted two overlapping periods of data and marketing exclusivity: a four-year period during which no abbreviated BLA relying upon the reference product may be submitted, and a twelve-year period during which no abbreviated BLA relying upon the reference product may be approved by FDA. For purposes of the Public Health Service Act, a “reference product” is defined as “the single biological product licensed under [a full BLA] against which a biological product is evaluated in an application submitted under [an abbreviated BLA].” We believe that if our products are approved via BLAs, they will be considered to be reference products that are entitled to both four-year and twelve-year exclusivity. The FDA, however, has not issued any regulations or final guidance explaining how it will implement the abbreviated BLA provisions, including the exclusivity provisions for reference products. It is thus possible that the FDA will decide to interpret the provisions in such a way that our products are not considered to be reference products for purposes of the statute or to be entitled to any period of data or marketing exclusivity. Even if our products are considered to be reference products eligible for exclusivity, other companies nevertheless could market competing versions of such biological products if such companies can complete, and FDA permits the submission of and approves, full BLAs with complete human clinical data packages for such products,

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA or BLA, to market the same drug for the same indication, except in very limited circumstances, for seven years. For purposes of small molecule drugs, the FDA defines “same drug” as a drug that contains the same active moiety and is intended for the same use as the previously approved orphan drug. For purposes of large molecule drugs, the FDA defines “same drug” as a drug that contains the same principal molecular structural features, but not necessarily all of the same structural features, and is intended for the same use as the drug in question. Notwithstanding the above definitions, a drug that is clinically superior to an orphan drug will not be considered the “same drug” and thus will not be blocked by orphan drug exclusivity.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the drug to meet the needs of patients with the rare disease or condition.

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The FDA also administers a clinical research grants program, whereby researchers may compete for funding to conduct clinical trials to support the approval of drugs, biologics, medical devices and medical foods for rare diseases and conditions. An application for an orphan grant should propose one discrete clinical trial to facilitate FDA approval of the product for a rare disease or condition. The study may address an unapproved new product or an unapproved new use for a product already on the market. The future availability of such grants is subject to uncertainties regarding continued federal funding.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of drug products. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency or reviewing courts in ways that may significantly affect our business and development of our product candidates and any products that we may commercialize. It is impossible to predict whether additional legislative changes will be enacted, or FDA regulations, guidance or interpretations changed, or what the impact of any such changes may be. Federal budget uncertainties or spending reductions may reduce the capabilities of the FDA, extend the duration of required regulatory reviews, and reduce the availability of clinical research grants.

Foreign Regulation of New Drug Compounds

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in all or most foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application, or CTA, much like the IND prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed. Similarly, all clinical trials in Australia require review and approval of clinical trial proposals by an ethics committee, which provides a combined ethical and scientific review process.

The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, the clinical trials must be conducted in accordance with GCP, which have their origin in the World Medical Association’s Declaration of Helsinki, the applicable regulatory requirements, and guidelines developed by the International Conference on Harmonization, or ICH, for GCP practices in clinical trials.

The approval procedure also varies among countries and can involve requirements for additional testing. The time required may differ from that required for FDA approval and may be longer than that required to obtain FDA approval. Although there are some procedures for unified filings in the EU, in general, each country has its own procedures and requirements, many of which are time consuming and expensive. Thus, there can be substantial delays in obtaining required approvals from foreign regulatory authorities after the relevant applications are filed.

In Europe, marketing authorizations may be submitted under a centralized or decentralized procedure. The centralized procedure is mandatory for the approval of biotechnology and many pharmaceutical products and provides for the grant of a single marketing authorization that is valid in all EU member states. The decentralized procedure is a mutual recognition procedure that is available at the request of the applicant for medicinal products that are not subject to the centralized procedure. We strive to choose the appropriate route of European regulatory filing to accomplish the most rapid regulatory approvals. However, our chosen regulatory strategy may not secure regulatory approvals on a timely basis or at all.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

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Pharmaceutical Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any drug products for which we obtain regulatory approval. In the United States and markets in other countries, sales of any products for which we may receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payors. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the drug product. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drugs for a particular indication. Third-party payors may provide coverage, but place stringent limitations on such coverage, such as requiring alternative treatments to be tried first. These third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare product candidates. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to incurring the costs required to obtain FDA approvals. Our product candidates may not be considered medically reasonable or necessary or cost-effective. Even if a drug product is covered, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Federal, state and local governments in the United States continue to consider legislation to limit the growth of healthcare costs, including the cost of prescription drugs. Future legislation could limit payments for pharmaceuticals such as the drug candidates that we are developing.

Different pricing and reimbursement schemes exist in other countries. In the EU, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate systems under which products may be marketed only after a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to set their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert competitive pressure that may reduce pricing within a country.

The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, the emphasis on managed care in the United States has increased and we expect will continue to exert downward pressure on pharmaceutical pricing. Coverage policies, third-party reimbursement rates and pharmaceutical pricing regulations may change at any time. In particular, the Patient Protection and Affordable Care Act, or PPACA, and a related reconciliation bill were enacted in the United States in March 2010, and contain provisions that may reduce the profitability of pharmaceutical products, including, for example, increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Hazardous Materials

Our research and development processes involve the controlled use of hazardous materials, chemicals and radioactive materials and produce waste products. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste products. We do not expect the cost of complying with these laws and regulations to be material.

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Manufacturing

To date, we have manufactured only limited supplies of drug substance for use in IND-enabling toxicology studies in animals at our own facility and have contracted with several third-party contract manufacturing organizations for the supply of drug substance and finished product to meet our testing needs for pre-clinical toxicology and clinical testing. We expect to continue to rely on third-party contract manufacturing organizations for the supply of drug substance and certain drug product, including siRNAs and siRNA conjugates, for our product candidates for the foreseeable future. In November 2012, we elected to buy out our manufacturing obligations to TPC with respect to our LNP-based pipeline programs. Pursuant to the terms of the 2012 cross-license agreement with Tekmira, we made a one-time payment of $30.0 million to Tekmira for the termination of, and our release from, all of our obligations under the manufacturing agreement, including without limitation the obligations to obtain materials and/or services from TPC. We also have the right to manufacture and have manufactured our LNP-based RNAi therapeutics, which right may be sublicensed to our collaborators. During 2012, we established a manufacturing facility and have developed cGMP capabilities and processes for the manufacture of ALN-TTR02 formulated finished drug product for Phase III clinical trials and early commercial use. We expect to manufacture late stage clinical and early stage commercial supply for ALN-TTR02 in our facility. In the future, we may also develop our own capabilities to manufacture drug substance, including siRNAs and siRNA conjugates for human clinical use. Commercial quantities of any drugs that we may seek to develop will have to be manufactured in facilities, and by processes, that comply with FDA regulations and other federal, state and local regulations, as well as comparable foreign regulations.

We believe we have sufficient manufacturing capacity through our third-party contract manufacturers and our internal manufacturing facility to meet our current research and clinical needs. We believe that the supply capacity we have established externally, together with the internal capacity we developed during 2012 to support clinical trials, will be sufficient to meet our anticipated needs. We also believe that with reasonably anticipated benefits from increases in scale and improvements in chemistry, we will be able to manufacture our product candidates at commercially competitive prices.

Scientific Advisors

We seek advice from our scientific advisory board, which consists of a number of leading scientists and physicians, on scientific and medical matters. Our scientific advisory board meets regularly to assess:

• our research and development programs;

• the design and implementation of our clinical programs;

• our patent and publication strategies;

• new technologies relevant to our research and development programs; and

• specific scientific and technical issues relevant to our business.

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The current members of our scientific advisory board are:

Name	Position/Institutional Affiliation
Dennis A. Ausiello, M.D.	Jackson Professor of Clinical Medicine/Harvard Medical School; Chief of Medicine/Massachusetts General Hospital
David P. Bartel, Ph.D.	Member/Whitehead Institute for Biomedical Research; Professor/Massachusetts Institute of Technology; Investigator/Howard Hughes Medical Institute
Robert S. Langer, Ph.D.	Institute Professor/Massachusetts Institute of Technology
Judy Lieberman, M.D., Ph.D.	Senior Investigator/Immune Disease Institute — Harvard Medical School; Professor/Harvard Medical School
Paul R. Schimmel, Ph.D.	Ernest and Jean Hahn Professor/Skaggs Institute for Chemical Biology, The Scripps Research Institute
Phillip A. Sharp, Ph.D.	Institute Professor/The Koch Institute for Integrative Cancer Research, Massachusetts Institute of Technology
Daniel J. Rader, M.D.	Professor of Medicine and Chief, Division of Translational Medicine and Human Genetics/Perelman School of Medicine, University of Pennsylvania
Markus Stoffel, M.D., Ph.D.	Professor/Institute of Molecular Systems Biology, Swiss Federal Institute of Technology (ETH) Zurich
Thomas H. Tuschl, Ph.D.	Professor/Rockefeller University; Investigator/Howard Hughes Medical Institute
Phillip D. Zamore, Ph.D.	Gretchen Stone Cook Professor/University of Massachusetts Medical School; Co-Director/RNAi Therapeutics Institute, University of Massachusetts Medical School; Investigator/Howard Hughes Medical Institute

Employees

At January 31, 2013, we had 129 employees, 107 of whom were engaged in research and development. None of our employees are represented by a labor union or covered by a collective bargaining agreement, nor have we experienced work stoppages. We believe that relations with our employees are good.

Financial Information About Geographic Areas

See the section entitled “Segment Information” appearing in Note 2 to our consolidated financial statements for financial information about geographic areas. The Notes to our consolidated financial statements are contained in Part II, Item 8, “Financial Statements and Supplementary Data,” of this annual report on Form 10-K.

Corporate Information

The company comprises four entities, Alnylam Pharmaceuticals, Inc. and three wholly owned subsidiaries (Alnylam U.S., Inc., Alnylam Europe AG and Alnylam Securities Corporation). Alnylam Pharmaceuticals, Inc. is a Delaware corporation that was formed in May 2003. Alnylam U.S., Inc. is also a Delaware corporation that was formed in June 2002. Alnylam Securities Corporation is a Massachusetts corporation that was formed in December 2006. Alnylam Europe AG, which was incorporated in Germany in June 2000 under the name Ribopharma AG, was acquired by Alnylam Pharmaceuticals, Inc. in July 2003. Our principal executive office is located at 300 Third Street, Cambridge, Massachusetts 02142, and our telephone number is (617) 551-8200.

Investor Information

We maintain an internet website at http://www.alnylam.com. The information on our website is not incorporated by reference into this annual report on Form 10-K and should not be considered to be a part of this annual report on Form 10-K. Our website address is included in this annual report on Form 10-K as an inactive technical reference only. Our reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, and amendments to those reports, are accessible through our website, free of charge, as soon as reasonably practicable after these reports are filed electronically with, or

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otherwise furnished to, the SEC. We also make available on our website the charters of our audit committee, compensation committee, nominating and corporate governance committee, and science and technology committee, as well as our corporate governance guidelines and our code of business conduct and ethics. In addition, we intend to disclose on our web site any amendments to, or waivers from, our code of business conduct and ethics that are required to be disclosed pursuant to the SEC rules.

You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding Alnylam and other issuers that file electronically with the SEC. The SEC’s Internet website address is http://www.sec.gov.

Executive Officers of the Registrant

Set forth below is information about our executive officers, as of December 31, 2012.

Name	Age		Position
John M. Maraganore, Ph.D		50	Chief Executive Officer and Director
Barry E. Greene		49	President and Chief Operating Officer
Akshay K. Vaishnaw, M.D., Ph.D.		50	Executive Vice President and Chief Medical Officer
Laurence E. Reid, Ph.D.		49	Senior Vice President and Chief Business Officer
Michael P. Mason		38	Vice President of Finance and Treasurer

John M. Maraganore, Ph.D. has served as our Chief Executive Officer and as a member of our board of directors since December 2002. Dr. Maraganore also served as our President from December 2002 to December 2007. From April 2000 to December 2002, Dr. Maraganore served as Senior Vice President, Strategic Product Development at Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Dr. Maraganore serves as a member of the board of directors of the Biotechnology Industry Organization.

Barry E. Greene has served as our President and Chief Operating Officer since December 2007, as our Chief Operating Officer since he joined us in October 2003, and from February 2004 through December 2005, as our Treasurer. From February 2001 to September 2003, Mr. Greene served as General Manager of Oncology at Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Mr. Greene serves as a member of the board of directors of Acorda Therapeutics, Inc., a biotechnology company.

Akshay K. Vaishnaw, M.D., Ph.D. has served as our Executive Vice President and Chief Medical Officer since June 2012 and prior to that as our Senior Vice President and Chief Medical Officer from June 2011 to June 2012. He served as our Senior Vice President, Clinical Research from December 2008 to June 2011, and prior to that served as our Vice President, Clinical Research from the time he joined us in January 2006. From December 1998 through December 2005, Dr. Vaishnaw held various positions at Biogen Idec Inc. (formerly Biogen, Inc.), a biopharmaceutical company, most recently as Senior Director, Translational Medicine. Dr. Vaishnaw is a Member of the Royal College of Physicians, United Kingdom.

Laurence E. Reid, Ph.D. has served as our Senior Vice President and Chief Business Officer since he joined us in June 2010. From January 2006 through May 2010, Dr. Reid served as the Chief Business Officer at Ensemble Therapeutics, a biotechnology company. Prior to joining Ensemble Therapeutics, Dr. Reid worked as a founder of two start-up companies in the fields of stem cell therapeutics and inflammation. Dr. Reid previously spent ten years at Millennium Pharmaceuticals, Inc., a biopharmaceutical company, from 1993 through 2003, where he served in a range of general management and business development positions, including General Manager of Millennium UK with responsibility for Millennium’s European operations, Vice President of Business Development and Strategic Planning for the company’s predictive medicine efforts, as well as in pharmaceutical business development and technology acquisition.

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Michael P. Mason has served as our Vice President of Finance and Treasurer since February 2011. From December 2005 to February 2011, Mr. Mason served as our Corporate Controller, and from August 2009 to February 2011, as our Senior Director of Finance. From June 2006 to July 2009, Mr. Mason served as our Director of Finance. From May 2000 through November 2005, Mr. Mason served in several finance and commercial roles at Praecis Pharmaceuticals Incorporated, a public biotechnology company, most recently as Corporate Controller. Prior to Praecis, Mr. Mason worked in the audit practice at KPMG LLP, a national audit, tax and advisory services firm. Mr. Mason has an MBA and is a certified public accountant.

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ITEM 1A. RISK FACTORS

Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. All statements other than statements relating to historical matters should be considered forward-looking statements. When used in this report, the words “believe,” “expect,” “anticipate,” “may” “could” “intend,” “will,” “plan,” “target,” “goal” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Any or all of our forward-looking statements in this annual report on Form 10-K and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those anticipated in forward-looking statements. We explicitly disclaim any obligation to update any forward-looking statements to reflect events or circumstances that arise after the date hereof. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

Risks Related to Our Business

Risks Related to Being an Early Stage Company

Because we are in early-stage clinical development, there is limited information about our ability to successfully overcome many of the risks and uncertainties encountered by companies in the biopharmaceutical industry.

As a company in the early stages of clinical development, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area. For example, to execute our business plan, we will need to successfully:

• execute product development activities using unproven technologies related to both RNAi and to the delivery of siRNAs to the relevant tissues and cells;

• build and maintain a strong intellectual property portfolio;

• gain regulatory acceptance for the development of our product candidates and market success for any products we commercialize;

• develop and maintain successful strategic alliances; and

• manage our spending as costs and expenses increase due to clinical trials, regulatory approvals and commercialization.

If we are unsuccessful in accomplishing these objectives, we may not be able to develop product candidates, commercialize products, raise capital, expand our business or continue our operations.

The approach we are taking to discover and develop novel RNAi therapeutics is unproven and may never lead to marketable products.

We have concentrated our efforts and therapeutic product research on RNAi technology, and our future success depends on the successful development of this technology and products based on it. Neither we nor any other company has received regulatory approval to market therapeutics utilizing siRNAs, the class of molecule we are trying to develop into drugs. The scientific discoveries that form the basis for our efforts to discover and develop new drugs are relatively new. The scientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited. Skepticism as to the feasibility of developing RNAi therapeutics has been expressed in scientific literature. For example, there are potential challenges to achieving

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safe RNAi therapeutics based on the so-called off-target effects and activation of the interferon response. In addition, decisions by other companies with respect to their RNAi development efforts may increase skepticism in the marketplace regarding the potential for RNAi therapeutics.

Relatively few product candidates based on these discoveries have ever been tested in animals or humans. siRNAs may not naturally possess the inherent properties typically required of drugs, such as the ability to be stable in the body long enough to reach the tissues in which their effects are required, nor the ability to enter cells within these tissues in order to exert their effects. We currently have only limited data, and no conclusive evidence, to suggest that we can introduce these drug-like properties into siRNAs. We may spend large amounts of money trying to introduce these properties, and may never succeed in doing so. In addition, these compounds may not demonstrate in patients the chemical and pharmacological properties ascribed to them in laboratory studies, and they may interact with human biological systems in unforeseen, ineffective or harmful ways. As a result, we may never succeed in developing a marketable product, we may not become profitable and the value of our common stock will decline.

Further, our focus solely on RNAi technology for developing drugs, as opposed to multiple, more proven technologies for drug development, increases the risks associated with the ownership of our common stock. If we are not successful in developing a product candidate using RNAi technology, we may be required to change the scope and direction of our product development activities. In that case, we may not be able to identify and implement successfully an alternative product development strategy.

Risks Related to Our Financial Results and Need for Financing

We have a history of losses and may never become and remain consistently profitable.

We have experienced significant operating losses since our inception. At December 31, 2012, we had an accumulated deficit of $507.0 million. To date, we have not developed any products nor generated any revenues from the sale of products. Further, we do not expect to generate any such revenues in the foreseeable future. We expect to continue to incur annual net operating losses over the next several years and will require substantial resources over the next several years as we expand our efforts to discover, develop and commercialize RNAi therapeutics. We anticipate that the majority of any revenues we generate over the next several years will be from alliances with pharmaceutical and biotechnology companies or funding from contracts with the government or foundations, but cannot be certain that we will be able to secure or maintain these alliances or contracts, or meet the obligations or achieve any milestones that we may be required to meet or achieve to receive payments. We anticipate that revenues derived from such sources will not be sufficient to make us consistently profitable.

We believe that to become and remain consistently profitable, we must succeed in discovering, developing and commercializing novel drugs with significant market potential. This will require us to be successful in a range of challenging activities, including pre-clinical testing and clinical trial stages of development, obtaining regulatory approval for these novel drugs and manufacturing, marketing and selling them. We may never succeed in these activities, and may never generate revenues that are significant enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we cannot become and remain consistently profitable, the market price of our common stock could decline. In addition, we may be unable to raise capital, expand our business, develop additional product candidates or continue our operations.

We will require substantial additional funds to complete our research and development activities and if additional funds are not available, we may need to critically limit, significantly scale back or cease our operations.

We have used substantial funds to develop our RNAi technologies and will require substantial funds to conduct further research and development, including pre-clinical testing and clinical trials of our product candidates, and to manufacture and market any products that are approved for commercial sale. Because we cannot be certain of the length of time or activities associated with successful development of our product candidates, we are unable to estimate the actual funds we will require to develop and commercialize them.

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Our future capital requirements and the period for which we expect our existing resources to support our operations may vary from what we expect. We have based our expectations on a number of factors, many of which are difficult to predict or are outside of our control, including:

• our progress in demonstrating that siRNAs can be active as drugs;

• our ability to develop relatively standard procedures for selecting and modifying siRNA product candidates;

• progress in our research and development programs, as well as the magnitude of these programs;

• the timing, receipt and amount of milestone and other payments, if any, from present and future collaborators, if any;

• the timing, receipt and amount of funding under future government or foundation contracts, if any;

• our ability to maintain and establish additional collaborative arrangements and/or new business initiatives;

• the resources, time and costs required to initiate and complete our pre-clinical and clinical trials, obtain regulatory approvals, and obtain and maintain licenses to third-party intellectual property;

• our ability to manufacture, or contract with third-parties for the manufacture of, our product candidates for clinical testing and commercial sale;

• the resources, time and cost required for the preparation, filing, prosecution, maintenance and enforcement of patent claims;

• our ability to achieve the anticipated cost reductions as a result of, and to successfully manage the potential impact of, our January 2012 strategic corporate restructuring and workforce reduction on our culture, collaborative relationships and business operations;

• the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes;

• progress in the research and development programs of Regulus; and

• the timing, receipt and amount of sales and royalties, if any, from our potential products.

If our estimates and predictions relating to these factors are incorrect, we may need to modify our operating plan.

Even if our estimates are correct, we will be required to seek additional funding in the future and intend to do so through either collaborative arrangements, public or private equity offerings or debt financings, or a combination of one or more of these funding sources. Additional funds may not be available to us on acceptable terms or at all.

In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, under our shelf registration statement or otherwise, further dilution to our stockholders will result. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, may involve restrictive covenants that could limit our flexibility in conducting future business activities and, in the event of insolvency, would be paid before holders of equity securities received any distribution of corporate assets.

If we are unable to obtain funding on a timely basis, we may be required to significantly delay or curtail one or more of our research or development programs or undergo additional reductions in our workforce or other corporate restructuring activities. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies, product candidates or products that we would otherwise pursue on our own.

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If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements prove inaccurate, our actual results may vary from those reflected in our projections and accruals.

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses, the amounts of charges accrued by us and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We cannot assure you, however, that our estimates, or the assumptions underlying them, will be correct.

The investment of our cash, cash equivalents and fixed income marketable securities is subject to risks which may cause losses and affect the liquidity of these investments.

At December 31, 2012, we had $226.2 million in cash, cash equivalents and fixed income marketable securities. We historically have invested these amounts in corporate bonds, commercial paper, securities issued by the U.S. government obligations, certificates of deposit and money market funds meeting the criteria of our investment policy, which is focused on the preservation of our capital. These investments are subject to general credit, liquidity, market and interest rate risks, including the impact of U.S. sub-prime mortgage defaults that have affected various sectors of the financial markets and caused credit and liquidity issues. We may realize losses in the fair value of these investments or a complete loss of these investments, which would have a negative effect on our consolidated financial statements. In addition, should our investments cease paying or reduce the amount of interest paid to us, our interest income would suffer. The market risks associated with our investment portfolio may have an adverse effect on our results of operations, liquidity and financial condition.

Risks Related to Our Dependence on Third Parties

Our license and collaboration agreements with pharmaceutical companies are important to our business. If these pharmaceutical companies do not successfully develop drugs pursuant to these agreements or we develop drugs targeting the same diseases as our non-exclusive licensees, our business could be adversely affected.

In July 2007, we entered into a license and collaboration agreement with Roche. Under the license and collaboration agreement we granted Roche a non-exclusive license to our intellectual property to develop and commercialize therapeutic products that function through RNAi, subject to our existing contractual obligations to third parties. In November 2010, Roche announced the discontinuation of certain activities in research and early development, including their RNAi research efforts. In October 2011, Arrowhead announced its acquisition of RNA therapeutics assets from Roche, including our license and collaboration agreement with Roche. As a result of the assignment, Arrowhead now has all of the rights and obligations of Roche under that agreement. The license is limited to four therapeutic areas and may be expanded to include additional therapeutic areas, upon payment to us by Arrowhead of an additional $50.0 million for each additional therapeutic area, if any. In addition, in exchange for our contributions under the collaboration agreement, for each RNAi therapeutic product developed by Arrowhead, its affiliates, or sublicensees under the collaboration agreement, we are entitled to receive milestone payments upon achievement of specified development and sales events, totaling up to an aggregate of $100.0 million per therapeutic target, together with royalty payments based on worldwide annual net sales, if any. Our receipt of milestone payments under this agreement is dependent upon Arrowhead’s ability to successfully develop and commercialize RNAi therapeutic products.

In May 2008, we entered into a similar license and collaboration agreement with Takeda, which is limited to two therapeutic areas, and which may be expanded to include additional therapeutic areas, upon payment to us by Takeda of an additional $50.0 million for each additional therapeutic area, if any. For each RNAi therapeutic product developed by Takeda, its affiliates and sublicensees, we are entitled to receive specified development and commercialization milestone payments, totaling up to $171.0 million per product, together with royalty

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payments based on worldwide annual net sales, if any. In addition, we agreed that we will not grant any other party rights to develop RNAi therapeutics in the Asian territory through May 2013.

In September 2010, Novartis exercised its right under our collaboration and license agreement to select 31 designated gene targets, for which Novartis has exclusive rights to discover, develop and commercialize RNAi therapeutic products using our intellectual property and technology. Under the terms of the collaboration and license agreement, for any RNAi therapeutic products Novartis develops against these targets, we are entitled to receive milestone payments upon achievement of certain specified development and annual net sales events, up to an aggregate of $75.0 million per therapeutic product, as well as royalties on annual net sales of any such product.

If Takeda, Novartis or Arrowhead fails to successfully develop products using our technology, we may not receive any milestone or royalty payments under our agreements with them. In addition, even if Takeda is not successful in its efforts, we are limited in our ability to form alliances with other parties in the Asian territory until May 2013. We also have the option under the Takeda agreement, exercisable until the start of Phase III development, to opt-in under a 50-50 profit sharing agreement to the development and commercialization in the United States of up to four Takeda licensed products, and would be entitled to opt-in rights for two additional products for each additional field expansion, if any, elected by Takeda under the collaboration agreement. If Takeda fails to successfully develop products, we may not realize any economic benefit from these opt-in rights. Finally, Takeda could become a competitor of ours in the development of RNAi-based drugs targeting the same diseases that we choose to target. Takeda has significantly greater financial resources than we do and far more experience in developing and marketing drugs, which could put us at a competitive disadvantage if we were to compete with them in the development of RNAi-based drugs targeting the same disease.

We may not be able to execute our business strategy if we are unable to enter into alliances with other companies that can provide business and scientific capabilities and funds for the development and commercialization of our product candidates. If we are unsuccessful in forming or maintaining these alliances on terms favorable to us, our business may not succeed.

We do not have any capability for sales, marketing or distribution and have limited capabilities for drug development. In addition, we believe that other companies are expending substantial resources in developing safe and effective means of delivering siRNAs to relevant cell and tissue types. Accordingly, we have entered into alliances with other companies and collaborators that we believe can provide such capabilities, and we intend to enter into additional such alliances in the future. Specifically, we intend to focus on developing and commercializing ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 on our own in North and South America, Europe and other parts of the world, and have sought, or may seek, alliances for development and commercialization of these product candidates in Japan and other Asian territories. In February 2013, we entered into a global alliance to advance our ALN-PCS program. We also intend to enter into global alliances to advance our ALN-TMP, ALN-AAT and potentially other programs. In such alliances, we expect our current, and may expect our future, collaborators to provide substantial capabilities in delivery of RNAi therapeutics to the relevant cell or tissue type, clinical development, regulatory affairs, and/or marketing, sales and distribution. For example, under our agreements with MIT, Tekmira, UBC and AlCana, and Arrowhead, among others, we have access to certain existing delivery technologies and/or are developing additional delivery capabilities. In addition, under certain of our other alliances, we may expect our collaborators to develop, market and/or sell certain of our product candidates. We may have limited or no control over the development, sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties. For example, we will rely entirely on (i) Kyowa Hakko Kirin for development and commercialization of any RNAi products for the treatment of RSV in Asia; (ii) Ascletis for development and commercialization of any RNAi products for the treatment of liver cancer in China and certain other territories and (iii) Genzyme for the development and commercialization of ALN-TTR in Japan and the Asia-Pacific region. If Kyowa Hakko Kirin, Ascletis and/or Genzyme are not successful in their commercialization efforts, our future revenues from RNAi therapeutics for these indications may be adversely affected.

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We may not be successful in entering into such alliances on terms favorable to us due to various factors, including our ability to successfully demonstrate proof of concept for our technology in man, our ability to demonstrate the safety and efficacy of our specific drug candidates, our ability to manufacture or have manufactured RNAi therapeutics, the strength of our intellectual property and/or concerns around challenges to our intellectual property. Even if we do succeed in securing any such alliances, we may not be able to maintain them if, for example, development or approval of a product candidate is delayed, challenges are raised as to the validity or scope of our intellectual property or sales of an approved drug are lower than we expected. In addition, under our collaboration agreements with Monsanto and Genzyme, we may be required to pay liquidated damages or repay upfront payments and may lose royalty and other rights. In the case of the Monsanto agreement, if we cease to own or otherwise exclusively control certain licensed patent rights in the agriculture field, resulting in the loss of exclusivity with respect to Monsanto’s rights to such patent rights, and such loss of exclusivity has a material adverse effect on the licensed products (as defined in the agreement), we would be required to pay Monsanto up to $5.0 million in liquidated damages, and Monsanto’s royalty obligations to us would be reduced or, under certain circumstances, terminated.

Furthermore, any delay in entering into collaboration agreements would likely either delay the development and commercialization of our certain of our product candidates and reduce their competitiveness even if they reach the market, or prevent the development of certain product candidates. Any such delay related to our collaborations could adversely affect our business.

For certain product candidates that we may develop, we have formed collaborations to fund all or part of the costs of drug development and commercialization, such as our collaborations with Takeda, Medtronic and MedCo. We may not, however, be able to enter into additional collaborations for ALN-TMP, ALN-VSP or ALN-RSV, and the terms of any collaboration agreement we do secure may not be favorable to us. If we are not successful in our efforts to enter into future collaboration arrangements with respect to one or more of these product candidates, we may not have sufficient funds to develop that or any other product candidate internally, or to bring any product candidates to market. If we do not have sufficient funds to develop and bring our product candidates to market, we will not be able to generate sales revenues from these product candidates, and this will substantially harm our business.

If any collaborator terminates or fails to perform its obligations under agreements with us, the development and commercialization of our product candidates could be delayed or terminated.

Our dependence on collaborators for capabilities and funding means that our business could be adversely affected if any collaborator terminates its collaboration agreement with us or fails to perform its obligations under that agreement. Our current or future collaborations, if any, may not be scientifically or commercially successful. Disputes may arise in the future with respect to the ownership of rights to technology or products developed with collaborators, which could have an adverse effect on our ability to develop and commercialize any affected product candidate.

Our current collaborations allow, and we expect that any future collaborations will allow, either party to terminate the collaboration for a material breach by the other party. Our agreement with Kyowa Hakko Kirin for the development and commercialization of RSV therapeutics for the treatment of RSV infection in Japan and other major markets in Asia may be terminated by Kyowa Hakko Kirin without cause upon 180-days’ prior written notice to us, subject to certain conditions, and our agreement with MedCo relating to the development and commercialization of ALN-PCS worldwide may be terminated by MedCo at any time upon four months’ prior written notice. If we were to lose a commercialization collaborator, we would have to attract a new collaborator or develop internal sales, distribution and marketing capabilities, which would require us to invest significant amounts of financial and management resources.

In addition, if we have a dispute with a collaborator over the ownership of technology or other matters, or if a collaborator terminates its collaboration with us, for breach or otherwise, or determines not to pursue the research and development of RNAi therapeutics, it could delay our development of product candidates, result in the need for additional company resources to develop product candidates, make it more difficult for us to attract new collaborators and could adversely affect how we are perceived in the business and financial communities.

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For example, in March 2011, Tekmira filed a civil complaint against us claiming, among other things. misappropriation of its confidential and proprietary information and trade secrets. As a result of the litigation, which was settled in November 2012, we were required to expend resources and management attention that would otherwise have been engaged in other activities. Moreover, a collaborator, or in the event of a change in control of a collaborator or the assignment of a collaboration agreement to a third-party, the successor entity or assignee, could determine that it is in its interests to:

• pursue alternative technologies or develop alternative products, either on its own or jointly with others, that may be competitive with the products on which it is collaborating with us or which could affect its commitment to the collaboration with us;

• pursue higher-priority programs or change the focus of its development programs, which could affect the collaborator’s commitment to us; or

• if it has marketing rights, choose to devote fewer resources to the marketing of our product candidates, if any are approved for marketing, than it does for product candidates developed without us.

If any of these occur, the development and commercialization of one or more product candidates could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities to continue such development and commercialization on our own.

We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, our development plans may be adversely affected.

We rely on independent clinical investigators, contract research organizations and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our clinical trials. We have contracted, and we plan to continue to contract with certain third-parties to provide certain services, including site selection, enrollment, monitoring and data management services. Although we depend heavily on these parties, we do not control them and therefore, we cannot be assured that these third-parties will adequately perform all of their contractual obligations to us. If our third-party service providers cannot adequately and timely fulfill their obligations to us, or if the quality and accuracy of our clinical trial data is compromised due to failure by such third-party to adhere to our protocols or regulatory requirements or if such third-parties otherwise fail to meet deadlines, our development plans may be delayed or terminated.

We have very limited manufacturing experience or resources and we must incur significant costs to develop this expertise and/or rely on third parties to manufacture our products.

We have very limited manufacturing experience. Some of our product candidates utilize specialized formulations, such as liposomes or LNP-based formulations, whose scale-up and manufacturing could be very difficult. We also have very limited experience in such scale-up and manufacturing, requiring us to depend on a limited number of third parties, who might not be able to deliver in a timely manner, or at all. In order to develop products, apply for regulatory approvals and commercialize our products, we will need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities. Our internal manufacturing capabilities are limited to small-scale production of material for use in in vitro and in vivo experiments that is not required to be produced under current good manufacturing practice, or cGMP, standards. During 2012, we developed cGMP capabilities and processes for the manufacture of ALN-TTR02 for Phase III clinical use and early commercial supply. We may manufacture clinical trial materials ourselves or we may rely on others to manufacture the materials we will require for any clinical trials that we initiate. There are a limited number of manufacturers that supply synthetic siRNAs. We currently rely on several contract manufacturers for our supply of synthetic siRNAs. There are risks inherent in pharmaceutical manufacturing that could affect the ability of our contract manufacturers to meet our delivery time requirements or provide adequate amounts of material to meet our needs. Included in these risks are synthesis and purification failures and contamination during the manufacturing process, which could result in unusable product and cause delays in our development process, as well as additional expense to us. To fulfill our siRNA requirements, we may also need to secure alternative suppliers of synthetic siRNAs.

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In addition to the manufacture of the synthetic siRNAs, we may have additional manufacturing requirements related to the technology required to deliver the siRNA to the relevant cell or tissue type, such as LNPs or conjugates. In some cases, the delivery technology we utilize is highly specialized or proprietary, and for technical and legal reasons, we may have access to only one or a limited number of potential manufacturers for such delivery technology. Failure by manufacturers to properly formulate our siRNAs for delivery could result in unusable product. Furthermore, a breach by such manufacturers of their contractual obligations or a dispute with such manufacturers would cause delays in our discovery and development process, as well as additional expense to us. Given the limited number of suppliers for our delivery technology and other materials, we have developed cGMP capabilities and processes for the manufacture of ALN-TTR02 for Phase III clinical use and early commercial supply, and in the future, we may also develop our own capabilities to manufacture drug substance, including siRNAs and siRNA conjugates for human clinical use. In developing these manufacturing capabilities by building our own manufacturing facility, we have incurred substantial expenditures. Also, we will likely need to hire and train employees to staff our new facility.

The manufacturing process for any products that we may develop is subject to FDA and foreign regulatory authority approval process and we will need to contract with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements on an ongoing basis. In addition, if we receive the necessary regulatory approval for any product candidate, we also expect to rely on third parties, including our commercial collaborators, to produce materials required for commercial supply. We may experience difficulty in obtaining adequate manufacturing capacity for our needs. If we are unable to obtain or maintain contract manufacturing for these product candidates, or to do so on commercially reasonable terms, we may not be able to successfully develop and commercialize our products.

To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we depend, and will depend in the future, on these third parties to perform their obligations in a timely manner and consistent with contractual and regulatory requirements, including those related to quality control and quality assurance. The failure of a third-party manufacturer to perform its obligations as expected, or, to the extent we manufacture all or a portion of our product candidates ourselves, our failure to execute on our manufacturing requirements could adversely affect our business in a number of ways, including:

• we or our current or future collaborators may not be able to initiate or continue clinical trials of products that are under development;

• we or our current or future collaborators may be delayed in submitting regulatory applications, or receiving regulatory approvals, for our product candidates;

• we may lose the cooperation of our collaborators;

• our products could be the subject of inspections by regulatory authorities;

• we may be required to cease distribution or recall some or all batches of our products; and

• ultimately, we may not be able to meet commercial demands for our products.

If any third-party manufacturer with whom we contract fails to perform its obligations, we may be forced to manufacture the materials ourselves, for which we may not have the capabilities or resources, or enter into an agreement with a different third-party manufacturer, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills required to manufacture our products or product candidates may be unique or proprietary to the original manufacturer and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget. Furthermore, a manufacturer may possess technology related to the manufacture of our product candidate that such manufacturer owns independently. This would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third-party manufacture our products or product candidates.

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We have no sales, marketing or distribution experience and would have to invest significant financial and management resources to establish these capabilities.

We have no sales, marketing or distribution experience. We currently expect to rely heavily on third parties to launch and market certain of our product candidates, if approved. However, if we elect to develop internal sales, distribution and marketing capabilities as part of our core product strategy, we will need to invest significant financial and management resources. For core products where we decide to perform sales, marketing and distribution functions ourselves, we could face a number of additional risks, including:

• we may not be able to attract and build a significant marketing or sales force;

• the cost of establishing a marketing or sales force may not be justifiable in light of the revenues generated by any particular product; and

• our direct sales and marketing efforts may not be successful.

If we are unable to develop our own sales, marketing and distribution capabilities, we will not be able to successfully commercialize our core products without reliance on third parties.

The current credit and financial market conditions may exacerbate certain risks affecting our business.

Due to the tightening of global credit, there may be a disruption or delay in the performance of our third-party contractors, suppliers or collaborators. We rely on third parties for several important aspects of our business, including significant portions of our manufacturing needs, development of product candidates and conduct of clinical trials. If such third parties are unable to satisfy their commitments to us, our business could be adversely affected.

Risks Related to Managing Our Operations

If we are unable to attract and retain qualified key management and scientists, staff, consultants and advisors, our ability to implement our business plan may be adversely affected.

We are highly dependent upon our senior management and scientific staff. The loss of the service of any of the members of our senior management, including Dr. John Maraganore, our Chief Executive Officer, may significantly delay or prevent the achievement of product development and other business objectives. Our employment agreements with our key personnel are terminable without notice. We do not carry key man life insurance on any of our employees.

We face intense competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities, governmental entities and other research institutions, many of which have substantially greater resources with which to reward qualified individuals than we do. In addition, as a result of our September 2010 and January 2012 corporate restructurings and workforce reductions, we may face additional challenges in retaining our existing employees and recruiting new employees to join our company as our business needs change. We may be unable to attract and retain suitably qualified individuals, and our failure to do so could have an adverse effect on our ability to implement our future business plan.

Our corporate restructuring and workforce reduction plan may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.

In January 2012, we announced a corporate restructuring and workforce reduction plan pursuant to which we reduced our workforce by approximately 33%. We took these actions in order to reduce costs, streamline operations and improve our cost structure. The workforce reduction was substantially completed at the end of the first quarter of 2012. As a result of the reduction in workforce, in the first quarter of 2012, we recorded a restructuring charge of $3.9 million and during the remainder of 2012, paid substantially all of the costs related to this restructuring. The restructuring charges were based on a number of assumptions. Actual results may differ materially and additional charges not currently expected may be incurred in connection with, or as a result of,

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these reductions. In addition, we may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to achieve the anticipated benefits, savings or improvements in our cost structure in the expected time frame or other unforeseen events occur, our business and results of operations may be adversely affected.

Our restructuring plan has been and may continue to be disruptive to our operations. For example, cost savings measures may distract management from our core business, harm our reputation, yield unanticipated consequences, such as attrition beyond planned reductions in workforce, or increased difficulties in our day-to-day operations, and may adversely affect employee morale. Our workforce reductions could also harm our ability to attract and retain qualified management, scientific, manufacturing and sales and marketing personnel who are critical to our business. Any failure to attract or retain qualified personnel could prevent us from successfully developing and commercializing our products and product candidates in the future.

We may have difficulty expanding our operations successfully as we seek to evolve from a company primarily involved in discovery and pre-clinical testing into one that develops and commercializes drugs.

Despite our January 2012 workforce reduction in connection with our strategic corporate restructuring, we expect that as we seek to increase the number of product candidates we are developing we will need to expand our operations in the future. This growth may place a strain on our administrative and operational infrastructure. If product candidates we develop enter and advance through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with other organizations to provide these capabilities for us. As our operations expand due to our development progress, we expect that we will need to manage additional relationships with various collaborators, suppliers and other organizations. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.

Our business and operations could suffer in the event of system failures.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. Such events could cause interruption of our operations. For example, the loss of pre-clinical trial data or data from completed or ongoing clinical trials for our product candidates could result in delays in our regulatory filings and development efforts and significantly increase our costs. To the extent that any disruption or security breach were to result in a loss of or damage to our data, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the development of our product candidates could be delayed.

Risks Related to Our Industry

Risks Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates

Any product candidates we develop may fail in development or be delayed to a point where they do not become commercially viable.

Before obtaining regulatory approval for the commercial distribution of our product candidates, we must conduct, at our own expense, extensive pre-clinical tests and clinical trials to demonstrate the safety and efficacy in humans of our product candidates. Pre-clinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome, and the historical failure rate for product candidates is high. We currently have several programs in clinical development, including ALN-RSV01 and ALN-TTR02 in Phase II clinical trials and ALN-TTRsc, ALN-PCS and ALN-VSP in Phase I clinical development. However, we may not be able to further advance these or any other product candidate through clinical trials.

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If we enter into clinical trials, the results from pre-clinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in subsequent human clinical trials of that product candidate or any other product candidate. For example, ALN-VSP, ALN-PCS, ALN-TTR02 and ALN-TTRsc employ novel delivery formulations that have yet to be extensively evaluated in human clinical trials and proven safe and effective. We, the FDA or other applicable regulatory authorities, or an institutional review board, or IRB, or similar foreign review board or committee, may suspend clinical trials of a product candidate at any time for various reasons, including if we or they believe the subjects or patients participating in such trials are being exposed to unacceptable health risks. Among other reasons, adverse side effects of a product candidate on subjects or patients in a clinical trial could result in the FDA or foreign regulatory authorities suspending or terminating the trial and refusing to approve a particular product candidate for any or all indications of use.

Clinical trials of a new product candidate require the enrollment of a sufficient number of patients, including patients who are suffering from the disease the product candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors, including the size of the patient population, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites, the availability of effective treatments for the relevant disease, the seasonality of infections and the eligibility criteria for the clinical trial. For example, we may experience difficulty enrolling our clinical trials, including, but not limited to, our ALN-TTR02 trial, due to the availability of existing approved treatments. Although our RNAi therapeutics have been generally safe and well tolerated in our clinical trials to date, in our ALN-VSP clinical trial, one patient with advanced pancreatic neuroendocrine cancer with extensive involvement of the liver developed hepatic failure five days following the second dose of ALN-VSP and subsequently died; this was deemed possibly related to the study drug. In addition, in our ALN-VSP and ALN-TTR01 Phase I clinical trials, we have reported an incidence of acute infusion reactions occurring in 15-20% of patients. These were graded as mild or moderate in severity and readily responded to slowing of the infusion rate; all patients completed dosing without further incident. The frequency of acute infusion reactions in our ALN-PCS and ALN-TTR02 Phase I clinical trials has been less than three percent. In our ALN-PCS clinical trial, we reported the occurrence of a mild, transient rash that was observed in sixteen subjects, including four who received placebo; the incidence of this finding was the same in both placebo and drug treatment arms. In addition, our Phase II clinical trial of ALN-TTR02 trial targets a small population of patients suffering from ATTR. Delays or difficulties in patient enrollment or difficulties retaining trial participants, including as a result of the availability of existing treatments or the occurrence of adverse events, can result in increased costs, longer development times or termination of a clinical trial.

Clinical trials also require the review, oversight and approval of IRBs, which continually review clinical investigations and protect the rights and welfare of human subjects. Inability to obtain or delay in obtaining IRB approval can prevent or delay the initiation and completion of clinical trials, and the FDA or foreign regulatory authorities may decide not to consider any data or information derived from a clinical investigation not subject to initial and continuing IRB review and approval in support of a marketing application.

Our product candidates that we develop may encounter problems during clinical trials that will cause us, an IRB or regulatory authorities to delay, suspend or terminate these trials, or that will delay or confound the analysis of data from these trials. If we experience any such problems, we may not have the financial resources to continue development of the product candidate that is affected, or development of any of our other product candidates. We may also lose, or be unable to enter into, collaborative arrangements for the affected product candidate and for other product candidates we are developing.

A failure of one of more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, pre-clinical testing and the clinical trial process that could delay or prevent regulatory approval or our ability to commercialize our product candidates, including:

• our pre-clinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional pre-clinical testing or clinical trials, or we may abandon projects that we expect to be promising;

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• delays in filing INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators or IRBs in order to commence a clinical trial at a prospective trial site, or their suspension or termination of a clinical trial once commenced;

• conditions imposed on us by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

• problems in engaging IRBs to oversee clinical trials or problems in obtaining or maintaining IRB approval of trials;

• delays in enrolling patients and volunteers into clinical trials, and variability in the number and types of patients and volunteers available for clinical trials;

• high drop-out rates for patients and volunteers in clinical trials;

• negative or inconclusive results from our clinical trials or the clinical trials of others for product candidates similar to ours;

• inadequate supply or quality of product candidate materials or other materials necessary for the conduct of our clinical trials;

• greater than anticipated clinical trial costs;

• serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;

• poor effectiveness of our product candidates during clinical trials;

• unfavorable FDA or other regulatory agency inspection and review of a clinical trial site or records of any clinical or pre-clinical investigation;

• failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;

• governmental or regulatory delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or

• varying interpretations of data by the FDA and similar foreign regulatory agencies.

Even if we successfully complete clinical trials of our product candidates, any given product candidate may not prove to be a safe and effective treatment for the diseases for which it was being tested.

The regulatory approval process may be delayed for any products we develop that require the use of specialized drug delivery devices, which may require us to incur additional costs and delay receipt of any potential product revenue.

Some product candidates that we develop may need to be administered using specialized drug delivery devices that deliver RNAi therapeutics directly to diseased parts of the body. While we expect to rely on drug delivery systems that have been approved by the FDA or other regulatory agencies to deliver drugs like ours to diseased parts of the body, we, or our collaborator, may need to modify the design or labeling of such delivery device for some products we may develop. In such an event, the FDA may regulate the product as a combination product or require additional approvals or clearances for the modified delivery device. Further, to the extent the specialized delivery device is owned by another company, we would need that company’s cooperation to implement the necessary changes to the device, or its labeling, and to obtain any additional approvals or clearances. In cases where we do not have an ongoing collaboration with the company that makes the device, obtaining such additional approvals or clearances and the cooperation of such other company could significantly delay and increase the cost of obtaining marketing approval, which could reduce the commercial viability of our product candidate. In addition, the use of a specialized delivery system, even if previously approved, could

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complicate the design or analysis of clinical trials for our RNAi therapeutics. In summary, we may be unable to find, or experience delays in finding, suitable drug delivery systems to administer RNAi therapeutics directly to diseased parts of the body, which could negatively affect our ability to successfully commercialize these RNAi therapeutics.

We may be unable to obtain United States or foreign regulatory approval and, as a result, unable to commercialize our product candidates.

Our product candidates are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, marketing and distribution of drugs. Rigorous pre-clinical testing and clinical trials and an extensive regulatory approval process are required to be successfully completed in the United States and in many foreign jurisdictions before a new drug can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. It is possible that none of the product candidates we may develop will obtain the regulatory approvals necessary for us or our collaborators to begin selling them.

We have very limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to obtain FDA and other approvals is unpredictable but typically takes many years following the commencement of clinical trials, depending upon the type, complexity and novelty of the product candidate. The standards that the FDA and its foreign counterparts use when regulating us are not always applied predictably or uniformly and can change. Any analysis we perform of data from pre-clinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. It is impossible to predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be.

Because the drugs we are developing may represent a new class of drug, the FDA and its foreign counterparts have not yet established any definitive policies, practices or guidelines in relation to these drugs. While we believe the product candidates that we are currently developing are regulated as new drugs under the Federal Food, Drug, and Cosmetic Act, the FDA could decide to regulate them or other products we may develop as biologics under the Public Health Service Act. The lack of policies, practices or guidelines may hinder or slow review by the FDA of any regulatory filings that we may submit. Moreover, the FDA may respond to these submissions by defining requirements we may not have anticipated. Such responses could lead to significant delays in the clinical development of our product candidates. In addition, because there may be approved treatments for some of the diseases for which we may seek approval, in order to receive regulatory approval, we may need to demonstrate through clinical trials that the product candidates we develop to treat these diseases, if any, are not only safe and effective, but safer or more effective than existing products. Furthermore, in recent years, there has been increased public and political pressure on the FDA with respect to the approval process for new drugs, and the FDA’s standards, especially regarding drug safety, appear to have become more stringent.

Any delay or failure in obtaining required approvals could have a material adverse effect on our ability to generate revenues from the particular product candidate for which we are seeking approval. Furthermore, any regulatory approval to market a product may be subject to limitations on the approved uses for which we may market the product or the labeling or other restrictions. In addition, the FDA has the authority to require a Risk Evaluation and Mitigation Strategy, or REMS, plan as part of an NDA or biologics license application, or BLA, or after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug or biologic, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. These limitations and restrictions may limit the size of the market for the product and affect reimbursement by third-party payors.

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We are also subject to numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process varies among countries and includes all of the risks associated with FDA approval described above as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. Approval by the FDA does not ensure approval by regulatory authorities outside the United States and vice versa.

Even if we obtain regulatory approvals, our marketed drugs will be subject to ongoing regulatory review. If we fail to comply with continuing U.S. and foreign requirements, our approvals could be limited or withdrawn, we could be subject to other penalties, and our business would be seriously harmed.

Following any initial regulatory approval of any drugs we may develop, we will also be subject to continuing regulatory review, including the review of adverse drug experiences and clinical results that are reported after our drug products are made commercially available. This would include results from any postmarketing tests or surveillance to monitor the safety and efficacy of the drug product required as a condition of approval or agreed to by us. Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved uses for which the product may be marketed. Other ongoing regulatory requirements include, among other things, submissions of safety and other post-marketing information and reports, registration and listing, as well as continued compliance with cGMP requirements and good clinical practices for any clinical trials that we conduct post-approval. In addition, we are conducting, and intend to continue to conduct, clinical trials for our product candidates, and we intend to seek approval to market our product candidates, in jurisdictions outside of the United States, and therefore will be subject to, and must comply with, regulatory requirements in those jurisdictions.

The FDA has significant post-market authority, including, for example, the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate serious safety risks related to the use of a drug and to require withdrawal of the product from the market. The FDA also has the authority to require a REMS plan after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug.

The manufacturer and manufacturing facilities we use to make any of our product candidates will also be subject to periodic review and inspection by the FDA and other regulatory agencies. The discovery of any new or previously unknown problems with our third-party manufacturers, manufacturing processes or facilities, may result in restrictions on the drug or manufacturer or facility, including withdrawal of the drug from the market. We have recently developed cGMP capabilities and processes for the manufacture of ALN-TTR02 for Phase III clinical and early commercial use. We do not currently have the ability to manufacture material for a broader commercial scale. We may manufacture clinical trial materials or we may contract a third party to manufacture these materials for us. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured products ourselves, including reliance on the third-party manufacturer for regulatory compliance. Our product promotion and advertising is also subject to regulatory requirements and continuing regulatory review.

If we or our collaborators, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the United States or foreign jurisdictions in which we may seek to market our products, we or they may be subject to, among other things, fines, warning letters, holds on clinical trials, refusal by the FDA to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution.

Even if we receive regulatory approval to market our product candidates, the market may not be receptive to our product candidates upon their commercial introduction, which will prevent us from becoming profitable.

The product candidates that we are developing are based upon new technologies or therapeutic approaches. Key participants in pharmaceutical marketplaces, such as physicians, third-party payors and consumers, may not accept a product intended to improve therapeutic results based on RNAi technology. As a result, it may be more

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difficult for us to convince the medical community and third-party payors to accept and use our product, or to provide favorable reimbursement.

Other factors that we believe will materially affect market acceptance of our product candidates include:

• the timing of our receipt of any marketing approvals, the terms of any approvals and the countries in which approvals are obtained;

• the safety and efficacy of our product candidates, as demonstrated in clinical trials;

• relative convenience and ease of administration of our product candidates;

• the willingness of patients to accept potentially new routes of administration;

• the success of our physician education programs;

• the availability of adequate government and third-party payor reimbursement;

• the pricing of our products, particularly as compared to alternative treatments; and

• availability of alternative effective treatments for the diseases that product candidates we develop are intended to treat and the relative risks, benefits and costs of the treatments.

In addition, our estimates regarding the potential market size may be materially different from what we currently expect at the time we commence commercialization, which could result in significant changes in our business plan and may have a material adverse effect on our results of operations and financial condition.

If we or our collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation.

As a manufacturer of pharmaceuticals, we are subject to federal, state, and foreign healthcare laws and regulations pertaining to fraud and abuse and patients’ rights. These laws and regulations include:

• the U.S. federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for a healthcare item or service, or the purchasing or ordering of an item or service, for which payment may be made under a federal healthcare program such as Medicare or Medicaid;

• the U.S. federal false claims law, which prohibits, among other things, individuals or entities from knowingly presenting or causing to be presented, claims for payment by government funded programs such as Medicare or Medicaid that are false or fraudulent, and which may apply to us by virtue of statements and representations made to customers or third parties;

• the U.S. federal Health Insurance Portability and Accountability Act, or HIPAA, and Health Information Technology for Economic and Clinical Health, or HITECH, Act, which prohibit executing a scheme to defraud healthcare programs; impose requirements relating to the privacy, security, and transmission of individually identifiable health information; and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information;

• the federal Open Payments regulations under the National Physician Payment Transparency Program have been issued under PPACA and will require that manufacturers of pharmaceutical and biological drugs covered by Medicare, Medicaid, and Children’s Health Insurance Programs report all consulting fees, travel reimbursements, research grants, and other payments or gifts with values over $10 made to physicians and teaching hospitals; and

• state laws comparable to each of the above federal laws, such as, for example, anti-kickback and false claims laws applicable to commercial insurers and other non-federal payors, requirements for mandatory corporate regulatory compliance programs, and laws relating to patient data privacy and security.

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If our operations are found to be in violation of any such requirements, we may be subject to penalties, including civil or criminal penalties, monetary damages, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely our financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.

If we or our collaborators, manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to enforcement actions, which could affect our ability to develop, market and sell our products successfully and could harm our reputation and lead to reduced acceptance of our products by the market. These enforcement actions include, among others:

• adverse regulatory inspection findings;

• warning letters;

• voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals;

• restrictions on, or prohibitions against, marketing our products;

• restrictions on, or prohibitions against, importation or exportation of our products;

• suspension of review or refusal to approve pending applications or supplements to approved applications;

• exclusion from participation in government-funded healthcare programs;

• exclusion from eligibility for the award of government contracts for our products;

• suspension or withdrawal of product approvals;

• product seizures;

• injunctions; and

• civil and criminal penalties and fines.

Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business.

The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. Although we intend to monitor these regulations, our programs are currently in the early stages of development and we will not be able to assess the impact of price regulations for a number of years. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenues we are able to generate from the sale of the product in that country.

Our ability to commercialize any products successfully also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Even if we succeed in bringing one or more products to the market, these products may not be considered cost-effective, and the amount reimbursed for any products

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may be insufficient to allow us to sell our products on a competitive basis. Because our programs are in the early stages of development, we are unable at this time to determine their cost effectiveness or the likely level or method of reimbursement. Increasingly, the third-party payors who reimburse patients or healthcare providers, such as government and private insurance plans, are requiring that drug companies provide them with predetermined discounts from list prices, and are seeking to reduce the prices charged or the amounts reimbursed for pharmaceutical products. If the price we are able to charge for any products we develop, or the reimbursement provided for such products, is inadequate in light of our development and other costs, our return on investment could be adversely affected.

We currently expect that any drugs we develop may need to be administered under the supervision of a physician on an outpatient basis. Under currently applicable U.S. law, certain drugs that are not usually self-administered (including injectable drugs) may be eligible for coverage under the Medicare Part B program if:

• they are incident to a physician’s services;

• they are reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice; and

• they have been approved by the FDA and meet other requirements of the statute.

There may be significant delays in obtaining coverage for newly-approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA. Moreover, eligibility for coverage does not imply that any drug will be reimbursed in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement may be based on payments allowed for lower-cost drugs that are already reimbursed, may be incorporated into existing payments for other services and may reflect budgetary constraints or imperfections in Medicare data. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for new drugs that we develop and for which we obtain regulatory approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.

We believe that the efforts of governments and third-party payors to contain or reduce the cost of healthcare and legislative and regulatory proposals to broaden the availability of healthcare will continue to affect the business and financial condition of pharmaceutical and biopharmaceutical companies. A number of legislative and regulatory changes in the healthcare system in the United States and other major healthcare markets have been proposed in recent years, and such efforts have expanded substantially in recent years. These developments have included prescription drug benefit legislation that was enacted and took effect in January 2006, healthcare reform legislation enacted by certain states, and major healthcare reform legislation that was passed by Congress and enacted into law in the United States in 2010. These developments could, directly or indirectly, affect our ability to sell our products, if approved, at a favorable price.

In particular, in March 2010, the Patient Protection and Affordable Care Act, or PPACA, and a related reconciliation bill were signed into law. This new legislation changes the current system of healthcare insurance and benefits intended to broaden coverage and control costs. The new law also contains provisions that will affect companies in the pharmaceutical industry and other healthcare related industries by imposing additional costs and changes to business practices. Provisions affecting pharmaceutical companies include the following:

• Mandatory rebates for drugs sold into the Medicaid program have been increased, and the rebate requirement has been extended to drugs used in risk-based Medicaid managed care plans.

• The 340B Drug Pricing Program under the Public Health Services Act has been extended to require mandatory discounts for drug products sold to certain critical access hospitals, cancer hospitals and other covered entities.

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• Pharmaceutical companies are required to offer discounts on brand-name drugs to patients who fall within the Medicare Part D coverage gap, commonly referred to as the “Donut Hole.”

• Pharmaceutical companies are required to pay an annual non-tax deductible fee to the federal government based on each company’s market share of prior year total sales of branded products to certain federal healthcare programs, such as Medicare, Medicaid, Department of Veterans Affairs and Department of Defense. Since we expect our branded pharmaceutical sales to constitute a small portion of the total federal health program pharmaceutical market, we do not expect this annual assessment to have a material impact on our financial condition.

• The new law provides that approval of an application for a follow-on biologic product may not become effective until 12 years after the date on which the reference innovator biologic product was first licensed by the FDA, with a possible six-month extension for pediatric products. After this exclusivity ends, it will be easier for generic manufacturers to enter the market, which is likely to reduce the pricing for such products and could affect our profitability.

The full effects of the U.S. healthcare reform legislation cannot be known until the new law is fully implemented through regulations or guidance issued by the Centers for Medicare & Medicaid Services and other federal and state healthcare agencies. The financial impact of the U.S. healthcare reform legislation over the next few years will depend on a number of factors, including but not limited, to the policies reflected in implementing regulations and guidance, and changes in sales volumes for products affected by the new system of rebates, discounts and fees. The new legislation may also have a positive impact on our future net sales, if any, by increasing the aggregate number of persons with healthcare coverage in the United States, but such increases are unlikely to be realized until approximately 2014 at the earliest.

Moreover, we cannot predict what healthcare reform initiatives may be adopted in the future. Further federal and state legislative and regulatory developments are likely, and we expect ongoing initiatives in the United States to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipated revenues from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop drug candidates.

Our ability to obtain services, reimbursement or funding from the federal government may be impacted by possible reductions in federal spending.

U.S. federal government agencies currently face potentially significant spending reductions. Under the Budget Control Act of 2011, the failure of Congress to enact deficit reduction measures of at least $1.2 trillion for the years 2013 through 2021 triggered automatic cuts to most federal programs. These cuts would include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, starting in 2013. Under the American Taxpayer Relief Act of 2012, which was enacted on January 1, 2013, the imposition of these automatic cuts was delayed until March 1, 2013. The full impact on our business of these automatic cuts, assuming they are implemented, is uncertain.

If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or NIH to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated. These reductions may also impact the ability of relevant agencies to timely review and approve drug research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop.

There is a substantial risk of product liability claims in our business. If we are unable to obtain sufficient insurance, a product liability claim against us could adversely affect our business.

Our business exposes us to significant potential product liability risks that are inherent in the development, testing, manufacturing and marketing of human therapeutic products. Product liability claims could delay or prevent completion of our clinical development programs. If we succeed in marketing products, such claims could result in an FDA investigation of the safety and effectiveness of our products, our manufacturing processes

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and facilities or our marketing programs, and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used, or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources, and substantial monetary awards to trial participants or patients. We currently have product liability insurance that we believe is appropriate for our stage of development and may need to obtain higher levels prior to marketing any of our product candidates. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material adverse effect on our business.

If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.

Our research and development involves the use of hazardous materials, chemicals and various radioactive compounds. We maintain quantities of various flammable and toxic chemicals in our facilities in Cambridge that are required for our research and development activities. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. We believe our procedures for storing, handling and disposing these materials in our Cambridge facilities comply with the relevant guidelines of the City of Cambridge, the Commonwealth of Massachusetts and the Occupational Safety and Health Administration of the U.S. Department of Labor. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards mandated by applicable regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

Risks Related to Patents, Licenses and Trade Secrets

If we are not able to obtain and enforce patent protection for our discoveries, our ability to develop and commercialize our product candidates will be harmed.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under the patent and other intellectual property laws of the United States and other countries, so that we can prevent others from unlawfully using our inventions and proprietary information. However, we may not hold proprietary rights to some patents required for us to commercialize our proposed products. Because certain U.S. patent applications are confidential until the patents issue, such as applications filed prior to November 29, 2000, or applications filed after such date which will not be filed in foreign countries, third parties may have filed patent applications for technology covered by our pending patent applications without our being aware of those applications, and our patent applications may not have priority over those applications. For this and other reasons, we may be unable to secure desired patent rights, thereby losing desired exclusivity. Further, we may be required to obtain licenses under third-party patents to market our proposed products or conduct our research and development or other activities. If licenses are not available to us on acceptable terms, we will not be able to market the affected products or conduct the desired activities.

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Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. In addition, we may rely on third-party collaborators to file patent applications relating to proprietary technology that we develop jointly during certain collaborations. The process of obtaining patent protection is expensive and time-consuming. If our present or future collaborators fail to file and prosecute all necessary and desirable patent applications at a reasonable cost and in a timely manner, our business will be adversely affected. Despite our efforts and the efforts of our collaborators to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. While issued patents are presumed valid, this does not guarantee that the patent will survive a validity challenge or be held enforceable. Any patents we have obtained, or obtain in the future, may be challenged, invalidated, adjudged unenforceable or circumvented by parties attempting to design around our intellectual property. Moreover, third parties or the United States Patent and Trademark Office, or USPTO, may commence interference proceedings involving our patents or patent applications. Any challenge to, finding of unenforceability or invalidation or circumvention of, our patents or patent applications, would be costly, would require significant time and attention of our management and could have a material adverse effect on our business.

Our pending patent applications may not result in issued patents. The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factual considerations. The standards that the USPTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. Similarly, the ultimate degree of protection that will be afforded to biotechnology inventions, including ours, in the United States and foreign countries, remains uncertain and is dependent upon the scope of the protection decided upon by patent offices, courts and lawmakers. Moreover, there are periodic discussions in the Congress of the United States and in international jurisdictions about modifying various aspects of patent law. For example, the America Invents Act includes a number of changes to the patent laws of the United States. If any changes to the patent laws are enacted and do not provide adequate protection for discoveries, including our ability to pursue infringers of our patents for substantial damages, our business could be adversely affected. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical or biotechnology patents.

Accordingly, we do not know the degree of future protection for our proprietary rights or the breadth of claims that will be allowed in any patents issued to us or to others. We also rely to a certain extent on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. If any trade secret, know-how or other technology not protected by a patent were to be disclosed to or independently developed by a competitor, our business and financial condition could be materially adversely affected.

We license patent rights from third-party owners. If such owners do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.

We are a party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful for our business. In particular, we have obtained licenses from, among others, CRT, Isis, MIT, Whitehead, Max Planck Innovation, Tekmira, UTSW and Arrowhead. We also intend to enter into additional licenses to third-party intellectual property in the future.

Our success will depend in part on the ability of our licensors to obtain, maintain and enforce patent protection for our licensed intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we are licensed. Even if patents issue in respect of these patent applications, our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects. In addition, we sublicense our rights under various third-party licenses to our collaborators. Any impairment of these sublicensed rights could result in

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reduced revenues under our collaboration agreements or result in termination of an agreement by one or more of our collaborators.

Other companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing our products.

RNAi is a relatively new scientific field, the commercial exploitation of which has resulted in many different patents and patent applications from organizations and individuals seeking to obtain patent protection in the field. We have obtained grants and issuances of RNAi patents and have licensed many of these patents from third parties on an exclusive basis. The issued patents and pending patent applications in the United States and in key markets around the world that we own or license claim many different methods, compositions and processes relating to the discovery, development, manufacture and commercialization of RNAi therapeutics.

Specifically, we have a portfolio of patents, patent applications and other intellectual property covering: fundamental aspects of the structure and uses of siRNAs, including their manufacture and use as therapeutics, and RNAi-related mechanisms; chemical modifications to siRNAs that improve their suitability for therapeutic uses; siRNAs directed to specific targets as treatments for particular diseases; and delivery technologies, such as in the field of cationic liposomes.

As the field of RNAi therapeutics is maturing, patent applications are being fully processed by national patent offices around the world. There is uncertainty about which patents will issue, and, if they do, as to when, to whom, and with what claims. It is likely that there will be significant litigation and other proceedings, such as interference, reexamination and opposition proceedings, in various patent offices relating to patent rights in the RNAi field. For example, various third parties have initiated oppositions to patents in our Kreutzer-Limmer and Tuschl II series in the European Patent Office, or EPO, and in other jurisdictions. We expect that additional oppositions will be filed in the EPO and elsewhere, and other challenges will be raised relating to other patents and patent applications in our portfolio. In many cases, the possibility of appeal exists for either us or our opponents, and it may be years before final, unappealable rulings are made with respect to these patents in certain jurisdictions. The timing and outcome of these and other proceedings is uncertain and may adversely affect our business if we are not successful in defending the patentability and scope of our pending and issued patent claims. In addition, third parties may attempt to invalidate our intellectual property rights. Even if our rights are not directly challenged, disputes could lead to the weakening of our intellectual property rights. Our defense against any attempt by third parties to circumvent or invalidate our intellectual property rights could be costly to us, could require significant time and attention of our management and could have a material adverse effect on our business and our ability to successfully compete in the field of RNAi.

There are many issued and pending patents that claim aspects of oligonucleotide chemistry and modifications that we may need to apply to our siRNA therapeutic candidates. There are also many issued patents that claim targeting genes or portions of genes that may be relevant for siRNA drugs we wish to develop. Thus, it is possible that one or more organizations will hold patent rights to which we will need a license. If those organizations refuse to grant us a license to such patent rights on reasonable terms, we may not be able to market products or perform research and development or other activities covered by these patents.

If we become involved in patent litigation or other proceedings related to a determination of rights, we could incur substantial costs and expenses, substantial liability for damages or be required to stop our product development and commercialization efforts.

Third parties may sue us for infringing their patent rights. Likewise, we may need to resort to litigation to enforce a patent issued or licensed to us or to determine the scope and validity of proprietary rights of others. In addition, a third party may claim that we have improperly obtained or used its confidential or proprietary information. For example, in March 2011, Tekmira filed a civil complaint against us alleging, among other things, misappropriation of the plaintiffs’ confidential and proprietary information and trade secrets. In November 2012, we settled this litigation and restructured our contractual relationship with Tekmira. In connection with this restructuring, we incurred a $65.0 million charge to operating expenses during the quarter

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ended December 31, 2012. In addition, during the pendency of the litigation, we incurred significant costs, and the defense of this litigation diverted the attention of our management and other resources that would otherwise have been engaged in other activities.

Furthermore, third parties may challenge the inventorship of our patents or licensed patents. For example, in March 2011, the University of Utah, or Utah, filed a complaint in the United States District Court for the District of Massachusetts against us, Max Planck Gesellschaft Zur Foerderung Der Wissenschaften e.V. and Max Planck Innovation, together, Max Planck, Whitehead, MIT and UMass, claiming that a professor of Utah is the sole inventor, or in the alternative, a joint inventor of certain of our in-licensed patents. The original complaint was not served on any of the parties and, in July 2011, Utah filed an amended complaint containing substantially the same claims as the original complaint against us, Max Planck, Whitehead, MIT and UMass. The amended complaint alleges the defendants have incorrectly determined inventorship of some of our in-licensed patents and further claims unjust enrichment, unfair competition, false advertising and seeks correction of inventorship, injunctive relief and unspecified damages. In October 2011, we, Max Planck, Whitehead, MIT and UMass filed a motion to dismiss and UMass filed a motion to dismiss on separate grounds, which we, Max Planck, Whitehead and MIT have joined. In December 2011, Utah filed a second amended complaint dropping UMass as a defendant and adding as defendants several UMass officials. In June 2012, the Court denied both motions to dismiss. We, Max Planck, Whitehead, MIT and UMass have filed an appeal of the Court’s ruling on the motion to dismiss for lack of jurisdiction and have filed a motion requesting that the Court stay the case pending the outcome of the appeal. In July 2012, the Court stayed discovery in the case pending the outcome of the defendants’ appeal. Oral arguments in the appeal are scheduled to be heard in early March 2013 in the United States Court of Appeals for the Federal Circuit. We intend to vigorously defend ourselves in this matter, however, litigation is subject to inherent uncertainty and a court could ultimately rule against us.

In addition, in connection with certain license and collaboration agreements, we have agreed to indemnify certain third parties for certain costs incurred in connection with litigation relating to intellectual property rights or the subject matter of the agreements. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and litigation would divert our management’s efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any litigation could delay our research and development efforts and limit our ability to continue our operations.

If any parties successfully claim that our creation or use of proprietary technologies infringes upon or otherwise violates their intellectual property rights, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patent rights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license and are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability to generate revenues or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. Moreover, we expect that a number of our collaborations will provide that royalties payable to us for licenses to our intellectual property may be offset by amounts paid by our collaborators to third parties who have competing or superior intellectual property positions in the relevant fields, which could result in significant reductions in our revenues from products developed through collaborations.

If we fail to comply with our obligations under any licenses or related agreements, we may be required to pay damages and could lose license or other rights that are necessary for developing and protecting our RNAi technology and any related product candidates that we develop, or we could lose certain exclusive rights to grant sublicenses.

Our current licenses impose, and any future licenses we enter into are likely to impose, various development, commercialization, funding, royalty, diligence, sublicensing, insurance, patent prosecution and enforcement, and other obligations on us. If we breach any of these obligations, or use the intellectual property

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licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license or render the license non-exclusive, which could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology or enable a competitor to gain access to the licensed technology. Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights. In addition, while we cannot currently determine the amount of the royalty obligations we will be required to pay on sales of future products, if any, the amounts may be significant. The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any. Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary technology and processes, we rely in part on confidentiality agreements with our collaborators, employees, consultants, outside scientific collaborators and sponsored researchers, and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Risks Related to Competition

The pharmaceutical market is intensely competitive. If we are unable to compete effectively with existing drugs, new treatment methods and new technologies, we may be unable to commercialize successfully any drugs that we develop.

The pharmaceutical market is intensely competitive and rapidly changing. Many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs for the same diseases that we are targeting or expect to target. Many of our competitors have:

• much greater financial, technical and human resources than we have at every stage of the discovery, development, manufacture and commercialization of products;

• more extensive experience in pre-clinical testing, conducting clinical trials, obtaining regulatory approvals, and in manufacturing, marketing and selling pharmaceutical products;

• product candidates that are based on previously tested or accepted technologies;

• products that have been approved or are in late stages of development; and

• collaborative arrangements in our target markets with leading companies and research institutions.

We will face intense competition from drugs that have already been approved and accepted by the medical community for the treatment of the conditions for which we may develop drugs. We also expect to face competition from new drugs that enter the market. We believe a significant number of drugs are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may try to develop drugs. For instance, we are currently evaluating RNAi therapeutics for ATTR, hemophilia and RBD, AIP, severe hypercholesterolemia, hemoglobinopathies, including beta-thalassemia, RSV, liver cancers and HD, and have a number of additional discovery programs targeting other diseases. These drugs may be more effective, safer, less expensive, or marketed and sold more effectively, than any products we develop.

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If we successfully develop product candidates, and obtain approval for them, we will face competition based on many different factors, including:

• the safety and effectiveness of our products;

• the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration;

• the timing and scope of regulatory approvals for these products;

• the availability and cost of manufacturing, marketing and sales capabilities;

• price;

• reimbursement coverage; and

• patent position.

Our competitors may develop or commercialize products with significant advantages over any products we develop based on any of the factors listed above or on other factors. Our competitors may therefore be more successful in commercializing their products than we are, which could adversely affect our competitive position and business. Competitive products may make any products we develop obsolete or noncompetitive before we can recover the expenses of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and the ability to execute on our business plan. Furthermore, we also face competition from existing and new treatment methods that reduce or eliminate the need for drugs, such as the use of advanced medical devices. The development of new medical devices or other treatment methods for the diseases we are targeting could make our product candidates noncompetitive, obsolete or uneconomical.

We face competition from other companies that are working to develop novel drugs and technology platforms using technology similar to ours. If these companies develop drugs more rapidly than we do or their technologies, including delivery technologies, are more effective, our ability to successfully commercialize drugs may be adversely affected.

In addition to the competition we face from competing drugs in general, we also face competition from other companies working to develop novel drugs using technology that competes more directly with our own. We are aware of multiple companies that are working in the field of RNAi. In addition, we granted licenses or options for licenses to Isis, GeneCare Research Institute Co., Ltd., Benitec Ltd., Arrowhead and its subsidiary, Calando Pharmaceuticals, Inc., Tekmira, Quark Pharmaceuticals, Inc., Sylentis S.A.U. and others under which these companies may independently develop RNAi therapeutics against a limited number of targets. Any of these companies may develop its RNAi technology more rapidly and more effectively than us. Merck was one of our collaborators and a licensee under our intellectual property for specified disease targets until September 2007, at which time we and Merck agreed to terminate our collaboration. As a result of its acquisition of Sirna Therapeutics, Inc. in December 2006, and in light of the mutual termination of our collaboration, Merck, which has substantially more resources and experience in developing drugs than we do, may become a direct competitor.

In addition, as a result of agreements that we have entered into, Arrowhead, as the assignee of Roche, and Takeda have obtained non-exclusive licenses, and Novartis has obtained specific exclusive licenses for 31 gene targets, to certain aspects of our technology that give them the right to compete with us in certain circumstances We also compete with companies working to develop antisense-based drugs. Like RNAi therapeutics, antisense drugs target mRNAs, in order to suppress the activity of specific genes. Isis is currently marketing an antisense drug and has several antisense product candidates in clinical trials. The development of antisense drugs is more advanced than that of RNAi therapeutics, and antisense technology may become the preferred technology for drugs that target mRNAs to silence specific genes.

In addition to competition with respect to RNAi and with respect to specific products, we face substantial competition to discover and develop safe and effective means to deliver siRNAs to the relevant cell and tissue

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types. Safe and effective means to deliver siRNAs to the relevant cell and tissue types may be developed by our competitors, and our ability to successfully commercialize a competitive product would be adversely affected. In addition, substantial resources are being expended by third parties in the effort to discover and develop a safe and effective means of delivering siRNAs into the relevant cell and tissue types, both in academic laboratories and in the corporate sector. Some of our competitors have substantially greater resources than we do, and if our competitors are able to negotiate exclusive access to those delivery solutions developed by third parties, we may be unable to successfully commercialize our product candidates.

Risks Related to Our Common Stock

If our stock price fluctuates, purchasers of our common stock could incur substantial losses.

The market price of our common stock has fluctuated and may continue to fluctuate significantly in response to factors that are beyond our control. The stock market in general has recently experienced extreme price and volume fluctuations. The market prices of securities of pharmaceutical and biotechnology companies have been extremely volatile, and have experienced fluctuations that often have been unrelated or disproportionate to the operating performance of these companies. These broad market fluctuations could result in extreme fluctuations in the price of our common stock, which could cause purchasers of our common stock to incur substantial losses.

We may incur significant costs from class action litigation due to our expected stock volatility.

Our stock price may fluctuate for many reasons, including as a result of public announcements regarding the progress of our development efforts or the development efforts of our collaborators and/or competitors, the addition or departure of our key personnel, variations in our quarterly operating results and changes in market valuations of pharmaceutical and biotechnology companies. When the market price of a stock has been volatile as our stock price may be, holders of that stock have occasionally brought securities class action litigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit of this type against us, even if the lawsuit is without merit, we could incur substantial costs defending the lawsuit. The lawsuit could also divert the time and attention of our management.

Sales of additional shares of our common stock, including by us or our directors and officers, could cause the price of our common stock to decline.

Sales of substantial amounts of our common stock in the public market, or the availability of such shares for sale, by us or our officers and directors, or others, including the issuance of common stock upon exercise of outstanding options, could adversely affect the price of our common stock.

Anti-takeover provisions in our charter documents and under Delaware law and our stockholder rights plan could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation and our bylaws may delay or prevent an acquisition of us or a change in our management. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions include:

• a classified board of directors;

• a prohibition on actions by our stockholders by written consent;

• limitations on the removal of directors; and

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• advance notice requirements for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings.

In addition, our board of directors has adopted a stockholder rights plan, the provisions of which could make it difficult for a potential acquirer of Alnylam to consummate an acquisition transaction. Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. These provisions would apply even if the proposed merger or acquisition could be considered beneficial by some stockholders.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our operations are based primarily in Cambridge, Massachusetts. As of January 31, 2013, we leased approximately 129,000 square feet of office and laboratory space in Cambridge, Massachusetts for our corporate headquarters and primary research facility, of which approximately 34,000 square feet is under sublease to a third party through September 2016, subject to an option to terminate in December 2013, with advance notice and payment of a termination fee. The lease for this property expires in September 2016, and we have the option to extend the lease for two successive five-year periods. In February 2012, we executed a lease for approximately 15,000 square feet of additional office and laboratory space in Cambridge, Massachusetts for our cGMP manufacturing facility. The lease for this property expires in August 2017, and we have the option to extend this lease for two successive five-year periods.

We believe that the total space available to us under our current leases will meet our needs for the foreseeable future and that additional space would be available to us on commercially reasonable terms if required.

ITEM 3. LEGAL PROCEEDINGS

University of Utah Litigation

On March 22, 2011, Utah filed a civil complaint in the United States District Court for the District of Massachusetts against us, Max Planck, Whitehead, MIT and UMass, claiming a professor at Utah is the sole inventor or, in the alternative, a joint inventor, of the Tuschl patents. Utah did not serve the original complaint on us or the other defendants. On July 6, 2011, Utah filed an amended complaint alleging substantially the same claims against us, Max Planck, Whitehead, MIT and UMass. The amended complaint was served on us on July 14, 2011. Utah is seeking changes to the inventorship of the Tuschl patents, unspecified damages and other relief. On October 31, 2011, we, Max Planck, Whitehead, MIT and UMass filed a motion to dismiss. Also on October 31, 2011, UMass filed a motion to dismiss on separate grounds, which we, Max Planck, Whitehead and MIT have joined. On December 31, 2011, the University filed a second amended complaint dropping UMass as a defendant and adding as defendants several UMass officials. In June 2012, the Court denied both motions to dismiss. We, Max Planck, Whitehead, MIT and UMass have filed an appeal of the Court’s ruling on the motion to dismiss for lack of jurisdiction and have filed a motion requesting that the Court stay the case pending the outcome of the appeal. In July 2012, the Court stayed discovery in the case pending the outcome of the defendants’ appeal. Oral arguments in the appeal are scheduled to be heard in early March 2013 in the United States Court of Appeals for the Federal Circuit.

Although we believe we have meritorious defenses and intend to vigorously defend ourself in this matter, litigation is subject to inherent uncertainty and a court could ultimately rule against us. In addition, the defense of 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. We have not recorded an estimate of the possible loss associated with this legal proceeding due to the uncertainties related to both the likelihood and the amount of any possible loss or range of loss.

Tekmira Settlement Agreement

On November 12, 2012, we, TPC, Protiva and AlCana entered into a settlement agreement and general release resolving all ongoing litigation, as well as a patent interference proceeding between us and Protiva. The terms of the settlement agreement include mutual releases and dismissal with prejudice of all claims and counterclaims in the following litigation between the parties: (i) Tekmira Pharmaceuticals Corp., et al. v. Alnylam Pharmaceuticals, Inc., et al., Civ. A. No. 11-1010-BLS2, pending in the Business Litigation Section of the Massachusetts Superior Court for Suffolk County; (ii) Tekmira Pharmaceuticals Corp. v. Michael Hope, et

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al., No. S117660, pending in the Supreme Court of British Columbia, Canada; (iii) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Civ. A. No. 1:12-CV-10087, pending in the United States District Court for the District of Massachusetts; and (iv) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Court File No. T-1783-12, pending in the Federal Court of Canada. In addition, as part of the settlement agreement, the parties agreed to a covenant not to sue one another in the future on matters released under the settlement agreement, as well as substantial liquidated damages to be paid by any party that breaches such covenant. The parties have also agreed to resolve any future disputes that may arise over the next three years through binding arbitration.

Pursuant to the settlement agreement, we and Tekmira also agreed to resolve the interference proceeding declared by the United States Board of Patent Appeals and Interferences between the us and Protiva, captioned Protiva Biotherapeutics, Inc. v. Alnylam Pharmaceuticals, Inc., Patent Interference No. 105792.

Contemporaneously with the execution of the settlement agreement, we and Tekmira restructured our contractual relationship and entered into a cross-license agreement that supersedes the prior license and manufacturing agreements among us, TPC and Protiva. In connection with this restructuring, we incurred a $65.0 million charge to operating expenses for the year ended December 31, 2012. A description of our 2012 cross-license agreement with Tekmira is set forth above under “Strategic Alliances — Delivery-Related Licenses and Collaborations – Tekmira.”

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock began trading on The NASDAQ Global Select Market on May 28, 2004 under the symbol “ALNY.” Prior to that time, there was no established public trading market for our common stock. The following table sets forth the high and low sale prices per share for our common stock on The NASDAQ Global Select Market for the periods indicated:

Year Ended December 31, 2011:	High		Low
First Quarter	$	12.34	$	9.03
Second Quarter	$	10.59	$	8.80
Third Quarter	$	10.37	$	6.28
Fourth Quarter	$	8.62	$	5.88
Year Ended December 31, 2012:	High		Low
First Quarter	$	13.75	$	8.33
Second Quarter	$	12.05	$	9.51
Third Quarter	$	21.38	$	11.64
Fourth Quarter	$	19.48	$	14.88

Holders of record

At January 31, 2013, there were 41 holders of record of our common stock. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial holders represented by these record holders.

Dividends

We have never paid or declared any cash dividends on our common stock. We currently intend to retain any earnings for future growth and, therefore, do not expect to pay cash dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

We intend to file with the SEC a definitive Proxy Statement, which we refer to herein as the Proxy Statement, not later than 120 days after the close of the fiscal year ended December 31, 2012. The information required by this item relating to our equity compensation plans is incorporated herein by reference to the information contained under the section captioned “Equity Compensation Plan Information” of the Proxy Statement.

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Stock Performance Graph

The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

The comparative stock performance graph below compares the five-year cumulative total stockholder return (assuming reinvestment of dividends, if any) from investing $100 on December 31, 2007, to the close of the last trading day of 2012, in each of (i) our common stock, (ii) the NASDAQ Stock Market (U.S.) Index and (iii) the NASDAQ Pharmaceutical Index. The stock price performance reflected in the graph below is not necessarily indicative of future price performance.

Comparison of Five-Year Cumulative Total Return

Among Alnylam Pharmaceuticals, Inc.,

NASDAQ Stock Market (U.S.) Index and NASDAQ Pharmaceutical Index

	12/31/2007		12/31/2008		12/31/2009		12/31/2010		12/30/2011		12/31/2012
Alnylam Pharmaceuticals, Inc.	$	100.00	$	85.04	$	60.59	$	33.91	$	28.03	$	62.76
NASDAQ Stock Market (U.S.) Index	$	100.00	$	48.19	$	69.26	$	82.22	$	104.94	$	123.87
NASDAQ Pharmaceutical Index	$	100.00	$	93.04	$	104.55	$	113.32	$	121.44	$	161.39

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for each of the five years in the period ended December 31, 2012 are derived from our audited consolidated financial statements. The selected consolidated financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements, and the related Notes, included elsewhere in this annual report on Form 10-K. Historical results are not necessarily indicative of future results.

Selected Consolidated Financial Data

(In thousands, except per share data)

	Year Ended December 31,
	2012			2011			2010			2009			2008
Statements of Comprehensive Loss Data:
Net revenues from research collaborators	$	66,725		$	82,757		$	100,041		$	100,533		$	96,163
Operating expenses(1)		196,181			137,575			144,111			148,644			123,998
Loss from operations		(129,456	)		(54,818	)		(44,070	)		(48,111	)		(27,835	)
Net loss		(106,014	)		(57,649	)		(43,515	)		(47,590	)		(26,249	)
Net loss per common share — basic and diluted	$	(2.11	)	$	(1.36	)	$	(1.04	)	$	(1.14	)	$	(0.64	)
Weighted average common shares outstanding — basic and diluted		50,286			42,410			42,040			41,633			41,077
(1) Non-cash stock-based compensation expenses included in operating expenses	$	12,360		$	16,676		$	19,118		$	19,727		$	16,382

	December 31,
	2012		2011		2010		2009		2008
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	226,228	$	260,809	$	349,904	$	435,316	$	512,709
Working capital		77,111		71,038		152,093		182,801		343,672
Total assets		287,520		281,917		393,265		481,385		554,676
Total stockholders’ equity		134,053		117,997		158,233		177,965		202,125

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a biopharmaceutical company developing novel therapeutics based on RNAi. RNAi is a naturally occurring biological pathway within cells for selectively silencing and regulating the expression of specific genes. Since many diseases are caused by the inappropriate activity of specific genes, the ability to silence genes selectively through RNAi could provide a new way to treat a wide range of human diseases. We believe that drugs that work through RNAi have the potential to become a broad new class of drugs, like small molecule, protein and antibody drugs. Using our intellectual property and the expertise we have built in RNAi, we are developing a set of biological and chemical methods and know-how that we apply in a systematic way to develop RNAi therapeutics for a variety of diseases.

Our core product strategy, which we refer to as “Alnylam 5x15,” is focused on the development and commercialization of novel RNAi therapeutics for the treatment of genetically defined targets for diseases with high unmet medical need. Under our core product strategy, we expect to have five RNAi therapeutic programs in clinical development, including programs in advanced stages, on our own or with one or more collaborators, by the end of 2015. As part of this strategy, our goal is to develop product candidates with the following shared characteristics: a genetically defined target and disease; the potential to have a significant impact in high unmet need patient populations; the ability to leverage our existing RNAi delivery platform; the opportunity to monitor an early biomarker in Phase I trials for human proof of concept; and the existence of clinically relevant endpoints for the filing of an NDA with a focused patient database and possible accelerated paths for commercialization. We are currently advancing five core programs in clinical or pre-clinical development: ALN-TTR, comprised of ALN-TTR02 and ALN-TTRsc, for the treatment of ATTR; ALN-AT3 for the treatment of hemophilia and RBD; ALN-AS1 for the treatment of AIP; ALN-PCS for the treatment of hypercholesterolemia; and ALN-TMP for the treatment of hemoglobinopathies, including beta-thalassemia. We are also advancing other early stage programs, including ALN-AAT, an RNAi therapeutic targeting AAT deficiency, for the treatment of AAT deficiency-associated liver disease. We intend to focus on developing and commercializing ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 on our own in North and South America, Europe and other parts of the world. In February 2013, we entered into a global alliance with MedCo to advance our ALN-PCS program. We also intend to enter into global alliances to advance our ALN-TMP, ALN-AAT and potentially other programs.

While focusing our efforts on our core product strategy, we also intend to continue to advance additional development programs through existing or future alliances. We have two partner-based programs in clinical development, including ALN-RSV01 for the treatment of RSV and ALN-VSP for the treatment of liver cancers, as well as one candidate in pre-clinical development, ALN-HTT for the treatment of HD.

We also continue to work internally and with third-party collaborators with the goal of developing new technologies to deliver our RNAi therapeutics both directly to specific sites of disease, and systemically by intravenous or subcutaneous administration. We have numerous RNAi therapeutic delivery collaborations and intend to continue to collaborate with academic and corporate third parties, as well as government entities, to evaluate different delivery options.

In January 2012, we implemented a strategic corporate restructuring pursuant to which we reduced our overall workforce by approximately 33%, to approximately 115 employees. The goal of the strategic corporate restructuring was to align our resources to focus on what we believe to be our highest value opportunities, including a focus on our lead programs, while advancing other pipeline programs through existing alliances and new collaborations. The reduction in personnel costs, along with other external costs, resulted in significant savings in our 2012 operating expenses. The workforce reduction was substantially completed at the end of the first quarter of 2012. During the three months ended March 31, 2012, we substantially completed the implementation of the strategic corporate restructuring and recorded $3.9 million of restructuring-related costs in operating expenses, including employee severance, benefits and related costs. We paid substantially all of these restructuring costs during 2012. We do not expect to incur any additional significant costs associated with this restructuring.

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In November 2012, we, TPC, Protiva and AlCana entered into a settlement agreement and general release resolving all ongoing litigation, as well as a patent interference proceeding between us and Protiva. The terms of the settlement agreement include mutual releases and dismissal with prejudice of all claims and counterclaims in connection with all of the litigation pending between the parties. Contemporaneously with the execution of the settlement agreement, we and Tekmira restructured our contractual relationship and entered into a cross-license agreement that supersedes the prior license and manufacturing agreements among us, TPC and Protiva. In connection with this restructuring, we incurred a $65.0 million charge to operating expenses for the year ended December 31, 2012. A description of our 2012 cross-license agreement with Tekmira is set forth in Part I, Item 1, “Strategic Alliances — Delivery-Related Licenses and Collaborations — Tekmira” of this annual report on Form 10-K.

We have incurred significant losses since we commenced operations in 2002 and expect such losses to continue for the foreseeable future. At December 31, 2012, we had an accumulated deficit of $507.0 million. Historically, we have generated losses principally from costs associated with research and development activities, acquiring, filing and expanding intellectual property rights and general administrative costs. As a result of planned expenditures for research and development activities relating to our drug development programs, including the development of drug delivery technologies and clinical trial costs, extension of the capabilities of our technology platform, including through business initiatives, continued management and growth of our patent portfolio, collaborations and general corporate activities, we expect to incur additional operating losses for the foreseeable future. We 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.

Although we currently have programs focused on a number of therapeutic areas, we are unable to predict when, if ever, we will successfully develop or be able to commence sales of any product. To date, a substantial portion of our total net revenues has been derived from collaboration revenues from strategic alliances with Roche, Takeda, Cubist and Novartis, and from the United States government in connection with our development of treatments for hemorrhagic fever viruses, including Ebola. We expect our sources of potential funding for the next several years to be derived primarily from new and existing strategic alliances, which may include license and other fees, funded research and development and milestone payments, government and foundation funding, and proceeds from the sale of equity or debt.

In February 2012, we sold an aggregate of 8,625,000 shares of our common stock through an underwritten public offering at a price to the public of $10.75 per share. As a result of this offering, we received aggregate net proceeds of approximately $86.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $5.9 million. In January 2013, we sold an aggregate of 9,200,000 shares of our common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of this offering, we received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million. We intend to use the proceeds from these offerings for general corporate purposes, ultimately focused on advancing our clinical pipeline, in particular our ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 programs, as well as for potential acquisitions of new businesses, technologies or products, working capital, capital expenditures, and general and administrative expenses.

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. Under our core product strategy, we expect to have five RNAi therapeutic programs in clinical development by the end of 2015, including programs in advanced stages, on our own or with one or more collaborators. While focusing our efforts on our core product strategy, we also intend to continue to advance additional partner-based development programs through existing or future alliances. In addition, we continue to work internally and with third-party collaborators to develop new technologies to deliver our RNAi therapeutics both directly to specific sites of disease, and systemically by intravenous or subcutaneous administration.

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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 efficacy of the product candidate. Moreover, there are uncertainties specific to any new field of drug discovery, including RNAi. The successful development of any product candidate we develop is highly uncertain. Due to the numerous risks associated with developing drugs, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts necessary to complete the development of, or the period, if any, in which material net cash inflows will commence from, any potential product candidate. These risks include the uncertainty of:

• our ability to discover new product candidates;

• our ability to progress product candidates into pre-clinical and clinical trials;

• the scope, rate of progress and cost of our pre-clinical trials and other research and development activities, including those related to developing safe and effective ways of delivering siRNAs into cells and tissues;

• the scope, rate of progress and cost of any clinical trials we commence;

• clinical trial results;

• the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

• the terms, timing and success of any collaboration, licensing and other arrangements that we may establish;

• the cost, timing and success of regulatory filings and approvals or potential changes in regulations that govern our industry or the way in which they are interpreted or enforced;

• the cost and timing of establishing sufficient sales, marketing and distribution capabilities;

• the cost and timing of establishing sufficient clinical and commercial supplies for any product candidates and products that we may develop;

• limits on our ability to research, develop, or manufacture our product candidates as a result of contractual obligations to third parties or intellectual property held by third parties;

• the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes; and

• the effect of competing technological and market developments.

Any failure to complete any stage of the development of any potential products in a timely manner 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 projects on schedule, or at all, and the potential consequences of failing to do so, are set forth in Part I, Item 1A of this annual report on Form 10-K under the heading “Risk Factors.”

Strategic Alliances

A significant component of our business plan is to enter into strategic alliances and collaborations with leading pharmaceutical and life sciences companies, academic institutions, research foundations and others, as appropriate, to gain access to funding, capabilities, technical resources and intellectual property to further our development efforts and to generate revenues. We also seek to form or advance new ventures and opportunities in areas outside our primary focus on RNAi therapeutics.

To generate revenues from our intellectual property rights, we also grant licenses to biotechnology companies under our InterfeRx program for the development and commercialization of RNAi therapeutics for specified targets in which we have no direct strategic interest. We also license key aspects of our intellectual

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property to companies active in the research products and services market, which includes the manufacture and sale of reagents. We expect our InterfeRx and research product licenses to generate modest near-term revenues that we can re-invest in the development of our proprietary RNAi therapeutics pipeline. At January 31, 2013, we had granted such licenses, on both an exclusive and non-exclusive basis, to approximately 20 companies.

Since delivery of RNAi therapeutics remains a major objective of our research activities, we also look to form collaboration and licensing arrangements with other companies and academic institutions to gain access to delivery technologies. For example, we have entered into agreements with Arrowhead, Tekmira, MIT, UBC and AlCana, among others, to focus on various delivery strategies. We have also entered into license agreements with Isis, Max Planck Innovation, Tekmira, MIT, CRT, Whitehead and UTSW, as well as a number of other entities, to obtain rights to intellectual property in the field of RNAi.

Finally, we have sought, and may seek in the future, funding for the development of our proprietary RNAi therapeutics pipeline from the government and foundations.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent liabilities in our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results. While our significant accounting policies are more fully described in the Notes to our consolidated financial statements included elsewhere in this annual report on Form 10-K, we believe the following accounting policies to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements:

Revenue Recognition

Our business strategy includes entering into collaborative license and development agreements with with leading pharmaceutical and life sciences companies for the development and commercialization of our product candidates. We have entered into collaboration agreements with Novartis, Biogen Idec, Roche/Arrowhead, Takeda, Kyowa Hakko Kirin, Cubist, Ascletis, Monsanto, Genzyme and MedCo. The terms of the agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical and pre-clinical development milestones, regulatory milestones, manufacturing services, sales milestones and royalties on product sales.

In January 2011, we adopted new authoritative guidance on revenue recognition for multiple element arrangements. The guidance, which applies to multiple element arrangements entered into or materially modified on or after January 1, 2011, amends the criteria for separating and allocating consideration in a multiple element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use of the residual method. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor specific objective evidence and third-party evidence is not available. Deliverables under the arrangement will be separate units of accounting provided that (i) a delivered item has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. The new guidance did not change the criteria for standalone value. As a biotechnology entity with unique and specialized delivered and undelivered performance obligations, we have been unable to demonstrate standalone value in our multiple element arrangements. For example, we applied the new rules to collaborations executed with Monsanto and Genzyme during 2012, but we were unable to demonstrate standalone value. In addition, we have not materially modified any of our multiple element arrangements. As such, we will continue to account for our other license and collaboration agreements under previously issued revenue recognition guidance for multiple element arrangements, as described below.

Non-refundable license fees are recognized as revenue upon delivery of the license only if we have a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the

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resulting receivable is reasonably assured and we have no further performance obligations under the license agreement. Multiple element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license and performance obligations such as research and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. We recognize upfront license payments as revenue upon delivery of the license only if the license has standalone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations would then be accounted for separately as performed. If the license is considered to either not have standalone value or have standalone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed and revenue will be recognized. We recognize revenue using either a proportional performance or straight-line method. We recognize revenue using the proportional performance method when we can reasonably estimate the level of effort required to complete our performance obligations under an arrangement and such performance obligations are provided on a best-efforts basis. Direct labor hours or full-time equivalents are typically used as the measure of performance. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of level of effort incurred to date to estimated total level of effort required to complete our performance obligations under the arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the proportional performance method, as of the period ending date.

If we cannot reasonably estimate the level of effort required to complete our performance obligations under an arrangement, we recognize revenue under the arrangement on a straight-line basis over the period we expect to complete our performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method, as of the period ending date.

Significant management judgment is required in determining the level of effort required under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which we expect to complete our aggregate performance obligations.

Many of our collaboration agreements entitle us to additional payments upon the achievement of performance-based milestones. These milestones are generally categorized into three types; development milestones which are generally based on the advancement of our pipeline and initiation of clinical trials, regulatory milestones which are generally based on the submission, filing or approval of regulatory applications such as an NDA in the United States, and commercialization milestones which are generally based on meeting specific thresholds of sales in certain geographic areas. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in our revenue model. Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counter-party performance are not included in our revenue model until the performance conditions are met.

We perform an assessment to determine whether a substantive milestone exists at the inception of our collaborative arrangements. In evaluating if a milestone is substantive, we consider whether uncertainty exists as to the achievement of the milestone event at the inception of the arrangement, the achievement of the milestone

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involves substantive effort and can only be achieved based in whole or part on the performance or the occurrence of a specific outcome resulting from our performance, the amount of the milestone payment appears reasonable either in relation to the effort expected to be expended or to the projected enhancement of the value of the delivered items, there is any future performance required to earn the milestone, and the consideration is reasonable relative to all deliverables and payment terms in the arrangement. When a substantive milestone is achieved, the accounting rules permit us to recognize revenue related to the milestone payment in its entirety.

To date, we have not recorded any substantive milestones under our collaborations because we have not identified any milestones that meet the required criteria listed above. We have deferred recognition of payments for achievement of non-substantive milestones and recognized revenue over the estimated period of performance applicable to each collaborative arrangement. As these milestones are achieved, we will recognize as revenue a portion of the milestone payment, which is equal to the percentage of the performance period completed, when the milestone is achieved, multiplied by the amount of the milestone payment, upon achievement of such milestone. We will recognize the remaining portion of the milestone payment over the remaining performance period under the proportional performance method or on a straight-line basis.

For revenue generating arrangements where we, as a vendor, provide consideration to a licensor or collaborator, as a customer, we apply the accounting standard that governs such transactions. This standard addresses the accounting for revenue arrangements where both the vendor and the customer make cash payments to each other for services and/or products. A payment to a customer is presumed to be a reduction of the selling price unless we receive an identifiable benefit for the payment and we can reasonably estimate the fair value of the benefit received. Payments to a customer that are deemed a reduction of selling price are recorded first as a reduction of revenue, to the extent of both cumulative revenue recorded to date and probable future revenues, which include any unamortized deferred revenue balances, under all arrangements with such customer, and then as an expense. Payments that are not deemed to be a reduction of selling price are recorded as an expense.

We evaluate our collaborative agreements for proper classification in our consolidated statements of comprehensive loss based on the nature of the underlying activity. Transactions between collaborators recorded in our consolidated statements of comprehensive loss are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship. We generally reflect amounts due under our collaborative agreements related to cost-sharing of development activities as a reduction of research and development expense.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets. Although we follow detailed guidelines in measuring revenue, certain judgments affect the application of our revenue policy. For example, in connection with our existing collaboration agreements, we have recorded on our balance sheet short-term and long-term deferred revenue based on our best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that we expect will not be recognized prior to the next 12 months are classified as long-term deferred revenue. However, this estimate is based on our current operating plan and, if our operating plan should change in the future, we may recognize a different amount of deferred revenue over the next 12-month period.

The estimate of deferred revenue also reflects management’s estimate of the periods of our involvement in certain of our collaborations. Our performance obligations under these collaborations consist of participation on steering committees and the performance of other research and development services. In certain instances, the timing of satisfying these obligations can be difficult to estimate. Accordingly, our estimates may change in the future. Such changes to estimates would result in a change in revenue recognition amounts. If these estimates and judgments change over the course of these agreements, it may affect the timing and amount of revenue that we recognize and record in future periods. At December 31, 2012, we had short-term and long-term deferred revenue of $31.4 million and $100.9 million, respectively, related to our collaborations.

We recognize revenue under government cost reimbursement contracts as we perform the underlying research and development activities.

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Roche/Arrowhead.    We received aggregate proceeds from Roche of $331.0 million in August 2007, of which $278.2 million was recorded as deferred revenue in connection with this alliance. We and Roche established a discovery collaboration in October 2009, pursuant to the terms of the Roche license and collaboration agreement and subject to our existing contractual obligations to third parties. In November 2010, Roche announced the discontinuation of certain activities in research and early development, including its RNAi research efforts. In October 2011, Arrowhead announced its acquisition of RNA therapeutics assets from Roche, including the license and collaboration agreement. As a result of the assignment, Arrowhead owns all of the rights and obligations of Roche under that agreement. The license is initially limited to four therapeutic areas, and may be expanded to include additional therapeutic areas upon payment to us by Arrowhead of an additional $50.0 million for each additional therapeutic area, if any. In exchange for our contributions under the collaboration agreement, for each RNAi therapeutic product developed by Arrowhead, its affiliates or sublicensees under the collaboration agreement, we are entitled to receive milestone payments upon achievement of specified development, regulatory and commercialization events, totaling up to an aggregate of $100.0 million per therapeutic target, together with a single-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments for each therapeutic target include up to $17.5 million for the achievement of specified development milestones, up to $62.5 million for the achievement of specified regulatory milestones and up to $20.0 million for the achievement of specified commercialization milestones. We could potentially earn the next development milestone payment of $1.0 million under the license and collaboration agreement based upon the initiation of the first Phase I clinical trial by Arrowhead for an RNAi therapeutic product. For purposes of potential future revenue recognition, we do not believe this milestone or any future milestones are substantive. 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 Arrowhead.

We determined that the deliverables under these agreements included the license, the Alnylam Europe assets and employees, the steering committees (joint steering committee and future technology committee) and the services under the discovery collaboration. We also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and assets of Alnylam Europe were not separable from the undelivered services (i.e., the steering committees and discovery collaboration) and, accordingly, the license and the services were treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, we base our revenue recognition pattern on the final deliverable. Under the Arrowhead alliance, the steering committee services and the discovery collaboration services were the final deliverables and all such services ended, contractually, in August 2012, five years from the effective date of the license and collaboration agreement.

We recognized revenue related to these agreements on a straight-line basis over five years because we could not reasonably estimate the total level of effort required to complete our service obligations under the license and collaboration agreement, and therefore, could not utilize a proportional performance model. At December 31, 2012, there was no remaining deferred revenue under the license and collaboration agreement as we recognized all remaining Roche/Arrowhead revenue during the quarter ended September 30, 2012. We will recognize future milestones under the license and collaboration agreement, if any, when such milestones are achieved.

Takeda.    In consideration for the rights granted to Takeda under the Takeda agreement, Takeda paid us an upfront payment of $100.0 million in June 2008 and agreed to pay us an additional $50.0 million upon achievement of specified technology transfer milestones. Of this $50.0 million, $20.0 million was paid in October 2008, $20.0 million was paid in March 2010 and $10.0 million was paid in March 2011. If Takeda elects to expand its license to additional therapeutic areas, Takeda will be required to pay us $50.0 million for each additional field selected, if any. In addition, for each RNAi therapeutic product developed by Takeda, its affiliates and sublicensees, we are entitled to receive specified development, regulatory and commercialization milestone payments, totaling up to $171.0 million per product, together with up to a double-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments per product include up to $26.0 million for the achievement of specified development milestones, up to $40.0 million for the achievement of specified regulatory milestones and up to $105.0 million for the achievement of specified commercialization milestones. We could potentially earn the next milestone payment of $2.0 million under the Takeda agreement based upon the achievement of a specified pre-clinical event by Takeda for an RNAi therapeutic product. For purposes of potential future revenue recognition, we do not believe this milestone or any

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future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any additional milestone payments or any royalty payments from Takeda.

Pursuant to the Takeda agreement, we and Takeda have also agreed to collaborate on the research of RNAi therapeutics directed to one or two disease targets agreed to by the parties, subject to our existing contractual obligations with third parties. The collaboration is governed by a JTTC, a JRCC and a JDCC, each of which is comprised of an equal number of representatives from each party.

We have determined that the deliverables under the Takeda agreement include the license, the joint committees (the JTTC, JRCC and JDCC), the technology transfer activities and the services that we will be obligated to perform under the research collaboration with Takeda. We also have determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered services (i.e., the joint committees and the research collaboration) are not separable and, accordingly, the license and services are being treated as a single unit of accounting. Under the Takeda agreement, the last elements to be delivered are the JDCC and JTTC services, each of which has a life of no more than seven years. We are recognizing the upfront payment of $100.0 million and the technology transfer milestones of $50.0 million, the receipt of which we believed was probable at the commencement of the collaboration, on a straight-line basis over seven years because we are unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the research collaboration is largely unknown, and therefore, cannot utilize a proportional performance model. As future milestones are achieved, we will recognize as revenue a portion of the milestone payment equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment. At December 31, 2012, deferred revenue under the Takeda agreement was $52.8 million.

Kyowa Hakko Kirin.    Under the terms of the Kyowa Hakko Kirin agreement, in June 2008, Kyowa Hakko Kirin paid us an upfront cash payment of $15.0 million. In addition, Kyowa Hakko Kirin is required to make payments to us upon achievement of specified development and sales milestones totaling up to $78.0 million, and double-digit royalty payments based on annual net sales, if any, of RNAi therapeutics for the treatment of RSV by Kyowa Hakko Kirin, its affiliates and sublicenses in the licensed territory. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, we may not receive any additional milestone payments or any royalty payments from Kyowa Hakko Kirin.

Our collaboration with Kyowa Hakko Kirin is governed by a joint steering committee that is comprised of an equal number of representatives from each party. We are responsible for supply of the product to Kyowa Hakko Kirin under a supply agreement unless Kyowa Hakko Kirin elects, prior to the first commercial sale of the product in the licensed territory, to manufacture the product itself or arrange for a third party to manufacture the product.

We have determined that the deliverables under the Kyowa Hakko Kirin agreement include the license, the joint steering committee, the manufacturing services and any additional RSV-specific RNAi therapeutic compounds that comprise the ALN-RSV program. We have determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the individual deliverables are not separable and, accordingly, must be accounted for as a single unit of accounting. We are currently unable to reasonably estimate our period of performance under the Kyowa Hakko Kirin agreement, as we are unable to estimate the timeline of our deliverables related to the fixed-price option granted to Kyowa Hakko Kirin for any additional compounds. We are deferring all revenue under the Kyowa Hakko Kirin agreement until we are able to reasonably estimate our period of performance. We will continue to reassess whether we can reasonably estimate the period of performance to fulfill our obligations under the Kyowa Hakko Kirin agreement. At December 31, 2012, deferred revenue under the Kyowa Hakko Kirin agreement was $15.5 million.

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Monsanto.    In consideration for the rights granted to Monsanto under the Monsanto agreement, Monsanto paid us $29.2 million in upfront cash payments. Monsanto is also required to make near-term milestone payments to us upon the achievement of specified technology transfer and patent-related milestones. We are also entitled to receive additional funding for collaborative research efforts. In the aggregate, we can earn up to $5.0 million in potential future milestone payments and research funding under the Monsanto alliance. In December 2012, we received $1.5 million of the $5.0 million in potential milestone payments from Monsanto based upon the achievement of a specified patent-related event. In addition, Monsanto is required to pay to us a percentage of specified fees from certain sublicense agreements Monsanto may enter into that include access to our intellectual property, as well as low single-digit royalty payments on worldwide, net sales by Monsanto, its affiliates and sublicensees of certain licensed products, as defined in the Monsanto agreement, if any. We could potentially earn the next milestone payment of $2.5 million under the Monsanto agreement based upon the completion of technology transfer activities. For purposes of potential future revenue recognition, we do not believe this milestone or any future milestones are substantive. Due to the uncertainty of the application of RNAi technology in the field of agriculture, we may not receive any additional milestone payments or any royalty payments from Monsanto.

Under the terms of the Monsanto agreement, in the event that during the exclusivity period Monsanto loses certain patent rights, and such loss has a material adverse effect on the licensed products, then we would be required to pay Monsanto up to $5.0 million as liquidated damages, and Monsanto’s royalty obligations to us under the Monsanto agreement would be reduced or, under certain circumstances, terminated. We have the right to cure any such loss of patent rights under the Monsanto agreement.

We have determined that the significant deliverables under the Monsanto agreement include the license, the technology transfer activities and the services that we will be obligated to perform under the Monsanto discovery collaboration. We have also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered technical transfer activities and Monsanto discovery collaboration services do not have standalone value due to the specialized nature of the services to be provided by us. In addition, while Monsanto has the ability to grant sublicenses, it cannot grant access to certain of our proprietary technology. The uniqueness of our services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered technical transfer activities and Monsanto discovery collaboration services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, we base our revenue recognition model on the final deliverable. Under the Monsanto agreement, the last deliverable to be completed is the Monsanto discovery collaboration, which must be completed within five years. We are recognizing revenue under the Monsanto agreement on a straight-line basis over five years. We are not utilizing a proportional performance model since we are unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the Monsanto discovery collaboration is largely unknown.

Genzyme.    In consideration for the rights granted to Genzyme under the Genzyme agreement, Genzyme paid us an upfront cash payment of $22.5 million. Upon achievement of certain milestones, we will be entitled to receive milestone payments, up to an aggregate of $50.0 million, including up to $25.0 million in specified development milestones and $25.0 million in specified regulatory milestones. In addition, we will be entitled to tiered royalties expected to yield an effective royalty rate percentage ranging from the mid-teens to mid-twenties based on annual net sales, if any, of Licensed Products in the Genzyme territory by Genzyme, its affiliates and sublicensees. We could potentially earn the next development milestone payment of $7.0 million under the Genzyme agreement based upon the completion of a successful Phase II ALN-TTR clinical trial, as defined in the Genzyme agreement. For purposes of potential future revenue recognition, we do not believe this milestone or any future milestones are substantive. 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 Genzyme.

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Under the Genzyme agreement, the parties will collaborate in the development of licensed products, with Genzyme assuming primary responsibility for the development and commercialization of licensed products in the Genzyme territory and us retaining primary responsibility for the development and commercialization of licensed products in the rest of the world. The collaboration between Genzyme and us is governed by a joint steering committee that will be comprised of an equal number of representatives from each party. Genzyme is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of ATTR in the Genzyme territory.

The Genzyme agreement originally provided that if development of a Licensed Product was terminated by us or Genzyme under certain limited circumstances, Genzyme would have the right to terminate the Genzyme agreement and we would be required to refund amounts paid by Genzyme to us under the agreement prior to such termination. On February 19, 2013, we and Genzyme agreed to amend the Genzyme agreement to remove this provision.

We have determined that the deliverables under the Genzyme agreement include the license, the joint steering committee and any additional TTR-specific RNAi therapeutic compounds that comprise the ALN-TTR program. We also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered joint steering committee and any additional TTR-specific RNAi therapeutic compounds do not have standalone value due to the specialized nature of the services to be provided by us. In addition, while Genzyme has the ability to grant sublicenses, it cannot sublicense all or substantially all of its rights under the Genzyme agreement. The uniqueness of our services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered services are being treated as a single unit of accounting. We are currently unable to reasonably estimate our period of performance under the Genzyme agreement, as we are unable to estimate the timeline of our deliverables related to the option granted to Genzyme for any additional compounds. We are deferring all revenue under the Genzyme agreement until we are able to reasonably estimate our period of performance. We will continue to reassess whether we can reasonably estimate the period of performance to fulfill our obligations under the Genzyme agreement.

Cubist.    In January 2009, we entered into a license and collaboration agreement with Cubist to develop and commercialize therapeutic products based on certain of our RNAi technology for the treatment of RSV. Licensed products initially included ALN-RSV01, as well as several other second-generation RNAi-based RSV inhibitors. In November 2009, we and Cubist entered into an amendment to our license and collaboration agreement, which provided that we and Cubist would focus our collaboration and joint development efforts on ALN-RSV02, a second-generation compound, intended for use in pediatric patients. In December 2010, we and Cubist jointly made a portfolio decision to put the development of ALN-RSV02 on hold. Pursuant to the terms of the amendment, we continued to develop ALN-RSV01 for adult transplant patients at our sole discretion and expense and Cubist had the right to opt into collaborating with us on ALN-RSV01, subject to specified conditions.

In February 2013, Cubist notified us that it would not exercise its opt-in right for ALN-RSV01. In light of this determination, we and Cubist mutually agreed to terminate the license and collaboration agreement effective as of February 6, 2013. As of the effective date, the parties have no further rights and obligations under the license and collaboration agreement, notwithstanding anything to the contrary in the agreement.

Under the terms of the Cubist agreement, we and Cubist shared responsibility for developing licensed products in North America and each was responsible for one-half of the related development costs, subject to the terms of the November 2009 amendment. Our collaboration with Cubist for the development of licensed products in North America was governed by a joint steering committee comprised of an equal number of representatives from each party. Cubist had the sole right to commercialize licensed products in North America with costs associated with such activities and any resulting profits or losses to be split equally between us and Cubist. In consideration for the rights granted to Cubist under the agreement, in January 2009, Cubist paid us an upfront cash payment of $20.0 million.

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We determined that the deliverables under the Cubist agreement included the licenses, technology transfer related to the ALN-RSV program, the joint steering committee and the development and manufacturing services that we were obligated to perform during the development period. We also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the licenses and undelivered services were not separable and, accordingly, the licenses and services were treated as a single unit of accounting. Under the Cubist agreement, the last element expected to be delivered was the development and manufacturing services, which had an expected life of approximately eight years. We were recognizing the upfront payment of $20.0 million on a straight-line basis over approximately eight years because we were unable to reasonably estimate the level of effort to fulfill our performance obligations, and therefore, could not utilize a proportional performance model. At December 31, 2012, deferred revenue under the Cubist agreement was $9.7 million. As a result of the termination of the Cubist agreement in February 2013 and the end of our performance obligations thereunder, we expect to recognize the remaining deferred revenue of $9.7 million during the first quarter of 2013.

Accounting for Income Taxes

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. The tax benefits recognized in our financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Our policy is to accrue interest and penalties related to unrecognized tax positions in income tax expense. As of December 31, 2012, we have not recorded significant interest and penalty expense related to uncertain tax positions.

We operate in the United States and Germany where our income tax returns are subject to audit and adjustment by local tax authorities. The nature of the uncertain tax positions is often very complex and subject to change, and the amounts at issue can be substantial. We develop our cumulative probability assessment of the measurement of uncertain tax positions using internal experience, judgment and assistance from professional advisors. We refine estimates as we become aware of additional information. Any outcome upon settlement that differs from our current estimate may result in additional tax expense in future periods. At December 31, 2012, we had no unrecognized tax benefits that, if recognized, would favorably impact our effective income tax rate in future periods.

We recognize income taxes when transactions are recorded in our consolidated statements of comprehensive loss, with deferred taxes provided for items that are recognized in different periods for financial statement and tax reporting purposes. We record a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In addition, we estimate our exposures relating to uncertain tax positions and establish reserves for such exposures when they become probable and reasonably estimable.

For the year ended December 31, 2012, we recorded a benefit from income taxes of $10.6 million. For the years ended December 31, 2011 and 2010, we recorded a provision for income taxes of zero and $0.5 million, respectively. The benefit of $10.6 million for the year ended December 31, 2012 is due to the recognition of corresponding income tax expense, recorded in other comprehensive income, associated with the increase in the value of our investment in Regulus that we carried at fair market value during the same period. At December 31, 2012, we had a valuation allowance against our net deferred tax assets to the extent it is more likely than not that the assets will not be realized. At December 31, 2012, we had federal and state net operating loss carryforwards of $272.7 million and $337.8 million, respectively, to reduce future taxable income that will expire at various dates through 2032. At December 31, 2012, we had federal and state research and development credit carryforwards of $15.3 million and $5.6 million, respectively, available to reduce future tax liabilities that expire at various dates through 2032. At December 31, 2012, we had foreign tax credit carryforwards of $3.2 million available to reduce future tax liabilities that expire in 2017. At December 31, 2012, we had alternative minimum tax credits of $0.8 million available to reduce future regular tax liabilities to the extent such regular tax less other non-refundable credits exceeds the tentative minimum tax. We have a valuation allowance against the net operating loss and credit deferred tax assets as it is unlikely that we will realize these assets. Ownership changes, as defined in the Internal Revenue Code, including those resulting from the issuance of common stock in

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connection with our public offerings, may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income or tax liability. The amount of the limitation is determined in accordance with Section 382 of the Internal Revenue Code. We have determined that based on our value, in the event there was an annual limitation under Section 382, all net operating loss and tax credit carryforwards would still be available to offset taxable income.

Accounting for Stock-Based Compensation

We have stock incentive plans and an employee stock purchase plan under which we grant equity instruments. We account for all stock-based awards granted to employees at their fair value and generally 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. We calculate the grant date fair values using the Black-Scholes valuation model. Our expected stock price volatility assumption is based on a combination of the historical and implied volatility of our publicly traded stock.

For stock option awards granted during the year ended December 31, 2012, we used a weighted-average expected stock-price volatility assumption of 57%. Our expected life assumption is based on our historical data. Our weighted average expected term was 5.7 years for the year ended December 31, 2012. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and currently have no intention to pay cash dividends. The risk-free interest rate used for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life.

For stock-based awards granted to non-employees, we generally recognize compensation expense over the vesting period of the award, which is generally the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to vesting, we re-measure the value of these stock-based awards (as calculated using the Black-Scholes option-pricing model) using the then current fair value of our common stock. Stock options granted to non-employees, other than members of our board of directors and scientific advisory board members, generally vest over the service period.

The fair value of restricted stock awards granted to employees is based upon the quoted closing market price per share on the date of grant, adjusted for assumed forfeitures. For performance-based restricted stock awards, the value of the awards is measured when we determine the achievement of such performance conditions is deemed probable. This determination requires significant judgment by management. Expense is recognized over the vesting period, commencing when we determine that it is probable that the awards will vest.

At December 31, 2012, the estimated fair value of unvested employee awards was $17.5 million, net of estimated forfeitures. We will recognize this amount over the weighted average remaining vesting period of approximately 2.3 years for these awards. Stock-based employee compensation expense was $11.4 million for the year ended December 31, 2012. However, we cannot currently predict the total amount of stock-based compensation expense to be recognized in any future period because such amounts will depend on levels of stock-based payments granted in the future as well as the portion of the awards that actually vest. The stock compensation accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option. We currently expect, based on an analysis of our historical forfeitures, excluding the impact of our corporate restructurings, that approximately 67% of our stock options will actually vest, and therefore have applied an annual forfeiture rate of 9.5% to all unvested employee stock options at December 31, 2012. Ultimately, the actual expense recognized over the vesting period will only be for those shares that vest.

Accounting for Joint Venture

From the formation of Regulus in September 2007 to October 2012, we accounted for our interest in Regulus using the equity method of accounting. We reviewed the consolidation guidance that defines a variable interest entity, or VIE, and concluded that Regulus qualified as a VIE during such time period. We recorded any

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gains or losses recognized from the issuance of stock by its equity method investee as other income (expense) in our consolidated statements of comprehensive loss. We did not consolidate Regulus’ financial results as we lacked the power to direct the activities that could significantly impact the economic success of Regulus. Under equity method accounting, because we had guaranteed the debt of Regulus, we were required to continue to recognize our share of any future losses which resulted in the carrying amount of our investment in Regulus to be reduced below zero. In October 2012, Regulus completed an initial public offering, resulting in our ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Based upon our new ownership percentage of 17%, as well as qualitative factors, we do not believe that we have the ability to exercise significant influence over the operating decisions and financial policies of Regulus and have therefore discontinued the equity method of accounting for Regulus. Accordingly, beginning in October 2012, we accounted for our investment in Regulus as an available-for-sale marketable security. For additional details on the accounting for our investment in Regulus, see Note 10 to our consolidated financial statements included in this annual report on Form 10-K.

Estimated Liability for Development Costs

We record accrued liabilities related to expenses for which service providers have not yet billed us with respect to products or services that we have received, specifically related to ongoing pre-clinical studies and clinical trials. These costs primarily relate to third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator fees. We have multiple product candidates in concurrent pre-clinical studies and clinical trials at multiple clinical sites throughout the world. In order to ensure that we have adequately provided for ongoing pre-clinical and clinical development costs during the period in which we incur such costs, we maintain an accrual to cover these expenses. We update our estimate for this accrual on at least a quarterly basis. The assessment of these costs is a subjective process that requires judgment. Upon settlement, these costs may differ materially from the amounts accrued in our consolidated financial statements. Our historical accrual estimates have not been materially different from our actual costs.

Results of Operations

The following data summarizes the results of our operations for the periods indicated, in thousands:

	Year Ended December 31,
	2012			2011			2010
Net revenues from research collaborators	$	66,725		$	82,757		$	100,041
Operating expenses		196,181			137,575			144,111
Loss from operations		(129,456	)		(54,818	)		(44,070	)
Net loss	$	(106,014	)	$	(57,649	)	$	(43,515	)

The increase in operating expenses for the year ended December 31, 2012 resulted from a $65.0 million charge to operating expenses in connection with the restructuring of our license agreement with Tekmira in November 2012, which is described below under the heading “Restructuring of Tekmira licensing agreement.”

Discussion of Results of Operations for 2012 and 2011

Net Revenues from Research Collaborators

We generate revenues through research collaborations. The following table summarizes our total consolidated net revenues from research collaborators, for the periods indicated, in thousands:

	Year Ended December 31,
	2012		2011
Roche/Arrowhead	$	37,318	$	55,978
Takeda		21,973		22,248
Monsanto		1,954		—
Other		5,480		4,531
Total net revenues from research collaborators	$	66,725	$	82,757

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Net revenues from research collaborators declined for the year ended December 31, 2012 as compared to the year ended December 31, 2011 due primarily to the completion of our remaining performance obligations under the Roche/Arrowhead alliance in August 2012. As a result of the termination of the Cubist agreement in February 2013 and the end of our performance obligations thereunder, we expect to recognize the remaining deferred revenue under the Cubist agreement of $9.7 million during the first quarter of 2013. We expect net revenues from research collaborators to decrease significantly during 2013 on a comparative basis due to the completion of our remaining performance obligations under the Roche/Arrowhead alliance in the third quarter of 2012.

We also had $132.3 million of deferred revenue at December 31, 2012, which consists of payments we have received from collaborators, primarily Takeda, Kyowa Hakko Kirin, Cubist, Monsanto and Genzyme, but have not yet recognized pursuant to our revenue recognition policies.

For the foreseeable future, we expect our revenues to continue to be derived primarily from our alliances with Takeda and Monsanto, and other strategic alliances, as well as new collaborations, foundation funding, government contracts and licensing activities.

Operating Expenses

The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total operating expenses, together with the changes, in thousands and percentages:

	2012		% of Total Operating Expenses			2011		% of Total Operating Expenses			Increase (Decrease)
											$			%
Research and development	$	86,569		44	%	$	99,295		72	%	$	(12,726	)		(13	)%
General and administrative		44,612		23	%		38,280		28	%		6,332			17	%
Restructuring of Tekmira license agreement		65,000		33	%		—		—			65,000			100	%
Total operating expenses	$	196,181		100	%	$	137,575		100	%	$	58,606			43	%

Research and development.    The following table summarizes the components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses, together with the changes, in thousands and percentages:

	2012		% of Expense Category			2011		% of Expense Category			Increase (Decrease)
											$			%
Research and development
Compensation and related	$	20,438		24	%	$	23,743		24	%	$	(3,305	)		(14	)%
Clinical trial and manufacturing		15,930		18	%		25,258		26	%		(9,328	)		(37	)%
External services		13,743		16	%		15,653		16	%		(1,910	)		(12	)%
Facilities-related		12,647		15	%		12,751		13	%		(104	)		(1	)%
Non-cash stock-based compensation		8,041		9	%		10,921		11	%		(2,880	)		(26	)%
License fees		5,693		7	%		1,381		1	%		4,312			312	%
Lab supplies and materials		4,422		5	%		6,283		6	%		(1,861	)		(30	)%
Restructuring		2,817		3	%		—		—			2,817			100	%
Other		2,838		3	%		3,305		3	%		(467	)		(14	)%
Total research and development expenses	$	86,569		100	%	$	99,295		100	%	$	(12,726	)		(13	)%

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Research and development expenses decreased during the year ended December 31, 2012 as compared to the year ended December 31, 2011 due primarily to lower clinical trial and manufacturing expenses related to our ALN-RSV, ALN-PCS and ALN-VSP programs and decreases in compensation-related expenses. Partially offsetting these decreases were additional expenses related to the advancement of our ALN-TTR program, as well as license fees due to certain entities, primarily fees due to Isis as a result of the Monsanto and Genzyme alliances. Also included in the year ended December 31, 2012 is a one-time charge related to our January 2012 strategic corporate restructuring, including employee severance, benefits and other related costs.

We expect to continue to devote a substantial portion of our resources to research and development expenses as we continue development of our and our collaborators’ product candidates and focus on continuing to develop drug delivery-related technologies. We expect that research and development expenses will remain consistent in 2013.

A significant portion of our research and development costs are not tracked by project as they benefit multiple projects or our technology platform and because our most-advanced programs are not yet in late-stage clinical development. However, our collaboration agreements contain cost-sharing arrangements pursuant to which certain costs incurred under the project are reimbursed. Costs reimbursed under the agreements typically include certain direct external costs and a negotiated full-time equivalent labor rate for the actual time worked on the project. In addition, we have been reimbursed under government contracts for certain allowable costs including direct internal and external costs. As a result, although a significant portion of our research and development expenses are not tracked on a project-by-project basis, we do track direct external costs attributable to, and the actual time our employees worked on, our collaborations and government contracts.

General and administrative.    The following table summarizes the components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses, together with the changes, in thousands and percentages:

	2012		% of Expense Category			2011		% of Expense Category			Increase (Decrease)
											$			%
General and administrative
Consulting and professional services	$	28,949		65	%	$	21,032		55	%	$	7,917			38	%
Compensation and related		6,384		14	%		7,074		18	%		(690	)		(10	)%
Non-cash stock-based compensation		4,319		10	%		5,755		15	%		(1,436	)		(25	)%
Facilities-related		1,648		4	%		2,254		6	%		(606	)		(27	)%
Restructuring		890		2	%		—		—			890			100	%
Other		2,422		5	%		2,165		6	%		257			12	%
Total general and administrative expenses	$	44,612		100	%	$	38,280		100	%	$	6,332			17	%

The increase in general and administrative expenses during the year ended December 31, 2012 as compared to the year ended December 31, 2011 was due primarily to higher consulting and professional services expenses related to business activities, primarily legal activities, a description of which is set forth in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K. Also included in the year ended December 31, 2012 is a one-time charge related to our January 2012 strategic corporate restructuring, including employee severance, benefits and other related costs. These increases were partially offset by a decrease in all compensation expenses and facilities-related expenses due primarily to the reduction in workforce in connection with the January 2012 strategic corporate restructuring. We expect that general and administrative expenses will decrease significantly in 2013, due primarily to lower consulting and professional services related to legal activities.

Restructuring of Tekmira license agreement.    For the year ended December 31, 2012, we incurred a $65.0 million charge to operating expenses in connection with the restructuring of our license agreement with

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Tekmira in November 2012. Specifically, we made a one-time payment of $30.0 million to Tekmira for the termination of, and our release from, all of our obligations under the manufacturing agreement with TPC, including without limitation the obligations to obtain materials and/or services from TPC. Further, we elected to buy-down certain future potential milestone and royalty payments due to Tekmira for certain of our RNAi therapeutics, formulated using LNP technology. Specifically, pursuant to the cross-license agreement, we made a one-time payment of $35.0 million to Tekmira, which amount constituted payment for the termination of the 2008 license agreements with TPC and Protiva and the parties’ rights and obligations thereunder, as well as the buy-down of certain milestone payments and the significant reduction of royalty rates for ALN-VSP, ALN-PCS and ALN-TTR. In addition, under the 2012 cross-license agreement, we will be obligated to pay TPC an aggregate of $10.0 million in contingent milestone payments related to advancement of ALN-VSP and ALN-TTR, which now represent the only potential milestones due to Tekmira for ALN-VSP, ALN-PCS and ALN-TTR LNP-based RNAi therapeutics. Specifically, we will be obligated to pay TPC a $5.0 million milestone payment upon each of (i) the initiation of a Phase III clinical trial of an LNP-based ALN-TTR therapeutic, and (ii) the manufacture of ALN-VSP clinical trial material for use in China. A description of our 2012 cross-license agreement with Tekmira is set forth in Part I, Item 1, “Strategic Alliances—Delivery-Related Licenses and Collaborations – Tekmira” of this annual report on Form 10-K.

Other income (expense)

We incurred $4.5 million equity in loss of joint venture (Regulus Therapeutics Inc.) for the year ended December 31, 2012 as compared to $3.5 million for the year ended December 31, 2011 related to our share of the net losses incurred by Regulus.

Interest income was $1.0 million in 2012 as compared to $1.2 million in 2011. The decrease in 2012 was due primarily to lower average interest rates as well as lower average cash, cash equivalent and fixed income marketable securities balances.

Other income was $16.4 million in 2012 due primarily to a gain recorded in connection with the issuance of common stock by Regulus. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. As a result of this issuance of stock by Regulus, we recognized a gain of $16.1 million. Other expense in 2011 was $0.5 million and was due primarily to an impairment charge related to our former investment in Tekmira equity securities, as the decrease in the fair value of this investment was deemed to be other than temporary.

Our benefit in income taxes was $10.6 million in 2012 as compared to zero for 2011. The increase in 2012 was due to our recognition of corresponding income tax benefit associated with the increase in the value of our investment in Regulus that we carried at fair market value during the same respective period.

Discussion of Results of Operations for 2011 and 2010

Net Revenues from Research Collaborators

We generate revenues through research collaborations. The following table summarizes our total consolidated net revenues from research collaborators, for the periods indicated, in thousands:

	Year Ended December 31,
	2011		2010
Roche/Arrowhead	$	55,978	$	55,978
Takeda		22,248		22,250
Novartis		149		9,313
Government contract		152		4,335
Other research collaborator		3,158		5,159
InterfeRx program, research reagent license and other		1,072		3,006
Total net revenues from research collaborators	$	82,757	$	100,041

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The decrease in Novartis revenues for the year ended December 31, 2011 as compared to the year ended December 31, 2010 was due primarily to the planned completion of the fifth and final year of the research program under the Novartis collaboration and license agreement in October 2010. The decrease in government contract revenues for the year ended December 31, 2011 as compared to the year ended December 31, 2010 was primarily the result of the completion of our contract with the National Institute of Allergy and Infectious Diseases in December 2010. The decrease in other research collaborator revenues for the year ended December 31, 2011 as compared to the year ended December 31, 2010 was primarily the result of the $1.9 million sublicense fee recognized in 2010 in connection with Regulus’ 2010 alliance with Sanofi, representing 7.5% of the $25.0 million upfront payment from Sanofi to Regulus. The decrease in InterfeRx program, research reagent license and other revenues for the year ended December 31, 2011 as compared to the year ended December 31, 2010 was due primarily to the substantial completion of our Alnylam Biotherapeutics’ collaborations in 2010.

We had $140.9 million of deferred revenue at December 31, 2011, which consisted of payments we had received from collaborators, primarily Roche/Arrowhead, Takeda, Kyowa Hakko Kirin and Cubist, that we had yet to recognize pursuant to our revenue recognition policies.

Operating Expenses

The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total operating expenses, together with the changes, in thousands and percentages:

	2011		% of Total Operating Expenses			2010		% of Total Operating Expenses			Increase (Decrease)
											$			%
Research and development	$	99,295		72	%	$	106,384		74	%	$	(7,089	)		(7	)%
General and administrative		38,280		28	%		37,727		26	%		553			1	%
Total operating expenses	$	137,575		100	%	$	144,111		100	%	$	(6,536	)		(5	)%

Research and development.    The following table summarizes the components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses, together with the changes, in thousands and percentages:

	2011		% of Expense Category			2010		% of Expense Category			Increase (Decrease)
											$			%
Research and development
Clinical trial and manufacturing	$	25,258		26	%	$	20,607		20	%	$	4,651			23	%
Compensation and related		23,743		24	%		24,053		23	%		(310	)		(1	)%
External services		15,653		16	%		22,471		21	%		(6,818	)		(30	)%
Facilities-related		12,751		13	%		12,051		11	%		700			6	%
Non-cash stock-based compensation		10,921		11	%		11,689		11	%		(768	)		(7	)%
Lab supplies and materials		6,283		6	%		7,775		7	%		(1,492	)		(19	)%
License fees		1,381		1	%		2,407		2	%		(1,026	)		(43	)%
Restructuring		—		—			1,863		2	%		(1,863	)		(100	)%
Other		3,305		3	%		3,468		3	%		(163	)		(5	)%
Total research and development expenses	$	99,295		100	%	$	106,384		100	%	$	(7,089	)		(7	)%

Research and development expenses decreased during the year ended December 31, 2011 as compared to year ended December 31, 2010 due primarily to lower external services expenses related to pre-clinical expenses

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in connection with our ALN-PCS program as we advanced this program to a Phase I clinical trial. In addition, external services expenses decreased due to research funding paid to Isis in 2010 in connection with our ssRNAi collaborative effort with Isis, which we terminated in November 2010. Also contributing to the decrease were restructuring expenses related to employee severance, benefits and related costs incurred in connection with our September 2010 corporate restructuring. Lab supplies and materials expenses decreased during the year ended December 31, 2011 as compared to the year ended December 31, 2010 due primarily to the reduction in workforce in connection with our September 2010 corporate restructuring. Partially offsetting these decreases was an increase in clinical trial and manufacturing expenses due primarily to increased clinical trial expenses for our ALN-PCS program.

General and administrative.    The following table summarizes the components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses, together with the changes, in thousands and percentages:

	2011		% of Expense Category			2010		% of Expense Category			Increase (Decrease)
											$			%
General and administrative
Consulting and professional services	$	21,032		55	%	$	18,753		50	%	$	2,279			12	%
Compensation and related		7,074		18	%		6,202		16	%		872			14	%
Non-cash stock-based compensation		5,755		15	%		7,429		20	%		(1,674	)		(23	)%
Facilities-related		2,254		6	%		2,379		6	%		(125	)		(5	)%
Insurance		717		2	%		759		2	%		(42	)		(6	)%
Restructuring		—		—			330		1	%		(330	)		(100	)%
Other		1,448		4	%		1,875		5	%		(427	)		(23	)%
Total general and administrative expenses	$	38,280		100	%	$	37,727		100	%	$	553			1	%

The slight increase in general and administrative expenses during the year ended December 31, 2011 as compared to the year ended December 31, 2010 was due primarily to higher consulting and professional services expenses related to business activities, primarily legal activities, a description of which is set forth in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K.

Other income (expense)

We incurred $3.5 million equity in loss of joint venture (Regulus Therapeutics Inc.) for the year ended December 31, 2011 as compared to $7.6 million for the year ended December 31, 2010 related to our share of the net losses incurred by Regulus. The decrease in equity in loss of joint venture (Regulus Therapeutics Inc.) for the year ended December 31, 2011 was due primarily to sublicense fees paid in connection with the strategic alliance formed by Regulus with Sanofi in June 2010.

Interest income was $1.2 million in 2011 as compared to $2.3 million in 2010. The decrease in 2011 was due primarily to lower average interest rates as well as lower average cash, cash equivalent and fixed income marketable securities balances.

Other expense was $0.5 million in 2011 and was due primarily to an impairment charge related to our former investment in Tekmira equity securities, as the decrease in the fair value of this investment was deemed to be other than temporary. Other income in 2010 was $6.4 million and was due primarily to a $4.4 million gain on the issuance of stock of Regulus, an equity-method investee, due to the increase in valuation of Regulus as a result of the $10.0 million equity investment Sanofi made in Regulus. In addition, in 2010, we received $2.0 million in connection with awards under the federal government’s Qualifying Therapeutic Discovery Project Program.

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Liquidity and Capital Resources

The following table summarizes our cash flow activities for the periods indicated, in thousands:

	Year Ended December 31,
	2012			2011			2010
Net loss	$	(106,014	)	$	(57,649	)	$	(43,515	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities		(630	)		26,509			38,734
Changes in operating assets and liabilities		(8,965	)		(55,928	)		(79,560	)
Net cash used in operating activities		(115,609	)		(87,068	)		(84,341	)
Net cash provided by investing activities		3,374			81,959			17,838
Net cash provided by financing activities		93,412			738			3,663
Effect of exchange rate on cash		—			—			(29	)
Net decrease in cash and cash equivalents		(18,823	)		(4,371	)		(62,869	)
Cash and cash equivalents, beginning of period		70,228			74,599			137,468
Cash and cash equivalents, end of period	$	51,405		$	70,228		$	74,599

Since we commenced operations in 2002, we have generated significant losses. At December 31, 2012, we had an accumulated deficit of $507.0 million. At December 31, 2012, we had cash, cash equivalents and fixed income marketable securities of $226.2 million, excluding our investment in equity securities of Regulus, compared to cash, cash equivalents and fixed income marketable securities of $260.8 million at December 31, 2011. Included in our December 31, 2012 cash, cash equivalents and fixed income marketable securities are the proceeds from our sale, in February 2012, of an aggregate of 8,625,000 shares of our common stock through an underwritten public offering at a price to the public of $10.75 per share. As a result of this offering, we received aggregate net proceeds of approximately $86.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $5.9 million. In January 2013, we sold an aggregate of 9,200,000 shares of our common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of this offering, we received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million. We intend to use the proceeds from these offerings for general corporate purposes, ultimately focused on advancing our clinical pipeline, in particular our ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 programs, as well as for potential acquisitions of new businesses, technologies or products, working capital, capital expenditures, and general and administrative expenses.

We invest primarily in cash equivalents, U.S. government obligations, high-grade corporate notes and commercial paper. Our investment objectives are, primarily, to assure liquidity and preservation of capital and, secondarily, to obtain investment income. All of our investments in debt securities are recorded at fair value and are available-for-sale. Fair value is determined based on quoted market prices and models using observable data inputs. We have not recorded any impairment charges to our fixed income marketable securities at December 31, 2012.

Operating activities

We have required significant amounts of cash to fund our operating activities as a result of net losses since our inception. The increase in net cash used in operating activities for the year ended December 31, 2012 compared to the year ended December 31, 2011 was due primarily to our net loss and other changes in our working capital, adjustments for noncash gains and benefits of $26.9 million and a decrease in deferred revenue of $8.6 million. The increase in net cash used in operating activities for the year ended December 31, 2011 compared to the year ended December 31, 2010 was due primarily to our net loss and other changes in our working capital, as well as a decrease in deferred revenue of $70.3 million. The increase in net cash used in

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operating activities for the year ended December 31, 2010 compared to the year ended December 31, 2009 was due primarily to our net loss and other changes in our working capital, as well as a decrease in deferred revenue of $60.7 million. Cash used in operating activities is adjusted for non-cash items to reconcile net loss to net cash provided by or used in operating activities. These non-cash adjustments consist primarily of stock-based compensation, equity in loss of joint venture (Regulus Therapeutics Inc.) and depreciation and amortization.

We expect that we will require significant amounts of cash to fund our operating activities for the foreseeable future as we continue to develop and advance our research and development initiatives. The actual amount of overall expenditures will depend on numerous factors, including the timing of expenses, the timing and terms of collaboration agreements or other strategic transactions, if any, and the timing and progress of our research and development efforts.

Investing activities

For the year ended December 31, 2012, net cash provided by investing activities of $3.4 million resulted primarily from sales and maturities of fixed income marketable securities of $11.9 million offset by purchases of property and equipment of $8.3 million primarily in connection with the build-out of our cGMP manufacturing facility. For the year ended December 31, 2011, net cash provided by investing activities of $82.0 million resulted primarily from net sales and maturities of fixed income marketable securities of $83.3 million, offset by purchases of property and equipment of $1.3 million. For the year ended December 31, 2010, net cash provided by investing activities of $17.8 million resulted primarily from net sales and maturities of fixed income marketable securities of $22.5 million, offset by purchases of property and equipment of $4.7 million.

Financing activities

For the year ended December 31, 2012, net cash of $93.4 million provided by financing activities was due primarily to proceeds of $86.8 million received from our February 2012 underwritten public offering, as well proceeds of $7.0 million from the issuance of common stock in connection with stock option exercises and other types of equity. For the year ended December 31, 2011, net cash provided by financing activities of $0.7 million was due to proceeds from the issuance of common stock in connection with stock option exercises and other types of equity. For the year ended December 31, 2010, net cash provided by financing activities of $3.7 million was due to proceeds of $1.0 million from our issuance of common stock to Novartis in April 2010, as well as proceeds of $2.7 million from the issuance of common stock in connection with stock option exercises and other types of equity.

Operating Capital Requirements

We do not know when, if ever, we will successfully develop or be able to commence sales of any product. Therefore, 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 drug development programs, including the development of drug delivery technologies and clinical trial costs, extension of the capabilities of our technology platform, including through business initiatives, continued management and growth of our patent portfolio, collaborations and general corporate activities. In February 2012, we sold an aggregate of 8,625,000 shares of our common stock through an underwritten public offering at a price to the public of $10.75 per share. As a result of the offering, we received aggregate net proceeds of approximately $86.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $5.9 million. In January 2013, we sold an aggregate of 9,200,000 shares of our common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of this offering, we received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million. We intend to use the proceeds from these offerings for general corporate purposes, ultimately focused on advancing our clinical pipeline, in particular our ALN-TTR02, ALN-TTRsc, ALN-AT3 and ALN-AS1 programs, as well as for potential acquisitions of new businesses, technologies or products, working capital, capital expenditures, and general and administrative expenses. Based on our current operating plan, we believe that our existing cash, cash equivalents and fixed

98

income marketable securities, together with the cash we expect to generate under our current alliances, will be sufficient to fund our planned operations through at least the end of 2016. For reasons discussed below, we may require significant additional funds earlier than we currently expect in order to develop, conduct clinical trials for and commercialize any product candidates.

In the future, we may seek additional funding through additional collaborative arrangements and public or private financings. In December 2012, we filed an automatically effective shelf registration statement with the SEC for an indeterminate number of shares. During the recent downturn in global financial markets, some companies have experienced difficulties raising capital, which has had a material adverse impact on their liquidity. The recent economic downturn has diminished the availability of capital and may limit our ability to access these markets to obtain financing in the future. As a result of these and other factors, additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any additional financing may further adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, further dilution to our existing stockholders may result. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. If we are unable to obtain funding on a timely basis, we may be required to significantly delay or curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies or product candidates that we would otherwise pursue.

Even if we are able to raise additional funds in a timely manner, our future capital requirements may vary from what we expect and will depend on many factors, including:

• our progress in demonstrating that siRNAs can be active as drugs;

• our ability to develop relatively standard procedures for selecting and modifying siRNA product candidates;

• progress in our research and development programs, as well as the magnitude of these programs;

• the timing, receipt and amount of milestone and other payments, if any, from present and future collaborators, if any;

• the timing, receipt and amount of funding under future government or foundation contracts, if any;

• our ability to maintain and establish additional collaborative arrangements and/or new business initiatives;

• the resources, time and costs required to successfully initiate and complete our pre-clinical and clinical trials, obtain regulatory approvals, and obtain and maintain licenses to third-party intellectual property;

• our ability to manufacture, or contract with third-parties for the manufacture of, our product candidates for clinical testing and commercial sale;

• the resources, time and cost required for the preparation, filing, prosecution, maintenance and enforcement of patent claims;

• our ability to achieve anticipated cost reductions as a result of, and to successfully manage the potential impact of, our January 2012 strategic corporate restructuring and workforce reduction on our culture, collaborative relationships and business operations;

• the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes;

• progress in the research and development programs of Regulus; and

• the timing, receipt and amount of sales and royalties, if any, from our potential products.

Off-Balance Sheet Arrangements

In connection with our license agreements with Max Planck relating to the Tuschl I and II patent applications, we are required to indemnify Max Planck for certain damages arising in connection with the

99

intellectual property rights licensed under the agreements. Under this indemnification agreement with Max Planck, we are responsible for paying the costs of any litigation relating to the license agreements or the underlying intellectual property rights. In connection with our research agreement with AlCana, we have agreed to indemnify AlCana for certain legal costs, subject to certain exceptions and limitations. Amounts paid under the AlCana indemnification agreement in connection with the legal proceedings described in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K were charged, or are being charged, to general and administrative expense. We have also agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of our ongoing litigation matters. In addition, we are 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. These indemnification obligations are considered off-balance sheet arrangements in accordance with GAAP. To date, other than certain costs associated with the certain previously settled litigation related to the Tuschl patents, and the Tekmira litigation described in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K, we have not encountered material costs as a result of such obligations and have not accrued any liabilities related to such obligations in our consolidated financial statements.

See Note 6 to our consolidated financial statements included in this annual report on Form 10-K for further discussion of these indemnification agreements and guarantee obligations.

Contractual Obligations

In the table below, we set forth our enforceable and legally binding obligations and future commitments at December 31, 2012, as well as obligations related to contracts that we are likely to continue, regardless of the fact that they were cancelable at December 31, 2012. Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the obligations we will actually pay in future periods may vary from those reflected in the table.

	Payments Due by Period
Contractual Obligations	2013		2014 and 2015		2016 and 2017		After 2017		Total
Operating lease obligations(1)	$	6,065	$	12,853	$	5,556	$	—	$	24,474
Purchase commitments(2)	$	10,343	$	725	$	—	$	—	$	11,068
Technology license commitments(3)	$	14,463	$	2,381	$	1,566	$	9,159	$	27,569
Total contractual cash obligations	$	30,871	$	15,959	$	7,122	$	9,159	$	63,111

(1) Relates to our Cambridge, Massachusetts non-cancelable operating lease agreements.

(2) Includes commitments related to purchase orders, clinical and pre-clinical agreements, and other purchase commitments for goods or services.

(3) Relates to our fixed payment obligations under license agreements, as well as other payments related to technology research and development.

We in-license technology from a number of sources. Pursuant to these in-license agreements, we will be required to make additional payments if and when we achieve specified development, regulatory and commercialization milestones. To the extent we are unable to reasonably predict the likelihood, timing or amount of such payments, we have excluded them from the table above.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board, or FASB, issued a new accounting standard that clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This standard is effective

100

on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. We adopted this amendment on January 1, 2012. The adoption of this new standard did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, a company may present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, a company is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. We adopted this amendment on January 1, 2012. Other than a change in presentation, the adoption of this guidance did not have a material impact on our consolidated financial statement.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. Other than a change in presentation, we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital until it is required to fund operations, including our research and development activities. Our fixed income marketable securities consist of U.S. government obligations, high-grade corporate notes and commercial paper. All of our investments in debt securities are classified as available-for-sale and are recorded at fair value. Our available-for-sale investments in debt securities are sensitive to changes in interest rates and changes in the credit ratings of the issuers. Interest rate changes would result in a change in the net fair value of these financial instruments due to the difference between the market interest rate and the market interest rate at the date of purchase of the financial instrument. If market interest rates were to increase immediately and uniformly by 50 basis points, or one-half of a percentage point, from levels at December 31, 2012, the net fair value of our interest-sensitive financial instruments would have resulted in a hypothetical decline of $0.9 million. A downgrade in the credit rating of an issuer of a debt security or further deterioration of the credit markets could result in a decline in the fair value of the debt instruments. Our investment guidelines prohibit investment in auction rate securities and we do not believe we have any direct exposure to losses relating from mortgage-based securities or derivatives related thereto such as credit-default swaps. We did not record any impairment charges to our fixed income marketable securities during the year ended December 31, 2012.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Management’s Annual Report on Internal Control Over Financial Reporting		104
Report of Independent Registered Public Accounting Firm		105
Consolidated Balance Sheets at December 31, 2012 and 2011		106
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2012, 2011 and 2010		107
Consolidated Statements of Stockholders’ Equity for the Years Ended December  31, 2012, 2011 and 2010		108
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010		109
Notes to Consolidated Financial Statements		110

103

Management’s Annual Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on its assessment, management concluded that, as of December 31, 2012, the Company’s internal control over financial reporting is effective based on those criteria.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report. This report appears on page 105.

104

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Alnylam Pharmaceuticals, Inc.

In our opinion, based on our audits and the report of other auditors with respect to the consolidated financial statement as of and for the years ended December 31, 2011 and 2010, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Alnylam Pharmaceuticals, Inc. and its subsidiaries at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We did not audit the 2011 or 2010 financial statements of Regulus Therapeutics Inc., an approximate 45 percent-owned equity investment, insofar as it relates to the Company’s net investment in (approximately $0.6 million at December 31, 2011) and equity in the net loss (approximately $3.5 million and $7.6 million for the years ended December 31, 2011 and 2010, respectively) of Regulus Therapeutics, Inc.. The financial statements of Regulus Therapeutics, Inc. were audited by other auditors whose report thereon has been furnished to us, and our opinion on the financial statements expressed herein, insofar as it relates to the amounts included for Regulus Therapeutics, Inc., is based solely on the report of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 19, 2013

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ALNYLAM PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	51,405		$	70,228
Marketable securities		71,407			76,174
Billed and unbilled collaboration receivables		104			1,468
Prepaid expenses and other current assets		2,540			4,158
Total current assets		125,456			152,028
Marketable securities		103,416			114,407
Investment in equity securities of Regulus Therapeutics Inc		38,748			—
Property and equipment, net		19,799			14,643
Other assets		101			839
Total assets	$	287,520		$	281,917
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,420		$	5,800
Accrued expenses		11,558			12,340
Deferred rent		950			484
Deferred revenue		31,417			62,366
Total current liabilities		48,345			80,990
Deferred rent, net of current portion		4,248			3,727
Deferred revenue, net of current portion		100,874			78,487
Other long-term liabilities		—			716
Total liabilities		153,467			163,920
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized and no shares issued and outstanding at December 31, 2012 and 2011		—			—
Common stock, $0.01 par value per share, 125,000,000 shares authorized; 52,489,936 shares issued and outstanding at December 31, 2012; 42,721,942 shares issued and outstanding at December 31, 2011		525			427
Additional paid-in capital		624,876			518,731
Accumulated other comprehensive income (loss)		15,662			(165	)
Accumulated deficit		(507,010	)		(400,996	)
Total stockholders’ equity		134,053			117,997
Total liabilities and stockholders’ equity	$	287,520		$	281,917

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

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ALNYLAM PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

	Year Ended December 31,
	2012			2011			2010
Net revenues from research collaborators	$	66,725		$	82,757		$	100,041
Operating expenses:
Research and development(1)		86,569			99,295			106,384
General and administrative(1)		44,612			38,280			37,727
Restructuring of Tekmira license agreement		65,000			—			—
Total operating expenses		196,181			137,575			144,111
Loss from operations		(129,456	)		(54,818	)		(44,070	)
Other income (expense):
Equity in loss of joint venture (Regulus Therapeutics Inc.)		(4,522	)		(3,505	)		(7,639	)
Gain on issuance of stock by Regulus Therapeutics Inc.		16,084			—			4,421
Interest income		977			1,205			2,305
Other income (expense)		331			(531	)		1,982
Total other income (expense)		12,870			(2,831	)		1,069
Loss before income taxes		(116,586	)		(57,649	)		(43,001	)
Benefit from (provision for) income taxes		10,572			—			(514	)
Net loss	$	(106,014	)	$	(57,649	)	$	(43,515	)
Net loss per common share — basic and diluted	$	(2.11	)	$	(1.36	)	$	(1.04	)
Weighted average common shares used to compute basic and diluted net loss per common share		50,286			42,410			42,040
Comprehensive loss:
Net loss	$	(106,014	)	$	(57,649	)	$	(43,515	)
Foreign currency translation		—			—			(29	)
Unrealized gain (loss) on marketable securities, net of tax		15,827			(879	)		27
Comprehensive loss	$	(90,187	)	$	(58,528	)	$	(43,517	)

(1) Non-cash stock-based compensation expenses included in operating expenses are as follows:

Research and development	$	8,041	$	10,921	$	11,689
General and administrative		4,319		5,755		7,429

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

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ALNYLAM PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance at December 31, 2009		41,837,427	$	418	$	476,663		$	716		$	(299,832	)	$	177,965
Exercise of common stock options		227,970		2		1,731			—			—			1,733
Issuance of common stock under other types of equity plans		164,656		2		2,423			—			—			2,425
Issuance of restricted stock		113,370		1		(1	)		—			—			—
Stock-based compensation expense		—		—		19,118			—			—			19,118
Foreign currency translation		—		—		—			(29	)		—			(29	)
Joint venture stock-based compensation (Regulus Therapeutics Inc.)		—		—		289			—			—			289
Tax benefit from stock-based compensation		—		—		220			—			—			220
Other comprehensive income		—		—		—			27			—			27
Net loss		—		—		—			—			(43,515	)		(43,515	)
Balance at December 31, 2010		42,343,423		423		500,443			714			(343,347	)		158,233
Exercise of common stock options		16,800		—		103			—			—			103
Issuance of common stock under other types of equity plans		124,815		2		1,021			—			—			1,023
Issuance of restricted stock		236,904		2		(2	)		—			—			—
Stock-based compensation expense		—		—		16,676			—			—			16,676
Joint venture stock-based compensation (Regulus Therapeutics Inc.)		—		—		370			—			—			370
Tax benefit from stock-based compensation		—		—		120			—			—			120
Other comprehensive loss		—		—		—			(879	)		—			(879	)
Net loss		—		—		—			—			(57,649	)		(57,649	)
Balance at December 31, 2011		42,721,942		427		518,731			(165	)		(400,996	)		117,997
Exercise of common stock options		661,909		7		6,395			—			—			6,402
Issuance of common stock under other types of equity plans		97,459		1		878			—			—			879
Issuance of restricted stock, net of cancellations and tax withholdings		383,626		4		(523	)		—			—			(519	)
Issuance of common stock, net of offering costs		8,625,000		86		86,714			—			—			86,800
Stock-based compensation expense		—		—		12,360			—			—			12,360
Joint venture stock-based compensation (Regulus Therapeutics Inc.)		—		—		321			—			—			321
Other comprehensive income		—		—		—			15,827			—			15,827
Net loss		—		—		—			—			(106,014	)		(106,014	)
Balance at December 31, 2012		52,489,936	$	525	$	624,876		$	15,662		$	(507,010	)	$	134,053

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

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ALNYLAM PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2012			2011			2010
Cash flows from operating activities:
Net loss	$	(106,014	)	$	(57,649	)	$	(43,515	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,035			5,125			4,941
Deferred income taxes		—			—			10,742
Non-cash stock-based compensation		12,360			16,676			19,118
Charge for 401(k) company stock match		364			488			495
Equity in loss of joint venture (Regulus Therapeutics Inc.)		4,522			3,505			7,639
Tax benefit from stock-based compensation		—			120			220
Other than temporary impairment on equity securities		—			595			—
Realized gain on sale of marketable securities		(255	)		—			—
Gain on issuance of stock by joint venture		(16,084	)		—			(4,421	)
Benefit from intraperiod tax allocation on marketable securities		(10,572	)		—			—
Changes in operating assets and liabilities:
Proceeds from landlord tenant improvements		1,780			—			—
Billed and unbilled collaboration receivables		1,364			1,982			2,594
Income taxes receivable		—			10,669			(10,669	)
Prepaid expenses and other assets		1,780			2,731			(2,738	)
Accounts payable		(1,736	)		(3,512	)		(3,177	)
Income taxes payable		—			—			(5,516	)
Accrued expenses and other		(3,591	)		2,457			651
Deferred revenue		(8,562	)		(70,255	)		(60,705	)
Net cash used in operating activities		(115,609	)		(87,068	)		(84,341	)
Cash flows from investing activities:
Purchases of property and equipment		(8,348	)		(1,291	)		(4,732	)
Increase in restricted cash		(162	)		—			—
Purchases of marketable securities		(277,129	)		(293,115	)		(390,473	)
Sales and maturities of marketable securities		289,013			376,365			413,043
Net cash provided by investing activities		3,374			81,959			17,838
Cash flows from financing activities:
Proceeds from exercise of stock options and other types of equity		6,971			738			2,670
Proceeds from issuance of common stock, net of offering costs		86,800			—			—
Payments for repurchase of common stock for employee tax withholding		(359	)		—			—
Proceeds from issuance of shares to Novartis		—			—			993
Net cash provided by financing activities		93,412			738			3,663
Effect of exchange rate on cash		—			—			(29	)
Net decrease in cash and cash equivalents		(18,823	)		(4,371	)		(62,869	)
Cash and cash equivalents, beginning of period		70,228			74,599			137,468
Cash and cash equivalents, end of period	$	51,405		$	70,228		$	74,599
Supplemental disclosure of cash flows:
(Cash paid for income taxes) proceeds from income tax refunds	$	(17	)	$	10,657		$	(5,767	)
Supplemental disclosure of noncash investing activities:
Fixed asset expenditures included in accounts payable and accrued expenses	$	1,441		$	—		$	—

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

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ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS

Alnylam Pharmaceuticals, Inc. (the “Company” or “Alnylam”) commenced operations on June 14, 2002 as a biopharmaceutical company seeking to develop and commercialize novel therapeutics based on RNA interference (“RNAi”). Alnylam is focused on discovering, developing and commercializing RNAi therapeutics by establishing strategic alliances with leading pharmaceutical and life sciences companies, establishing and maintaining a strong intellectual property position in the RNAi field, generating revenues through licensing agreements, and ultimately developing and commercializing RNAi therapeutics for its own account. The Company has devoted substantially all of its efforts to business planning, research and development, acquiring, filing and expanding intellectual property rights, recruiting management and technical staff, and raising capital.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company comprises four entities, Alnylam Pharmaceuticals, Inc. (the parent company) and three wholly-owned subsidiaries (Alnylam U.S., Inc., Alnylam Europe AG (“Alnylam Europe”) and Alnylam Securities Corporation). Alnylam Pharmaceuticals, Inc. is a Delaware corporation that was formed on May 8, 2003. Alnylam U.S., Inc. is also a Delaware corporation that was formed on June 14, 2002. Alnylam Securities Corporation is a Massachusetts corporation that was formed on December 19, 2006. Alnylam Europe was incorporated in Germany in June 2000 under the name Ribopharma AG. The Company acquired Alnylam Europe in July 2003.

The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Reclassifications

Certain reclassifications have been made to prior years’ consolidated financial statements to conform to the 2012 presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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. Actual results could differ from those estimates.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and fixed income marketable securities. At December 31, 2012 and 2011, substantially all of the Company’s cash, cash equivalents and fixed income marketable securities were invested in money market mutual funds, commercial paper, corporate notes and U.S. government securities through highly rated financial institutions. Investments are restricted, in accordance with the Company’s investment policy, to a concentration limit per issuer.

To date, the Company’s revenues from collaborations have been generated from primarily F. Hoffmann-La Roche Ltd and certain of its affiliates (collectively, “Roche”) (which assigned its rights and obligations to Arrowhead Research Corporation (“Arrowhead”) in 2011), Takeda Pharmaceutical Company Limited (“Takeda”), and Novartis Pharma AG and one of its affiliates (collectively, “Novartis”). In addition, the

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Company and Medtronic, Inc. (“Medtronic”) formed a collaboration with CHDI Foundation, Inc. (“CHDI”) to advance ALN-HTT, a novel drug-device combination for the treatment of Huntington’s disease. Under this collaboration, CHDI agreed to initially fund approximately 50% of the costs of this program up to the point at which an investigational new drug application could be filed. In April 2012, the Company exercised its option under the Medtronic agreement to opt-out of the 50-50 expense/profit share arrangement of the ALN-HTT program and move to a royalty and milestone licensing structure. In connection with the Company’s opt-out, in May 2012, CHDI notified the Company and Medtronic that it would cease further funding of the ALN-HTT program pursuant to the terms of the CHDI agreement. The Company recorded the funding received from CHDI as a reduction to research and development expense. For the year ended December 31, 2012, the composition of the Company’s billed and unbilled collaboration receivables was entirely composed of amounts due from the U.S. Government for the wind-down of completed government contracts.

The following table summarizes customers that represent greater than 10% of the Company’s net revenues from research collaborators, for the periods indicated:

	Year Ended December 31,
	2012			2011			2010
Roche/Arrowhead		56	%		68	%		56	%
Takeda		33	%		27	%		22	%

The following table summarizes customers with amounts due that represent greater than 10% of the Company’s billed and unbilled collaboration receivables balance, at the periods indicated:

	At December 31,
	2012			2011
U.S. Government		100	%		*	%
CHDI		—			51	%
GSK		—			20	%
Medtronic		—			13	%

* Represents 10% or less

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Fair Value Measurements

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following tables present information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2012 and 2011, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices (adjusted), interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy level is determined by the lowest level of significant input. Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows, in thousands:

Description	At December 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	50,213	$	50,213	$	—	$	—
Marketable securities (fixed income):
Corporate notes		91,523		—		91,523		—
U.S. Government obligations		60,661		—		60,661		—
Commercial paper		22,639		—		22,639		—
Marketable securities (Regulus equity holdings)		38,748		—		38,748		—
Total	$	263,784	$	50,213	$	213,571	$	—

Description	At December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	67,024	$	67,024	$	—	$	—
Marketable securities (fixed income):
Corporate notes		104,839		—		104,839		—
U.S. Government obligations		73,722		—		73,722		—
Commercial paper		11,395		—		11,395		—
Marketable securities (equity holdings)		625		—		625		—
Total	$	257,605	$	67,024	$	190,581	$	—

For the years ended December 31, 2012 and 2011, there were no transfers between Level 1 and Level 2 financial assets. The carrying amounts reflected in the Company’s consolidated balance sheets for cash, billed and unbilled collaboration receivables, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

Investments in Marketable Securities

The Company invests its excess cash balances in short-term and long-term marketable debt and equity securities. The Company classifies its investments in marketable debt securities as either held-to-maturity or

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available-for-sale based on facts and circumstances present at the time it purchased the securities. At each balance sheet date presented, the Company classified all of its investments in debt and equity securities as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary” and, if so, marks the investment to market through a charge to its consolidated statements of comprehensive loss. The Company did not record any impairment charges related to its fixed income marketable securities during the years ended December 31, 2012, 2011 or 2010. During 2011, the Company recorded an impairment charge of $0.6 million related to its former investment in equity securities of Tekmira Pharmaceuticals Corporation (“TPC”), as the decrease in the fair value of this investment was deemed to be other than temporary. The Company’s marketable securities are classified as cash equivalents if the original maturity, from the date of purchase, is 90 days or less, and as marketable securities if the original maturity, from the date of purchase, is in excess of 90 days. The Company’s cash equivalents are composed of money market funds, U.S. government obligations and commercial paper. At December 31, 2012, the Company accounts for its investment in Regulus as an available-for-sale marketable security. At December 31, 2012, the fair value of these equity securities was $38.7 million. As a result of the Regulus’ initial public offering, the Company’s carrying amount in these equity securities was $12.4 million, with a gross unrealized gain of $26.3 million recorded in other comprehensive income.

The Company obtains fair value measurement data for its marketable securities from independent pricing services. The Company performs validation procedures to ensure the reasonableness of this data. This includes meeting with the independent pricing services to understand the methods and data sources used. Additionally, the Company performs its own review of prices received from the independent pricing services by comparing these prices to other sources and confirming those securities are trading in active markets.

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The following tables summarize the Company’s marketable securities at December 31, 2012 and 2011, in thousands:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	22,650	$	1	$	(12	)	$	22,639
Corporate notes (Due within 1 year)		41,249		23		(4	)		41,268
Corporate notes (Due after 1 year through 2 years)		50,322		5		(72	)		50,255
U.S. Government obligations (Due within 1 year)		7,500		—		—			7,500
U.S. Government obligations (Due after 1 year through 2 years)		53,168		2		(9	)		53,161
Total	$	174,889	$	31	$	(97	)	$	174,823

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	11,397	$	—	$	(2	)	$	11,395
Corporate notes (Due within 1 year)		51,273		19		(47	)		51,245
Corporate notes (Due after 1 year through 2 years)		53,592		50		(48	)		53,594
U.S. Government obligations (Due within 1 year)		13,532		2		—			13,534
U.S. Government obligations (Due after 1 year through 2 years)		60,202		7		(21	)		60,188
Equity securities		750		—		(125	)		625
Total	$	190,746	$	78	$	(243	)	$	190,581

Estimated Liability for Development Costs

The Company records accrued liabilities related to expenses for which service providers have not yet billed the Company with respect to products or services that the Company has received, specifically related to ongoing pre-clinical studies and clinical trials. These costs primarily relate to third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator fees. The Company has multiple product candidates in concurrent pre-clinical studies and clinical trials at multiple clinical sites throughout the world. In order to ensure that the Company has adequately provided for ongoing pre-clinical and clinical development costs during the period in which the Company incurs such costs, the Company maintains an accrual to cover these expenses. The Company updates the estimate for this accrual on at least a quarterly basis. The assessment of these costs is a subjective process that requires judgment. Upon settlement, these costs may differ materially from the amounts accrued in the Company’s consolidated financial statements. The Company’s historical accrual estimates have not been materially different from the Company’s actual costs.

Revenue Recognition

The Company has entered into collaboration agreements with leading pharmaceutical and life sciences companies, including Novartis, Biogen Idec Inc. (“Biogen Idec”), Roche, Takeda, Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”), Cubist Pharmaceuticals, Inc. (“Cubist”), Monsanto Company (“Monsanto”) Genzyme

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Corporation (“Genzyme”) and The Medicines Company (“MedCo”). The terms of the Company’s collaboration agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical and pre-clinical development milestones, regulatory milestones, manufacturing services, sales milestones and royalties on product sales.

In January 2011, the Company adopted new authoritative guidance on revenue recognition for multiple element arrangements. The guidance, which applied to multiple element arrangements entered into or materially modified on or after January 1, 2011, amended the criteria for separating and allocating consideration in a multiple element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use of the residual method. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor specific objective evidence and third-party evidence is not available. Deliverables under the arrangement could be considered separate units of accounting provided that (i) a delivered item has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. The new guidance did not change the criteria for standalone value. As a biotechnology entity with unique and specialized delivered and undelivered performance obligations, the Company has been unable to demonstrate standalone value in its multiple element arrangements. For example, the Company applied the new rules to collaborations executed with Monsanto and Genzyme during 2012, but it was unable to demonstrate standalone value. In addition, the Company has not materially modified any of its multiple element arrangements. As such, the Company will continue to account for other license and collaboration agreements under previously issued revenue recognition guidance for multiple element arrangements, as described below.

Non-refundable license fees are recognized as revenue upon delivery of the license only if the Company has a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the resulting receivable is reasonably assured and the Company has no further performance obligations under the license agreement. Multiple element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license and performance obligations such as research and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. The Company recognizes upfront license payments as revenue upon delivery of the license only if the license has standalone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately as such obligations are fulfilled. If the license is considered to either not have standalone value or have standalone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either a proportional performance or straight-line method. The Company recognizes revenue using the proportional performance method when the level of effort required to complete its performance obligations under an arrangement can be reasonably estimated and such performance obligations are provided on a best-efforts basis. Direct labor hours or full-time equivalents are typically used as the measure of performance. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of level of effort incurred to date to estimated total level of effort required to complete the Company’s performance obligations under the arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the proportional performance method, as of the period ending date.

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If the Company cannot reasonably estimate the level of effort to complete its performance obligations under an arrangement, the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method, as of the period ending date.

Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.

Many of the Company’s collaboration agreements entitle it to additional payments upon the achievement of performance-based milestones. These milestones are generally categorized into three types; development milestones which are generally based on the advancement of the Company’s pipeline and initiation of clinical trials, regulatory milestones which are generally based on the submission, filing or approval of regulatory applications such as a new drug application in the United States, and commercialization milestones which are generally based on meeting specific thresholds of sales in certain geographic areas. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in the Company’s revenue model. Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counter-party performance are not included in the Company’s revenue model until the performance conditions are met.

The Company performs an assessment to determine whether a substantive milestone exists at the inception of its collaborative arrangements. In evaluating if a milestone is substantive, the Company considers whether uncertainty exists as to the achievement of the milestone event at the inception of the arrangement, the achievement of the milestone involves substantive effort and can only be achieved based in whole or part on the performance or the occurrence of a specific outcome resulting from the Company’s performance, the amount of the milestone payment appears reasonable either in relation to the effort expected to be expended or to the projected enhancement of the value of the delivered items, there is any future performance required to earn the milestone, and the consideration is reasonable relative to all deliverables and payment terms in the arrangement. When a substantive milestone is achieved, the accounting rules permit the Company to recognize revenue related to the milestone payment in its entirety.

To date, the Company has not recorded any substantive milestones under its collaborations because the Company has not identified any milestones that meet the required criteria listed above. The Company has deferred recognition of payments for achievement of non-substantive milestones and recognized revenue over the estimated period of performance applicable to each collaborative arrangement. As these milestones are achieved, the Company will recognize as revenue a portion of the milestone payment, which is equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment, upon achievement of such milestone. The Company will recognize the remaining portion of the milestone payment over the remaining performance period under the proportional performance method or on a straight-line basis.

For revenue generating arrangements where the Company, as a vendor, provides consideration to a licensor or collaborator, as a customer, the Company applies the accounting standard that governs such transactions. This standard addresses the accounting for revenue arrangements where both the vendor and the customer make cash payments to each other for services and/or products. A payment to a customer is presumed to be a reduction of the selling price unless the Company receives an identifiable benefit for the payment and it can reasonably estimate the fair value of the benefit received. Payments to a customer that are deemed a reduction of selling

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price are recorded first as a reduction of revenue, to the extent of both cumulative revenue recorded to date and probable future revenues, which include any unamortized deferred revenue balances, under all arrangements with such customer, and then as an expense. Payments that are not deemed to be a reduction of selling price are recorded as an expense.

The Company evaluates its collaborative agreements for proper classification in its consolidated statements of comprehensive loss based on the nature of the underlying activity. Transactions between collaborators recorded in the Company’s consolidated statements of comprehensive loss are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship. The Company generally reflects amounts due under its collaborative agreements related to cost-sharing of development activities as a reduction of research and development expense.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets. Although the Company follows detailed guidelines in measuring revenue, certain judgments affect the application of its revenue policy. For example, in connection with the Company’s existing collaboration agreements, the Company has recorded on its balance sheet short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months are classified as long-term deferred revenue. However, this estimate is based on the Company’s current operating plan and, if its operating plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.

The estimate of deferred revenue also reflects management’s estimate of the periods of the Company’s involvement in certain of its collaborations. The Company’s performance obligations under these collaborations consist of participation on steering committees and the performance of other research and development services. In certain instances, the timing of satisfying these obligations can be difficult to estimate. Accordingly, the Company’s estimates may change in the future. Such changes to estimates would result in a change in revenue recognition amounts. If these estimates and judgments change over the course of these agreements, it may affect the timing and amount of revenue that the Company recognizes and records in future periods. At December 31, 2012, the Company had short-term and long-term deferred revenue of $31.4 million and $100.9 million, respectively, related to its collaborations.

The Company recognizes revenue under government cost reimbursement contracts as the Company performs the underlying research and development activities.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured under enacted tax laws. A valuation allowance is required to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company’s policy is to accrue interest and penalties related to unrecognized tax positions in income tax expense. As of December 31, 2012, the Company has not recorded significant interest and penalty expense related to uncertain tax positions.

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Research and Development Costs

The Company expenses research and development costs as incurred. Included in research and development costs are wages, benefits and other operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, and overhead directly related to the Company’s research and development operations, as well as costs to acquire technology licenses.

The Company has entered into several license agreements for rights to utilize certain technologies. The terms of the licenses may provide for upfront payments, annual maintenance payments, milestone payments based upon certain specified events being achieved and royalties on product sales. The Company charges costs to acquire and maintain licensed technology that has not reached technological feasibility and does not have alternative future use to research and development expense as incurred. During the years ended December 31, 2012, 2011 and 2010, the Company charged to research and development expense costs associated with license fees of $5.7 million, $1.4 million and $2.4 million, respectively.

Accounting for Stock-Based Compensation

The Company has stock incentive plans and an employee stock purchase plan under which it grants equity instruments. The Company accounts for all stock-based awards granted to employees at their fair value and generally recognizes compensation expense over the vesting period of the award. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of stock options as of the grant date. The Company calculates the grant date fair values using the Black-Scholes valuation model. The Company’s expected stock price volatility assumption is based on a combination of the historical and implied volatility of the Company’s publicly traded stock.

For stock-based awards granted to non-employees, the Company generally recognizes compensation expense over the vesting period of the award, which is generally the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to vesting, the Company re-measures the value of these stock-based awards (as calculated using the Black-Scholes option-pricing model) using the then-current fair value of the Company’s common stock. Stock options granted by the Company to non-employees, other than members of the Company’s Board of Directors and Scientific Advisory Board members, generally vest over the service period.

The fair value of restricted stock awards granted to employees is based upon the quoted closing market price per share on the date of grant, adjusted for assumed forfeitures. For performance-based restricted stock awards, the value of the awards is measured when the Company determines that the achievement of such performance conditions is deemed probable. This determination requires significant judgment by management. Expense is recognized over the vesting period, commencing when the Company determines that it is probable that the awards will vest.

Accounting for Joint Venture

From the formation of Regulus in September 2007 to October 2012, the Company accounted for its interest in Regulus using the equity method of accounting. The Company reviewed the consolidation guidance that defines a variable interest entity (“VIE”) and concluded that Regulus qualified as a VIE during such time period. The Company recorded any gains or losses recognized from the issuance of stock by its equity method investee as other income (expense) in its consolidated statements of comprehensive loss. The Company did not consolidate Regulus’ financial results as the Company lacked the power to direct the activities that could significantly impact the economic success of Regulus. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Based upon the Company’s new ownership percentage of 17%, as well as

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qualitative factors, the Company does not believe that it has the ability to exercise significant influence over the operating decisions and financial policies of Regulus and has therefore discontinued the equity method of accounting for Regulus. Accordingly, beginning in October 2012, the Company has accounted for its investment in Regulus as an available-for-sale marketable security. For additional details on the accounting for the Company’s investment in Regulus, see Note 10.

Comprehensive Loss

Comprehensive loss is comprised of net loss and certain changes in stockholders’ equity that are excluded from net loss. The Company includes foreign currency translation adjustments in other comprehensive loss for Alnylam Europe as the functional currency is not the United States dollar. The Company also includes unrealized gains and losses on certain marketable securities in other comprehensive loss.

Net Loss Per Common Share

The Company computes basic net loss per common share by dividing net loss by the weighted average number of common shares outstanding. The Company computes 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. Potential common shares consist of shares issuable upon the exercise of stock options (using the treasury stock method), and unvested restricted stock awards. Because the inclusion of potential common shares would be anti-dilutive for all periods presented, diluted net loss per common share is the same as basic net loss per common share.

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

	December 31,
	2012		2011		2010
Options to purchase common stock		8,932		9,779		8,975
Unvested restricted common stock		604		312		113
		9,536		10,091		9,088

Segment Information

The Company operates in a single reporting segment, the discovery, development and commercialization of RNAi therapeutics.

Subsequent Events

The Company evaluated all events or transactions that occurred after December 31, 2012 up through the date these consolidated financial statements were issued. During this period, the Company did not have any material recognized subsequent events. However, the Company did have the following nonrecognized subsequent events, which are more fully described in Notes 3, 7 and 12:

• In January 2013, the Company sold an aggregate of 9,200,000 shares of its common stock through an underwritten public offering at a price to the public of $20.13 per share. See Note 7.

• In January 2013, the Company and MedCo entered into a license and collaboration agreement (the “MedCo Agreement”), pursuant to which the Company granted to MedCo an exclusive license to develop and commercialize specified RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9 (“PCSK9”). See Note 12.

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• In February 2013, Cubist notified the Company that it would not exercise its opt-in right for the Company’s ALN-RSV01 program for the treatment of respiratory syncytial virus infection in lung transplant patients. In light of this determination, the parties mutually agreed to terminate their license and collaboration agreement entered into in January 2009 (the “Cubist Agreement”). See Note 3.

• On February 19, 2013, the Company and Genzyme entered into an amendment to their license and collaboration agreement (the “Genzyme Agreement”). See Note 3.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This standard is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. The Company adopted this amendment on January 1, 2012. The adoption of this new standard did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, a company may present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, a company is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. The Company adopted this amendment on January 1, 2012. Other than a change in presentation, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. Other than a change in presentation, the Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

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3. SIGNIFICANT AGREEMENTS

The following table summarizes the Company’s total consolidated net revenues from research collaborators, for the periods indicated, in thousands:

	Year Ended December 31,
	2012		2011		2010
Roche/Arrowhead	$	37,318	$	55,978	$	55,978
Takeda		21,973		22,248		22,250
Cubist		2,777		2,467		2,363
Monsanto		1,954		—		—
Novartis		60		149		9,313
Government contract		—		152		4,335
Other		2,643		1,763		5,802
Total net revenues from research collaborators	$	66,725	$	82,757	$	100,041

Platform Alliances

Roche/Arrowhead Alliance

In July 2007, the Company and, for limited purposes, Alnylam Europe, entered into a license and collaboration agreement (the “LCA”) with Roche. Under the LCA, which became effective in August 2007, the Company granted Roche a non-exclusive license to the Company’s intellectual property, including delivery-related intellectual property existing as of the date of the LCA, to develop and commercialize therapeutic products that function through RNAi, subject to the Company’s existing contractual obligations to third parties. In November 2010, Roche announced the discontinuation of certain activities in research and early development, including its RNAi research efforts. In October 2011, Arrowhead announced its acquisition of RNA therapeutics assets from Roche, including the LCA. As a result of the assignment, Arrowhead owns all of the rights and obligations of Roche under the LCA. The license is initially limited to four therapeutic areas, and may be expanded to include additional therapeutic areas upon payment to the Company by Arrowhead of an additional $50.0 million for each additional therapeutic area, if any.

In consideration for the rights the Company granted under the LCA, Roche paid the Company $273.5 million in upfront cash payments. In addition, in exchange for the Company’s contributions under the LCA, for each RNAi therapeutic product developed by Arrowhead, its affiliates or sublicensees under the LCA, the Company is entitled to receive milestone payments upon achievement of specified development, regulatory and commercialization events, totaling up to an aggregate of $100.0 million per therapeutic target, together with a single-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments for each therapeutic target include up to $17.5 million for the achievement of specified development milestones, up to $62.5 million for the achievement of specified regulatory milestones and up to $20.0 million for the achievement of specified commercialization milestones. The Company could potentially earn the next development milestone payment of $1.0 million under the LCA based upon the initiation of the first Phase I clinical trial by Arrowhead for an RNAi therapeutic product. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Arrowhead. Under the LCA, the Company and Roche also established a discovery collaboration in October 2009 (“Discovery Collaboration”), subject to the Company’s existing contractual obligations to third parties.

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The term of the LCA generally ends upon the later of ten years from the first commercial sale of a licensed product and the expiration of the last-to-expire patent covering a licensed product. Arrowhead may terminate the LCA, on a licensed product-by-licensed product, licensed patent-by-licensed patent, and country-by-country basis, upon 180-days’ prior written notice, but is required to continue to make milestone and royalty payments to the Company if any royalties were payable on net sales of a terminated licensed product during the previous 12 months. The LCA may also be terminated by either party in the event the other party fails to cure a material breach under the LCA.

In July 2007, the Company executed a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Roche Finance Ltd, an affiliate of Roche. In connection with the execution of the LCA and the Common Stock Purchase Agreement, the Company also executed a share purchase agreement (the “Alnylam Europe Purchase Agreement”) with Alnylam Europe and Roche Beteiligungs GmbH, an affiliate of Roche (“Roche Germany”). Under the terms of the Alnylam Europe Purchase Agreement, the Company sold substantially all of the non-intellectual property assets of Alnylam Europe to Roche Germany for an aggregate purchase price of $15.0 million.

In summary, the Company received upfront payments totaling $331.0 million under the Roche alliance, which included an upfront payment under the LCA of $273.5 million, $42.5 million under the Common Stock Purchase Agreement and $15.0 million under the Alnylam Europe Purchase Agreement. The Company initially recorded $278.2 million of these proceeds as deferred revenue in connection with this alliance.

The Company determined that the deliverables under these agreements included the license, the Alnylam Europe assets and employees, the steering committees (joint steering committee and future technology committee) and the services under the Discovery Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and assets of Alnylam Europe are not separable from the undelivered services (i.e., the steering committees and Discovery Collaboration) and, accordingly the license and the services were treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Arrowhead alliance, the steering committee services and the Discovery Collaboration services are the final deliverables and all such services ended, contractually, in August 2012, five years from the effective date of the LCA.

The Company recognized the revenue related to these agreements on a straight-line basis over five years because the Company could not reasonably estimate the total level of effort required to complete its service obligations under the LCA, and therefore, could not utilize a proportional performance model. At December 31, 2012, there was no remaining deferred revenue under the LCA as the Company recognized all remaining Roche/Arrowhead revenue during the quarter ended September 30, 2012. The Company will recognize future milestones under the LCA, if any, when such milestones are achieved.

Takeda Alliance

In May 2008, the Company entered into a license and collaboration agreement (the “Takeda Agreement”) with Takeda to pursue the development and commercialization of RNAi therapeutics. Under the Takeda Agreement, the Company granted to Takeda a non-exclusive, worldwide, royalty-bearing license to the Company’s intellectual property, including delivery-related intellectual property, controlled by the Company as of the date of the agreement or during the five years thereafter, to develop, manufacture, use and commercialize RNAi therapeutics, subject to the Company’s existing contractual obligations to third parties. The license initially is limited to the fields of oncology and metabolic disease and may be expanded at Takeda’s option to include other therapeutic areas, subject to specified conditions. Under the Takeda Agreement, Takeda is the Company’s exclusive platform partner in the Asian territory, as defined in the Takeda Agreement, through May 2013.

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In consideration for the rights granted to Takeda under the Takeda Agreement, Takeda agreed to pay the Company $150.0 million in upfront and near-term technology transfer payments. In addition, the Company has the option, exercisable until the start of Phase III development, to opt-in under a 50-50 profit sharing agreement to the development and commercialization in the United States of up to four Takeda licensed products, and would be entitled to opt-in rights for two additional products for each additional field expansion, if any, elected by Takeda under the Takeda Collaboration Agreement. In June 2008, Takeda paid the Company an upfront payment of $100.0 million and agreed to pay to the Company an additional $50.0 million upon achievement of specified technology transfer milestones. Of this $50.0 million, $20.0 million was paid to the Company in October 2008, $20.0 million was paid to the Company in March 2010, and $10.0 million was paid to the Company in March 2011 (collectively, the “Technology Transfer Milestones”). If Takeda elects to expand its license to additional therapeutic areas, Takeda will be required to pay the Company $50.0 million for each additional field selected, if any. In addition, for each RNAi therapeutic product developed by Takeda, its affiliates and sublicensees, the Company is entitled to receive specified development, regulatory and commercialization milestone payments, totaling up to $171.0 million per product, together with up to a double-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments per product include up to $26.0 million for the achievement of specified development milestones, up to $40.0 million for the achievement of specified regulatory milestones and up to $105.0 million for the achievement of specified commercialization milestones. The Company could potentially earn the next milestone payment of $2.0 million under the Takeda Agreement based upon the achievement of a specified pre-clinical event by Takeda for an RNAi therapeutic product. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any additional milestone payments or any royalty payments from Takeda.

Pursuant to the Takeda Agreement, the Company and Takeda are also collaborating on the research of RNAi therapeutics directed to one or two disease targets agreed to by the parties (the “Research Collaboration”), subject to the Company’s existing contractual obligations with third parties. Takeda also has the option, subject to certain conditions, to collaborate with the Company on the research and development of RNAi drug delivery technology for targets agreed to by the parties. In addition, through May 2013, Takeda has a right of first negotiation for the development and commercialization of the Company’s RNAi therapeutic products in the Asian territory, excluding the Company’s ALN-RSV, ALN-TTR and ALN-PCS programs. In addition to the 50-50 profit sharing option, the Company has a similar right of first negotiation to participate with Takeda in the development and commercialization of licensed products in the United States. The collaboration is governed by a joint technology transfer committee (the “JTTC”), a joint research collaboration committee (the “JRCC”) and a joint delivery collaboration committee (the “JDCC”), each of which is comprised of an equal number of representatives from each party.

The term of the Takeda Agreement generally ends upon the later of (1) the expiration of the Company’s last-to-expire patent covering a licensed product and (2) the last-to-expire term of a profit sharing agreement in the event the Company elects to enter into such an agreement. The Takeda Agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Takeda may terminate the agreement on a licensed product-by-licensed product or country-by-country basis upon 180-days’ prior written notice to the Company, provided, however, that Takeda is required to continue to make royalty payments to the Company for the duration of the royalty term with respect to a licensed product.

The Company has determined that the deliverables under the Takeda Agreement include the license, the joint committees (the JTTC, JRCC and JDCC), the technology transfer activities and the services that the Company will be obligated to perform under the Research Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the

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license and undelivered services (i.e., the joint committees and the Research Collaboration) are not separable and, accordingly, the license and services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Takeda Agreement, the last elements to be delivered are the JDCC and JTTC services, each of which has a life of no more than seven years.

The Company is recognizing the upfront payment of $100.0 million and the Technology Transfer Milestones of $50.0 million, the receipt of which the Company believed was probable at the commencement of the collaboration, on a straight-line basis over seven years because the Company is unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the Research Collaboration is largely unknown, and therefore, cannot utilize a proportional performance model. As future milestones are achieved, if any, the Company will recognize as revenue a portion of the milestone payment equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment. At December 31, 2012, deferred revenue under the Takeda Agreement was $52.8 million.

Monsanto Alliance

In August 2012, the Company and Monsanto Company (“Monsanto”) entered into a license and collaboration agreement (the “Monsanto Agreement”), pursuant to which the Company granted to Monsanto a worldwide, exclusive, royalty bearing right and license, including the right to grant sublicenses, to the Company’s RNAi platform technology and intellectual property controlled by the Company as of the date of the Monsanto Agreement or during the 30 months thereafter, in the field of agriculture. The Monsanto Agreement also includes the transfer of technology from the Company to Monsanto and a collaborative research project (the “Monsanto Discovery Collaboration”). Under the Monsanto Agreement, Monsanto will be the Company’s exclusive collaborator in the agriculture field for a ten-year period (the “Exclusivity Period”).

In consideration for the rights granted to Monsanto under the Monsanto Agreement, Monsanto paid the Company $29.2 million in upfront cash payments. Monsanto is also required to make near-term milestone payments to the Company upon the achievement of specified technology transfer and patent-related milestones. The Company is also entitled to receive additional funding for collaborative research efforts. In the aggregate, the Company can earn up to $5.0 million in potential future milestone payments and research funding under the Monsanto Agreement. In addition, Monsanto is required to pay to the Company a percentage of specified fees from certain sublicense agreements Monsanto may enter into that include access to the Company’s intellectual property, as well as low single-digit royalty payments on worldwide, net sales by Monsanto, its affiliates and sublicensees of certain Licensed Products (as defined in the Monsanto Agreement), if any. In December 2012, the Company received a milestone payment of $1.5 million of the $5.0 million in potential milestone payments under the Monsanto Agreement based upon the achievement of a specified patent-related event. The Company could potentially earn the next milestone payment of $2.5 million under the Monsanto Agreement based upon the completion of technology transfer activities. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of the application of RNAi technology in the field of agriculture, the Company may not receive any additional milestone payments or any royalty payments from Monsanto.

The term of the Monsanto Agreement generally ends upon the expiration of the last-to-expire patent licensed under the agreement. The Company estimates that its fundamental RNAi patents licensed under the Monsanto Agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. After August 27, 2013, Monsanto may terminate the Monsanto Agreement in its entirety upon 30-days’ prior written notice to the Company, provided,

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however, that Monsanto is required to continue to make royalty payments to the Company if any royalties were payable on net sales of a Licensed Product during the previous 24 months. The Monsanto Agreement may also be terminated by either party in the event the other party fails to cure a material breach under the agreement.

The Company determined that the significant deliverables under the Monsanto Agreement include the license, the technology transfer activities and the services that the Company will be obligated to perform under the Monsanto Discovery Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered technical transfer activities and Monsanto Discovery Collaboration services do not have standalone value due to the specialized nature of the services to be provided by the Company. In addition, while Monsanto has the ability to grant sublicenses, it cannot grant access to certain of the Company’s proprietary technology. The uniqueness of the Company’s services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered technical transfer activities and Monsanto Discovery Collaboration services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition model on the final deliverable. Under the Monsanto Agreement, the last deliverable to be completed is the Monsanto Discovery Collaboration, which must be completed within five years. The Company is recognizing revenue under the Monsanto Agreement on a straight-line basis over five years. The Company is not utilizing a proportional performance model since it is unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the Monsanto Discovery Collaboration is largely unknown.

The Company received a payment of $29.2 million from Monsanto in August 2012, which was initially recorded as deferred revenue. Under the terms of the Monsanto Agreement, in the event that during the Exclusivity Period Monsanto loses certain patent rights, and such loss has a material adverse effect on the Licensed Products, then the Company would be required to pay Monsanto up to $5.0 million as liquidated damages, and Monsanto’s royalty obligations to the Company under the Monsanto Agreement would be reduced or, under certain circumstances, terminated. The Company has the right to cure any such loss of patent rights under the Monsanto Agreement. The Company has determined that this amount is not fixed and determinable and therefore, the Company has excluded this amount from its revenue model and is deferring the recognition of $5.0 million of revenue. The Company will continue to reassess when this amount can be considered fixed and determinable. If the achievement of a milestone is considered probable at the inception of the collaboration, the Company’s policy is to include the related payment in its revenue model. The Company has concluded that the receipt of the technology transfer payment of $2.5 million is probable, and has therefore included this amount in the Company’s revenue model. As future milestones are achieved, if any, the Company will recognize as revenue a portion of the milestone payment equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment. At December 31, 2012, deferred revenue under the Monsanto Agreement was $28.7 million.

Discovery and Development Alliances

Isis Collaboration and License Agreement

In April 2009, the Company and Isis amended and restated their existing strategic collaboration and license agreement (as amended and restated, the “Amended and Restated Isis Agreement”), originally entered into in March 2004, to extend the broad cross-licensing arrangement regarding double-stranded RNAi that was established in 2004, pursuant to which Isis granted the Company licenses to its current and future patents and patent applications relating to chemistry and to RNA-targeting mechanisms for the research, development and commercialization of double-stranded RNA (“dsRNA”) products. The Company has the right to use Isis technologies in its development programs or in collaborations and Isis agreed not to grant licenses under these patents to any other organization for the discovery, development and commercialization of dsRNA products

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designed to work through an RNAi mechanism, except in the context of a collaboration in which Isis plays an active role. The Company granted Isis non-exclusive licenses to its current and future patents and patent applications relating to RNA-targeting mechanisms and to chemistry for research use. The Company also granted Isis the non-exclusive right to develop and commercialize dsRNA products developed using RNAi technology against a limited number of targets. In addition, the Company granted Isis non-exclusive rights to research, develop and commercialize single-stranded RNA products. In August 2012, the Company and Isis amended the Amended and Restated Isis Agreement to provide for the discovery, development and commercialization of dsRNA products by the Company or its sublicensees in the field of agriculture.

In 2004, under the terms of the original Isis agreement, the Company paid Isis an upfront license fee of $5.0 million. The Company also agreed to pay Isis milestone payments, totaling up to approximately $3.4 million, upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product that the Company or a collaborator develops using Isis intellectual property. In addition, the Company agreed to pay to Isis a percentage of specified fees from strategic collaborations the Company may enter into that include access to Isis’ intellectual property.

Isis agreed to pay the Company, per therapeutic target, a license fee of $0.5 million, and milestone payments totaling approximately $3.4 million, payable upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product developed by Isis or a collaborator that utilizes the Company’s intellectual property. Isis has the right to elect up to ten non-exclusive target licenses under the agreement and has the right to purchase one additional non-exclusive target per year during the term of the collaboration.

As part of the Amended and Restated Isis Agreement, the Company and Isis established a collaborative effort focused on single-stranded RNAi (“ssRNAi”) technology and the Company obtained from Isis a co-exclusive, worldwide license to research, develop and commercialize ssRNAi products. The Company paid Isis $11.0 million in license fees upon signing the agreement in connection with the ssRNAi research program. In November 2010, the Company exercised its right to terminate the ssRNAi collaborative effort, and all licenses to ssRNAi products granted by Isis to the Company, and any obligation thereunder requiring the Company to provide further research funding or pay additional license fees, milestone payments, royalties or sublicense payments to Isis for such ssRNAi products, also terminated. The termination of this collaborative effort did not affect the remainder of the Amended and Restated Isis Agreement, including the Company’s licenses to Isis’ current and future patents and patent applications relating to dsRNAs, which remains in effect.

The term of the Amended and Restated Isis Agreement generally ends upon the expiration of the last-to-expire patent licensed thereunder, whether such patent is a patent licensed by the Company to Isis, or vice versa. As the license will include additional patents, if any, filed to cover future inventions, if any, the date of expiration cannot be determined at this time.

During 2012, as a result of certain payments received by the Company in connection with the Monsanto and Genzyme alliances, the Company paid $2.5 million to Isis. These license fees were charged to research and development expense.

Novartis Alliance

In the second half of 2005, the Company entered into a series of transactions with Novartis, which included a stock purchase agreement, an investor rights agreement (the “Investor Rights Agreement”) and a research collaboration and license agreement (the “Collaboration and License Agreement”) (collectively the “Novartis Agreements”). The Collaboration and License Agreement had a five-year research term. In October 2010, the research program under the Collaboration and License Agreement was substantially completed in accordance with the terms of the Collaboration and License Agreement, subject to certain surviving rights and obligations of the parties.

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In September 2010, Novartis exercised its right under the Collaboration and License Agreement to select 31 designated gene targets, for which Novartis has exclusive rights to discover, develop and commercialize RNAi therapeutic products using the Company’s intellectual property and technology, including delivery-related intellectual property and related technology. Under the terms of the Collaboration and License Agreement, for any RNAi therapeutic products Novartis develops against these targets, the Company is entitled to receive milestone payments upon achievement of certain specified development and annual net sales events, up to an aggregate of $75.0 million per therapeutic product, as well as royalties on annual net sales of any such product. For purposes of potential future revenue recognition, the Company does not believe these milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Novartis.

Novartis may terminate the Collaboration and License Agreement in the event that the Company materially breaches its obligations. The Company may terminate the Collaboration and License Agreement with respect to particular programs, products and/or countries in the event of specified material breaches by Novartis of its obligations, or in its entirety under specified circumstances for multiple such breaches.

The Company initially deferred the non-refundable $10.0 million upfront payment and the $6.4 million premium paid on the common stock of the Company purchased by Novartis. These payments, in addition to research funding and certain milestone payments, together totaled approximately $64.0 million, and are being amortized into revenue using the proportional performance method over the estimated duration of the Collaboration and License Agreement. Under this method, the Company estimates the level of effort to be expended over the term of the agreement and recognizes revenue based on the lesser of the amount calculated based on proportional performance of total expected revenue or the amount of non-refundable payments earned.

The Company believes the estimated period of performance under the Collaboration and License Agreement is ten years, which includes the five-year term of the agreement and limited support as part of a technology transfer until 2015, the fifth anniversary of the completion of the research term under the Collaboration and License Agreement. The Company continues to use an expected term of ten years in its proportional performance model. The Company reevaluates the expected term when new information is known that could affect the Company’s estimate. In the event the Company’s period of performance is different than estimated, the Company will adjust the amount of revenue recognized on a prospective basis. At December 31, 2012, deferred revenue under the Novartis Collaboration and License Agreement was $0.2 million.

At December 31, 2012, Novartis owned approximately 7.7% of the Company’s outstanding common stock.

Product Alliances

Kyowa Hakko Kirin Alliance

In June 2008, the Company entered into a license and collaboration agreement (the “KHK Agreement”) with Kyowa Hakko Kirin. Under the KHK Agreement, the Company granted Kyowa Hakko Kirin an exclusive license to its intellectual property in Japan and other markets in Asia (the “Licensed Territory”) for the development and commercialization of an RNAi therapeutic for the treatment of respiratory syncytial virus (“RSV”) infection. The KHK Agreement covers ALN-RSV01, as well as additional RSV-specific RNAi therapeutic compounds that comprise the ALN-RSV program (“Additional Compounds”). The Company retains all development and commercialization rights worldwide outside of the Licensed Territory.

Under the terms of the KHK Agreement, in June 2008, Kyowa Hakko Kirin paid the Company an upfront cash payment of $15.0 million. In addition, Kyowa Hakko Kirin is required to make payments to the Company upon achievement of specified development and sales milestones totaling up to $78.0 million, and royalty payments based on annual net sales, if any, of RNAi therapeutics for the treatment of RSV by Kyowa Hakko

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Kirin, its affiliates and sublicensees in the Licensed Territory. For purposes of potential future revenue recognition, the Company does not believe these milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Kyowa Hakko Kirin.

The collaboration between Kyowa Hakko Kirin and the Company is governed by a joint steering committee that is comprised of an equal number of representatives from each party. Under the agreement, Kyowa Hakko Kirin is establishing a development plan for the ALN-RSV program relating to the development activities to be undertaken in the Licensed Territory, with the initial focus on Japan. Kyowa Hakko Kirin is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of RSV in Japan and the rest of the Licensed Territory. The Company is responsible for supply of the product to Kyowa Hakko Kirin under a supply agreement unless Kyowa Hakko Kirin elects, prior to the first commercial sale of the product in the Licensed Territory, to manufacture the product itself or arrange for a third party to manufacture the product.

The term of the KHK Agreement generally ends on a country-by-country basis upon the later of (1) the expiration of the Company’s last-to-expire patent covering a licensed product and (2) the tenth anniversary of the first commercial sale in the country of sale. Additional patent filings relating to the collaboration may be made in the future. The KHK Agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Kyowa Hakko Kirin may terminate the agreement without cause upon 180-days’ prior written notice to the Company, subject to certain conditions.

The Company has determined that the deliverables under the KHK Agreement include the license, the joint steering committee, the manufacturing services and any Additional Compounds. The Company has determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the individual deliverables are not separable and, accordingly, must be accounted for as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable.

The Company is currently unable to reasonably estimate its period of performance under the KHK Agreement, as it is unable to estimate the timeline of its deliverables related to the fixed-price option granted to Kyowa Hakko Kirin for any Additional Compounds. The Company is deferring all revenue under the KHK Agreement until it is able to reasonably estimate its period of performance. The Company will continue to reassess whether it can reasonably estimate the period of performance to fulfill its obligations under the KHK Agreement. At December 31, 2012, deferred revenue under the KHK Agreement was $15.5 million.

Genzyme Alliance

In October 2012, the Company and Genzyme entered into the Genzyme Agreement pursuant to which the Company granted to Genzyme an exclusive license in Japan and the Asia-Pacific region (“the Genzyme Territory”) to develop and commercialize RNAi therapeutics targeting transthyretin (“TTR”) for the treatment of transthyretin-mediated amyloidosis (“ATTR”) and other human diseases. The Genzyme Agreement covers ALN-TTR02 and ALN-TTRsc, and may in the future cover additional TTR-specific RNAi therapeutic compounds that comprise the Company’s TTR program (together, “Licensed Products”), subject, in the case of Improvement Products (as defined in the Genzyme Agreement), to specified additional terms and conditions. The Company retains all development and commercialization rights worldwide outside of the Genzyme Territory.

In consideration for the rights granted to Genzyme under the Genzyme Agreement, Genzyme paid the Company an upfront cash payment of $22.5 million. Upon achievement of certain milestones, the Company will be entitled to receive milestone payments, up to an aggregate of $50.0 million, including up to $25.0 million in specified development milestones and $25.0 million in specified regulatory milestones. In addition, the Company

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will be entitled to tiered royalties expected to yield an effective royalty rate percentage ranging from the mid-teens to mid-twenties based on annual net sales, if any, of Licensed Products in the Genzyme Territory by Genzyme, its affiliates and sublicensees. The Company could potentially earn the next development milestone payment of $7.0 million under the Genzyme Agreement based upon the completion of a successful Phase II ALN-TTR clinical trial, as defined in the Genzyme Agreement. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Genzyme.

Under the Genzyme Agreement, the parties will collaborate in the development of Licensed Products, with Genzyme assuming primary responsibility for the development and commercialization of Licensed Products in the Genzyme Territory and the Company retaining primary responsibility for the development and commercialization of Licensed Products in the rest of the world. The collaboration between Genzyme and the Company is governed by a joint steering committee that will be comprised of an equal number of representatives from each party. Under the agreement, Genzyme is establishing a development plan for the ALN-TTR program relating to the development activities to be undertaken in the Genzyme Territory. Genzyme is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of ATTR in the Genzyme Territory. The Company and Genzyme intend to enter into a supply agreement to provide for supply of Licensed Products to Genzyme for clinical trials, and, at Genzyme’s request, commercial sales. Genzyme may elect, at any time during the term of the Genzyme Agreement, to manufacture Licensed Products itself or arrange for a third party to manufacture the product.

Genzyme also has a right of first negotiation in the event that the Company desires to grant any third party rights to develop and/or commercialize a Licensed Product for the treatment of ATTR or other human diseases outside of the Genzyme Territory.

The Company has agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of the Company’s ongoing litigation matters. Unless terminated earlier in accordance with the terms of the agreement, the Genzyme Agreement expires on a Licensed Product-by-Licensed Product and country-by-country basis upon the latest to occur of (1) the expiration of the last valid claim of the Company patents or joint patents covering a Licensed Product, (2) the expiration of the Regulatory Exclusivity (as defined in the Genzyme Agreement), and (3) twenty-five years from first commercial sale of such Licensed Product in such country. The Company estimates that its fundamental RNAi patents covering ALN-TTR compounds under the Genzyme Agreement will expire both in and outside of the United States generally between 2016 and 2021. The Company also estimates that its patents covering ALN-TTR compounds under the Genzyme Agreement in the United States and elsewhere will expire in 2032. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future. Either party may terminate the Genzyme Agreement in the event the other party fails to cure a material breach or in the event that development ends after a specified time period without regulatory approval of a Licensed Product. The Company may terminate the agreement upon patent-related challenges by Genzyme. Genzyme has the right to terminate the agreement without cause at any time upon six months’ prior written notice. Genzyme may also terminate the agreement upon forty-five days prior written notice if Genzyme determines that specified success criteria have not been met following the completion of a Phase II clinical trial.

During the period from the effective date of the Genzyme Agreement until the first commercial sale of a Licensed Product in a country in the Genzyme Territory, and thereafter during any period during which Genzyme is paying the Company any royalties on net sales of any Licensed Product in such country, neither party will,

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alone or with an affiliate or agreed upon third party, develop or commercialize in such country, any product for the treatment of ATTR, other than a Licensed Product or an agreed complementary product, without the prior written agreement of the other party.

The Genzyme Agreement originally provided that if development of a Licensed Product was terminated by the Company or Genzyme under certain limited circumstances, Genzyme would have the right to terminate the Genzyme Agreement and the Company would be required to refund amounts paid by Genzyme to the Company under the agreement prior to such termination. On February 19, 2013, the Company and Genzyme agreed to amend the Genzyme Agreement to remove this provision.

The Company has determined that the significant deliverables under the Genzyme Agreement include the license, the joint steering committee and any additional TTR-specific RNAi therapeutic compounds that comprise the ALN-TTR program. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered joint steering committee and any additional TTR-specific RNAi therapeutic compounds do not have standalone value due to the specialized nature of the services to be provided by the Company. In addition, while Genzyme has the ability to grant sublicenses, it cannot sublicense all or substantially all of its rights under the Genzyme Agreement. The uniqueness of the Company’s services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable.

The Company is currently unable to reasonably estimate its period of performance under the Genzyme Agreement, as it is unable to estimate the timeline of its deliverables related to the deliverable for any additional TTR-specific RNAi therapeutic compounds. The Company is deferring all revenue under the Genzyme Agreement until it is able to reasonably estimate its period of performance. The Company will continue to reassess whether it can reasonably estimate the period of performance to fulfill its obligations under the Genzyme Agreement. At December 31, 2012, deferred revenue under the Genzyme Agreement was $22.5 million.

Cubist Alliance

In January 2009, the Company entered into the Cubist Agreement to develop and commercialize therapeutic products based on certain of the Company’s RNAi technology for the treatment of RSV infection. Licensed products initially included ALN-RSV01, as well as several other second-generation RNAi-based RSV inhibitors. In November 2009, the Company and Cubist entered into an amendment to the Cubist Agreement (the “Amendment”), which provided that the Company and Cubist would focus their collaboration and joint development efforts on ALN-RSV02, a second-generation compound, intended for use in pediatric patients. In December 2010, the Company and Cubist jointly made a portfolio decision to put the development of ALN-RSV02 on hold. Pursuant to the terms of the Amendment, the Company continued to develop ALN-RSV01 for adult transplant patients at its sole discretion and expense and Cubist had the right to opt into collaborating with the Company on ALN-RSV01, subject to specified conditions.

In February 2013, Cubist notified the Company that it would not exercise its opt-in right for ALN-RSV01. In light of this determination, the Company and Cubist mutually agreed to terminate the license and collaboration agreement effective as of February 6, 2013 (the “Effective Date”). As of the Effective Date, the parties have no further rights and obligations under the Cubist Agreement, notwithstanding anything to the contrary in the Cubist Agreement.

In consideration for the rights granted to Cubist under the Cubist Agreement, in January 2009, Cubist paid the Company an upfront cash payment of $20.0 million. Under the terms of the Cubist Agreement, the Company and Cubist shared responsibility for developing licensed products in North America and each was responsible for one-half of the related development costs, subject to the terms of the Amendment. The Company’s collaboration

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with Cubist for the development of licensed products in North America was governed by a joint steering committee comprised of an equal number of representatives from each party. Cubist had the sole right to commercialize licensed products in North America with costs associated with such activities and any resulting profits or losses to be split equally between the Company and Cubist.

The Company determined that the deliverables under the Cubist Agreement included the licenses, technology transfer related to the ALN-RSV program, the joint steering committee and the development and manufacturing services that the Company was obligated to perform during the development period. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the licenses and undelivered services were not separable and, accordingly, the licenses and services were treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Cubist Agreement, the last element to be delivered was the development and manufacturing services, which had an expected life of approximately eight years.

The Company was recognizing the upfront payment of $20.0 million on a straight-line basis over approximately eight years because the Company was unable to reasonably estimate the level of effort to fulfill its performance obligations, and therefore, could not utilize a proportional performance model. At December 31, 2012, deferred revenue under the Cubist Agreement was $9.7 million. As a result of the termination of the Cubist Agreement in February 2013 and the end of the Company’s performance obligations thereunder, the Company expects to recognize the remaining deferred revenue of $9.7 million during the first quarter of 2013.

4. PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following at December 31, 2012 and 2011, in thousands:

			December 31,
	Useful Life		2012			2011
Laboratory equipment		5 years	$	21,201		$	19,994
Computer equipment and software		3 years		4,203			4,112
Furniture and fixtures		5 years		1,793			1,784
Leasehold improvements		*		19,862			19,676
Construction in progress		—		8,209			—
				55,268			45,566
Less: accumulated depreciation				(35,469	)		(30,923	)
			$	19,799		$	14,643

* Shorter of asset life or lease term

The Company’s construction in progress balance is due to the construction of the Company’s manufacturing facility.

During the years ended December 31, 2012, 2011 and 2010, the Company recorded $4.6 million, $5.0 million and $4.8 million, respectively, of depreciation expense related to its property and equipment.

5. 2012 RESTRUCTURING

In January 2012, the Company’s Board of Directors approved, and the Company implemented, a strategic corporate restructuring pursuant to which the Company reduced its overall workforce by approximately 33%, to approximately 115 employees.

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During the three months ended March 31, 2012, the Company substantially completed the implementation of the strategic corporate restructuring and recorded $3.9 million of restructuring-related costs in operating expenses, including employee severance, benefits and related costs. The Company paid substantially all of these restructuring costs during 2012. The Company did not incur any additional significant costs associated with this restructuring and does not expect to incur any additional significant costs in the future.

The following table summarizes the components of the Company’s restructuring expenses recorded in operating expenses and in current liabilities, in thousands:

	Original Charges and Amounts Accrued		(Reversals) or Adjustments to Charges			Amounts Paid Through December 31, 2012		Amounts Accrued at December 31, 2012
Employee severance, benefits and related costs	$	3,909	$	(202	)	$	3,666	$	41

6. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company has future purchase commitments totaling $11.1 million at December 31, 2012, of which $10.3 million is expected to be incurred in 2013 and $0.8 million is expected to be incurred past 2013. These commitments are related to purchase orders, clinical and pre-clinical agreements, and other purchase commitments for goods or services.

Technology License Commitments

The Company has licensed from third parties the rights to use certain technologies in its research processes as well as in any products the Company may develop including these licensed technologies. In accordance with the related license agreements, the Company is 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 the Company has licensed. At December 31, 2012, the Company was committed to make the following fixed, estimated and cancelable payments under existing license agreements, in thousands:

Year Ending December 31,
2013	$	14,463
2014		1,563
2015		818
2016		773
2017		793
Thereafter		9,159
Total	$	27,569

Operating Leases

The Company leases office and laboratory space located at 300 Third Street, Cambridge, Massachusetts (the “Premises”) for its corporate headquarters and primary research facility under a non-cancelable operating lease agreement (the “Third Street Lease”) with ARE-MA Region No. 28 LLC (the “Landlord”). Under the Third Street Lease, the Company leases a total of approximately 129,000 square feet of office and laboratory space at the Premises. The term of the Third Street Lease expires in September 2016. The Company has the option to extend the Third Street Lease for two successive five-year extensions.

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The Company separately agreed, with the Landlord’s consent, to sublease a portion of the Premises consisting of 34,014 square feet (the “Subleased Premises) beginning on September 1, 2010 pursuant to a sublease agreement between the Company and sanofi-aventis U.S. Inc. (“Sanofi”) dated August 3, 2010 (the “Sublease”). In November 2011, the Company and Sanofi entered into a first amendment to the Sublease, pursuant to which the Company agreed, with the Landlord’s consent, to extend the Sublease of the Subleased Premises through September 30, 2016 (the Sublease, as so amended by the first amendment, the “Amended Sublease”). Pursuant to the terms of the Amended Sublease, Sanofi has an option to terminate the Amended Sublease on December 31, 2013, with advance notice and payment of a termination fee to the Company. A one-time upfront payment from Sanofi, together with the future rental payments by Sanofi under the Amended Sublease will partially offset the Company’s obligations under the Third Street Lease through 2016 by approximately $10.0 million. In connection with the execution of the Amended Sublease, the Company and the Landlord entered into an amendment to the Third Street Lease (the Third Street Lease, as so amended, the “Amended Third Street Lease”) to, among other things, change the allocation as between the Company and the Landlord of Excess Income (as defined in the Amended Third Street Lease) received by the Company in connection with any assignment or subletting of any or all of the Premises (including the Subleased Premises).

On February 10, 2012, the Company entered into a non-cancelable real property lease agreement (“the BMR Lease”) with BMR-Fresh Pond Research Park LLC (“BMR”) for the Company’s manufacturing facility. Under the BMR Lease, the Company leases approximately 15,000 square feet of office and laboratory space located at 665 Concord Avenue, Cambridge, Massachusetts. The term of the BMR Lease expires August 31, 2017. The Company has the option to extend the BMR Lease for two successive five-year extensions.

From 2004 through 2008, the Company received $7.3 million in leasehold improvement incentives from the Landlord in connection with the Third Street Lease. In addition, the Company received $1.8 million in leasehold improvement incentives from BMR during the year ended December 31, 2012. These leasehold improvement incentives are being accounted for as a reduction in rent expense ratably over the Amended Third Street and BMR Lease terms. The balance from these leasehold improvement incentives is included in current portion of deferred rent and deferred rent, net of current portion in the consolidated balance sheets at December 31, 2012 and 2011.

Total rent expense, including operating expenses, under the Company’s real property leases was $6.4 million, $6.5 million and $6.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Future minimum payments under the Company’s non-cancelable leases are approximately as follows, in thousands:

Year Ending December 31,
2013		6,065
2014		6,303
2015		6,550
2016		5,192
2017		364
Total	$	24,474

Litigation

University of Utah Litigation

On March 22, 2011, The University of Utah (“Utah”) filed a civil complaint in the United States District Court for the District of Massachusetts against the Company, Max Planck Gesellschaft Zur Foerderung Der Wissenschaften e.V. and Max Planck Innovation GmbH (together, “Max Planck”), the Whitehead Institute for

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Biomedical Research (“Whitehead”), the Massachusetts Institute of Technology (“MIT”) and the University of Massachusetts (“UMass”), claiming a professor at Utah is the sole inventor or, in the alternative, a joint inventor, of the Tuschl patents. Utah did not serve the original complaint on the Company or the other defendants. On July 6, 2011, Utah filed an amended complaint alleging substantially the same claims against the Company, Max Planck, Whitehead, MIT and UMass. The amended complaint was served on the Company on July 14, 2011. Utah is seeking changes to the inventorship of the Tuschl patents, unspecified damages and other relief. On October 31, 2011, the Company, Max Planck, Whitehead, MIT and UMass filed a motion to dismiss. Also on October 31, 2011, UMass filed a motion to dismiss on separate grounds, which the Company, Max Planck, Whitehead and MIT have joined. On December 31, 2011, the University filed a second amended complaint dropping UMass as a defendant and adding as defendants several UMass officials. In June 2012, the Court denied both motions to dismiss. The Company, Max Planck, Whitehead, MIT and UMass have filed an appeal of the Court’s ruling on the motion to dismiss for lack of jurisdiction and have filed a motion requesting that the Court stay the case pending the outcome of the appeal. In July 2012, the Court stayed discovery in the case pending the outcome of the defendants’ appeal. Oral arguments in the appeal are scheduled to be heard in early March 2013 in the United States Court of Appeals for the Federal Circuit.

Although the Company believes it has meritorious defenses and intends to vigorously defend itself in this matter, litigation is subject to inherent uncertainty and a court could ultimately rule against the Company. In addition, the defense of litigation and related matters are costly and may divert the attention of the Company’s management and other resources that would otherwise be engaged in other activities. The Company has not recorded an estimate of the possible loss associated with this legal proceeding due to the uncertainties related to both the likelihood and the amount of any possible loss or range of loss.

The Company’s accounting policy for accrual of legal costs is to recognize such expenses as incurred.

Tekmira Settlement Agreement

On November 12, 2012, the Company, TPC, Protiva Biotherapeutics, Inc., a wholly owned subsidiary of TPC (“Protiva,” and together with TPC, “Tekmira”) and AlCana Technologies, Inc. (“AlCana”) entered into a settlement agreement and general release resolving all ongoing litigation, as well as a patent interference proceeding between the Company and Protiva. The terms of the settlement agreement include mutual releases and dismissal with prejudice of all claims and counterclaims in the following litigation between the parties: (i) Tekmira Pharmaceuticals Corp., et al. v. Alnylam Pharmaceuticals, Inc., et al., Civ. A. No. 11-1010-BLS2, pending in the Business Litigation Section of the Massachusetts Superior Court for Suffolk County; (ii) Tekmira Pharmaceuticals Corp. v. Michael Hope, et al., No. S117660, pending in the Supreme Court of British Columbia, Canada; (iii) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Civ. A. No. 1:12-CV-10087, pending in the United States District Court for the District of Massachusetts; and (iv) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Court File No. T-1783-12, pending in the Federal Court of Canada. In addition, as part of the settlement agreement, the parties agreed to a covenant not to sue one another in the future on matters released under the settlement agreement, as well as substantial liquidated damages to be paid by any party that breaches such covenant. The parties have also agreed to resolve any future disputes that may arise over the next three years through binding arbitration.

Pursuant to the settlement agreement, the Company and Tekmira also agreed to resolve the interference proceeding declared by the United States Board of Patent Appeals and Interferences between the Company and Protiva, captioned Protiva Biotherapeutics, Inc. v. Alnylam Pharmaceuticals, Inc., Patent Interference No. 105792.

Contemporaneously with the execution of the settlement agreement, the Company and Tekmira restructured their contractual relationship and entered into a cross-license agreement that supersedes the prior license and manufacturing agreements among the Company, TPC and Protiva. In connection with this restructuring, the Company incurred a $65.0 million charge to operating expenses for the year ended December 31, 2012. Specifically, the Company made a one-time payment of $30.0 million to Tekmira for the termination of, and its release from, all of its obligations under

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the manufacturing agreement with TPC, including without limitation the obligations to obtain materials and/or services from TPC. Further, the Company elected to buy-down certain future potential milestone and royalty payments due to Tekmira for certain of the Company’s RNAi therapeutics, formulated using LNP technology. Specifically, pursuant to the cross-license agreement, the Company made a one-time payment of $35.0 million to Tekmira, which amount constituted payment for the termination of the 2008 license agreements with TPC and Protiva and the parties’ rights and obligations thereunder, as well as the buy-down of certain milestone payments and the significant reduction of royalty rates for ALN-VSP, ALN-PCS and ALN-TTR. In addition, under the 2012 cross-license agreement, the Company will be obligated to pay TPC an aggregate of $10.0 million in contingent milestone payments related to advancement of ALN-VSP and ALN-TTR, which now represent the only potential milestones due to Tekmira for ALN-VSP, ALN-PCS and ALN-TTR lipid nanoparticle (“LNP”)-based RNAi therapeutics. Specifically, the Company will be obligated to pay TPC a $5.0 million milestone payment upon each of (i) the initiation of a Phase III clinical trial of an LNP-based ALN-TTR therapeutic, and (ii) the manufacture of ALN-VSP clinical trial material for use in China. The Company will expense these potential milestones when incurred and record them as research and development expense. A description of the Company’s cross-license agreement with Tekmira is included in Part I, Item 1, “ —Delivery-Related Licenses and Collaborations—Tekmira,” of this annual report on Form 10-K.

Indemnifications

Licensor indemnification — In connection with the Company’s license agreements with Max Planck relating to the Tuschl I and Tuschl II patent applications, the Company is required to indemnify Max Planck for certain damages arising in connection with the intellectual property rights licensed under the agreements. Under the Max Planck indemnification agreement, the Company is 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 Tuschl patents, which was settled during 2011. In connection with the Company’s research agreement with AlCana, the Company agreed to indemnify AlCana for certain legal costs, subject to certain exceptions and limitations, associated with the Tekmira litigation described above. These indemnification costs were charged to general and administrative expense. The Company has also agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of the Company’s ongoing litigation matters.

The Company is also a party to a number of agreements entered into in the ordinary course of business, which contain typical provisions that obligate the Company to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations.

The maximum potential future liability of the Company under any such indemnification provisions is uncertain. However, to date, other than certain costs associated with the certain previously settled litigation related to the Tuschl patents, and the Tekmira litigation described in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has determined that the estimated aggregate fair value of its potential liabilities under all such indemnification provisions is minimal and has not recorded any liability related to such indemnification provisions at December 31, 2012 or 2011.

7. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized up to 5,000,000 shares of preferred stock, $0.01 par value per share, for issuance. The preferred stock will have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Company’s Board of Directors upon its issuance. At December 31, 2012 and 2011, there were no shares of preferred stock outstanding.

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Stockholder Rights Agreement

On July 13, 2005, the Board of Directors of the Company declared a dividend of one right (collectively, the “Rights”) to buy one one-thousandth of a share of newly designated Series A Junior Participating Preferred Stock (“Series A Junior Preferred Stock”) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on July 26, 2005. Initially, the Rights are not exercisable and will be attached to all certificates representing outstanding shares of common stock. The Rights will expire at the close of business on July 13, 2015 unless earlier redeemed or exchanged. Until a Right is exercised, the holder thereof will have no rights as a stockholder of the Company, including the right to vote or to receive dividends. Subject to the terms and conditions of the rights agreement (the “Rights Agreement”), the Rights will become exercisable upon the earlier of (1) ten business days following the later of (a) the first date of a public announcement that a person or group (an “Acquiring Person”) acquires, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding shares of common stock of the Company or (b) the first date on which an executive officer of the Company has actual knowledge that an Acquiring Person has become such or (2) ten business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning more than 20% of the outstanding shares of common stock of the Company. Each Right entitles the holder to purchase one one-thousandth of a share of Series A Junior Preferred Stock at an initial purchase price of $80.00 in cash, subject to adjustment. In the event that any person or group becomes an Acquiring Person, unless the event causing the 20% threshold to be crossed is a Permitted Offer (as defined in the Rights Agreement), each Right not owned by the Acquiring Person will entitle its holder to receive, upon exercise, that number of shares of common stock of the Company (or in certain circumstances, cash, property or other securities of the Company) which equals the exercise price of the Right divided by 50% of the current market price (as defined in the Rights Agreement) per share of such common stock at the date of the occurrence of the event. In the event that, at any time after any person or group becomes an Acquiring Person, (i) the Company is consolidated with, or merged with and into, another entity and the Company is not the surviving entity of such consolidation or merger (other than a consolidation or merger which follows a Permitted Offer) or if the Company is the surviving entity, but shares of its outstanding common stock are changed or exchanged for stock or securities (of any other person) or cash or any other property, or (ii) more than 50% of the Company’s assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth in the Rights Agreement) shall thereafter have the right to receive, upon exercise, that number of shares of common stock of the acquiring company which equals the exercise price of the Right divided by 50% of the current market price of such common stock at the date of the occurrence of the event.

Public Offerings

In February 2012, the Company sold an aggregate of 8,625,000 shares of its common stock through an underwritten public offering at a price to the public of $10.75 per share. As a result of this offering, the Company received aggregate net proceeds of approximately $86.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $5.9 million.

In January 2013, the Company sold an aggregate of 9,200,000 shares of its common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of this offering, the Company received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million.

8. STOCK INCENTIVE PLANS

Stock Plans

In June 2009, the Company’s stockholders approved an amendment and restatement of the Company’s 2004 Stock Incentive Plan (the “Amended and Restated 2004 Plan”), which replaced the Company’s 2004 Stock

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Incentive Plan, as amended (the “2004 Plan”). At December 31, 2010, the Amended and Restated 2004 Plan provided for the granting of stock options to purchase up to 12,366,485 shares of common stock. Prior to the adoption of the Amended and Restated 2004 Plan, the Company was authorized to grant both stock options and restricted stock awards under the 2004 Plan. As of the effective date of the Amended and Restated 2004 Plan, the Company may only grant stock options under the Amended and Restated 2004 Plan, provided that the terms and conditions of any restricted stock awards outstanding under the 2004 Plan will continue to be governed by the Amended and Restated 2004 Plan.

In June 2009, the Company’s stockholders also approved the Company’s 2009 Stock Incentive Plan (the “2009 Plan”). The 2009 Plan provides for the granting of stock options, restricted stock awards and units, stock appreciation rights and other stock-based awards to purchase up to 2,200,000 shares of common stock. The 2009 Plan has a fungible share pool. Any award that is not a full value award shall be counted against the authorized share limits specified in the 2009 Plan as one share for each share of common stock subject to award, and all full value awards, defined in the 2009 Plan as restricted stock awards or other stock-based awards, shall be counted as one and a half shares for each one share of common stock subject to such full value award. In addition, the 2009 Plan includes a non-employee director stock option program under which each eligible non-employee director is entitled to (1) a grant of an option to purchase 30,000 shares of common stock upon his or her initial appointment to the Board of Directors, or such other amount as the Board of Directors deems appropriate, and (2) a subsequent annual grant of an option to purchase 15,000 shares of common stock based on continued service, made on the date of each annual meeting of stockholders, provided the non-employee director has served as a director for at least six months and is serving as a director immediately prior to and following such annual meeting. The chairman of the audit committee will receive an additional annual grant of an option to purchase 10,000 shares of common stock based on continued service and the chairman of the science and technology committee will receive an additional annual grant of an option to purchase 15,000 shares of common stock based on continued service. Stock options granted by the Company to non-employee directors upon their appointment to the Board of Directors vest as to one-third of such shares on each of the first, second and third anniversaries of the date of grant, and those granted at each year’s annual meeting at which they serve as a director vest in full on the first anniversary of the date of grant.

At December 31, 2012, an aggregate of 815,916 shares of common stock were reserved for issuance under the Company’s stock plans, including 541,806 shares of common stock available for equity awards and 274,110 shares available for future grant under the Company’s 2004 Employee Stock Purchase Plan (the “2004 Purchase Plan”). Each option shall expire within ten years of issuance. Stock options granted by the Company 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 until fully vested.

Stock-Based Compensation

The Company recorded $9.0 million, $14.8 million and $18.7 million of stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively, related to employee stock options and the 2004 Purchase Plan.

The Company accounts for non-employee grants as an expense over the vesting period of the underlying stock options. At the end of each financial reporting period prior to vesting, the Company re-measures the value of these stock options (as calculated using the Black-Scholes option-pricing model) using the then-current fair value of the Company’s common stock. The Company recognized $1.0 million, $0.4 million and $0.3 million of non-employee stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively.

In connection with the establishment of Regulus, the Company granted stock options to the members of Regulus’ scientific advisory board and board of directors and certain Regulus employees. In addition to the total stock-based compensation expense stated above, the Company recorded $0.3 million, $0.4 million and

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$0.3 million of stock-based compensation expense related to these stock option grants in equity in loss of joint venture (Regulus Therapeutics Inc.) in its consolidated statements of comprehensive loss for the years ended December 31, 2012, 2011 and 2010, respectively.

In October 2010, the Company granted 113,370 shares of restricted stock of the Company to certain employees. These restricted stock awards were valued at $1.4 million on the grant date. These restricted stock awards vest ratably over an approximate three-year period. In May 2011, the Company granted an aggregate of 229,806 shares of performance-based restricted stock awards to its employees, excluding the Company’s leadership team. These restricted stock awards were valued at $2.3 million on the grant date and have a term of five years. The vesting of these awards is predicated on the Company’s achievement of certain clinical development goals. In January 2012, as part of its post-restructuring retention program, the Company granted an aggregate of 513,082 shares of restricted stock to its retained employees, excluding the Company’s chief executive officer and president and chief operating officer. These restricted stock awards were valued at $5.3 million on the grant date and vest in full on the second anniversary of the grant date. The Company recognized an aggregate of $2.4 million, $1.5 million and $0.1 million of stock-based compensation expense related to all of these restricted stock awards for the years ended December 31, 2012, 2011 and 2010, respectively.

Total compensation cost for all stock-based awards for the years ended December 31, 2012, 2011 and 2010 was $12.7 million, $17.1 million and $19.4 million, respectively. No amounts relating to the stock-based compensation have been capitalized.

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. The Company’s expected stock-price volatility assumption for 2012 and 2011 is based on the historical volatility of the Company’s publicly traded stock. The expected life assumption for 2012 and 2011 is based on the Company’s historical data. The Company’s expected stock-price volatility assumption for 2010 is based on a combination of implied volatilities of its publicly traded stock option prices as well as the historical volatility of the Company’s publicly traded stock. The expected life assumption for 2010 is based on the equal weighting of the Company’s historical data and the historical data of the Company’s pharmaceutical and biotechnology peers. The dividend yield assumption is based on the fact that the Company has never paid cash dividends and has 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 Company currently expects, based on an analysis of its historical forfeitures, excluding the impact of its corporate restructurings, that approximately 67% of its stock options will actually vest, and therefore has applied an annual forfeiture rate of 9.5% to all unvested employee stock options at December 31, 2012. The Company will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior expense if the actual forfeitures are higher than estimated.

	2012			2011			2010
Risk-free interest rate		0.8-1.0	%		1.2-2.6	%		1.6-2.9	%
Expected dividend yield		—			—			—
Expected option life		5.6-5.9 years			5.8-5.9 years			5.9-6.1 years
Expected volatility		57	%		55-57	%		53-55	%

At December 31, 2012, there was $14.7 million of unearned compensation expense remaining related to unvested employee stock options to be recognized as expense over a weighted-average period of approximately 2.6 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Option Activity

The following table summarizes the activity of the Company’s stock option plans:

	Number of Options			Weighted Average Exercise Price
Outstanding, December 31, 2011		9,778,539		$	15.53
Granted		1,233,086		$	17.02
Exercised		(661,909	)	$	9.67
Cancelled		(1,418,133	)	$	18.47
Outstanding, December 31, 2012		8,931,583		$	15.71
Exercisable at December 31, 2010		4,983,088		$	18.60
Exercisable at December 31, 2011		6,033,858		$	18.13
Exercisable at December 31, 2012		5,885,363		$	17.20

The weighted average remaining contractual life for stock options outstanding and stock options exercisable at December 31, 2012 was 6.4 years and 5.2 years, respectively.

The aggregate intrinsic value of stock options outstanding at December 31, 2012 was $41.8 million, of which $24.9 million related to exercisable stock options. The intrinsic value of stock options exercised was $4.8 million, $40,000 and $1.8 million for the years ended December 31, 2012, 2011 and 2010, respectively. The weighted average fair value of stock options granted was $8.68, $7.68 and $5.98 per share for the years ended December 31, 2012, 2011 and 2010, respectively.

The aggregate intrinsic value of stock options expected to vest at December 31, 2012 was $14.7 million. The weighted average fair value of stock options expected to vest was $5.56. The weighted average remaining contractual life for stock options expected to vest was 8.8 years and the weighted average exercise price for these stock options was $12.82 per share at December 31, 2012.

Restricted Stock Awards

The following table summarizes the activity of the Company’s restricted stock awards:

	Number of Awards			Weighted Average Grant Date Fair Value
Unvested at December 31, 2011		312,482		$	10.68
Granted		513,082		$	10.49
Vested		(141,740	)	$	10.42
Forfeited		(80,064	)	$	5.94
Unvested at December 31, 2012		603,760		$	9.37

The total fair value of restricted stock awards that vested during the years ended December 31, 2012, 2011 and 2010 was $1.5 million, $0.5 million and zero, respectively. At December 31, 2012, there remained $2.8 million of unearned compensation expense related to unvested restricted stock awards to be recognized as expense over a weighted-average period of approximately one year.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Employee Stock Purchase Plan

In 2004, the Company adopted the 2004 Purchase Plan with 315,789 shares authorized for issuance. In June 2010, the Company’s stockholders approved an amendment to the 2004 Purchase Plan, which increased the shares authorized for issuance from 315,789 shares to 715,789 shares. Under the 2004 Purchase Plan, 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. The per-share purchase price at the end of each offering period is equal to the lesser of 85% of the closing price of the common stock at the beginning or end of the offering period. The Company issued 73,590, 79,038 and 72,674 shares during the years ended December 31, 2012, 2011 and 2010, respectively, and at December 31, 2012, 274,110 shares were available for issuance under the 2004 Purchase Plan.

The weighted average fair value of stock purchase rights granted as part of the 2004 Purchase Plan was $2.82, $3.46 and $5.12 per share for the years ended December 31, 2012, 2011 and 2010, respectively. The fair value was estimated using the Black-Scholes option-pricing model. The Company used a weighted-average stock-price volatility of 57%, expected option life assumption of six months and a risk-free interest rate of 0.1%. The Company recorded $0.2 million, $0.3 million and $0.3 million of stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively, related to the 2004 Purchase Plan.

9. INCOME TAXES

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. The Company establishes a valuation allowance when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax (liability) asset at December 31, 2012 and 2011 are as follows, in thousands:

	2012			2011
Deferred tax assets:
Net operating loss carryforwards	$	102,819		$	46,230
Research and development credits		17,443			12,405
AMT credits		788			788
Foreign tax credits		3,196			3,196
Capitalized research and development and start-up costs		16,102			3,974
Deferred revenue		30,776			53,485
Deferred compensation		24,804			21,855
Intangible assets		2,540			4,302
Partnership interest		7,118			5,338
Other		4,173			2,850
Total deferred tax assets		209,759			154,423
Deferred tax liabilities:
Intangible assets		(38	)		(91	)
Unrealized gain on available-for-sale securities		(10,572	)		—
Gain on issuance of stock by Regulus		(6,466	)		—
Deferred tax asset valuation allowance		(192,721	)		(154,423	)
Net deferred tax liability	$	(38	)	$	(91	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The (benefit from) provision for income taxes for the years ended December 31, 2012, 2011 and 2010 are as follows, in thousands:

	2012			2011			2010
U.S.:
Current	$	52		$	52		$	(9,928	)
Deferred		(10,572	)		—			10,494
Total U.S.		(10,520	)		52			566
Foreign:
Current		—			—			—
Deferred		(52	)		(52	)		(52	)
Total Foreign		(52	)		(52	)		(52	)
Provision for income taxes	$	(10,572	)	$	—		$	514

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
At U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal effect		4.9			4.6			4.2
Stock compensation		(0.7	)		(3.3	)		(5.0	)
Other permanent items		(1.6	)		(0.2	)		1.3
Valuation allowance		(28.5	)		(36.1	)		(36.7	)
Effective income tax rate		9.1	%		—	%		(1.2	)%

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. The Company has concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of all of its deferred tax assets. Accordingly, the Company has recorded a valuation allowance against the deferred tax assets that management believes will not be realized. The Company reevaluates the positive and negative evidence on a quarterly basis. The valuation allowance increased by $38.3 million, $23.0 million and $15.2 million for the years ended December 31, 2012, 2011 and 2010 respectively, due primarily to additional operating losses. Increases to the valuation allowance were partially offset by decreases related to the recognition of deferred revenue.

For the year ended December 31, 2012, the Company recorded a tax benefit of $10.6 million. For the years ended December 31, 2011 and 2010, the Company recorded a provision for income taxes of zero and $0.5 million, respectively. For the year ended December 31, 2012, the Company recorded unrealized gains on its investments in available-for-sale securities in other comprehensive income. The benefit of $10.6 million for the year ended December 31, 2012 is due to the recognition of corresponding income tax expense associated with the increase in the value of the Company’s investment in Regulus that the Company carried at fair market value during the same period. The corresponding income tax expense has been recorded in other comprehensive income. Intraperiod tax allocation rules require the Company to allocate its provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income. In periods in which the Company has a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as other comprehensive income, the Company must allocate the tax provision to the other categories of earnings. The Company then records a related tax benefit in continuing operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The deferred tax assets above exclude $10.1 million of net operating losses and $0.5 million of federal and state research and development credits related to tax deductions from the exercise of stock options subsequent to the adoption of the 2006 accounting standard on stock-based compensation. This amount represents an excess tax benefit and has not been included in the gross deferred tax assets.

At December 31, 2012, the Company had federal and state net operating loss carryforwards of $272.7 million and $337.8 million, respectively, to reduce future taxable income that will expire at various dates through 2032. At December 31, 2012, federal and state research and development credit carryforwards were $15.3 million and $5.6 million, respectively, available to reduce future tax liabilities that expire at various dates through 2032. At December 31, 2012, foreign tax credit carryforwards were $3.2 million available to reduce future tax liabilities that expire in 2017. At December 31, 2012, alternative minimum tax credits of $0.8 million are available to reduce future regular tax liabilities to the extent such regular tax less other non-refundable credits exceeds the tentative minimum tax. Ownership changes, as defined in the Internal Revenue Code, including those resulting from the issuance of common stock in connection with the Company’s public offerings, may limit the amount of net operating loss that can be utilized to offset future taxable income or tax liability. The Company has determined that based on the value of the Company, in the event there was an annual limitation under Section 382, all net operating loss and tax credit carryforwards would still be available to offset taxable income.

At December 31, 2012, the Company had no unrecognized tax benefits that, if recognized, would favorably impact the Company’s effective income tax rate in future periods. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, in thousands:

Balance at December 31, 2010	$	428
Subtractions for tax positions related to the prior years		(300	)
Balance at December 31, 2011		128
Subtractions for tax positions related to the prior years		(128	)
Balance at December 31, 2012	$	—

The tax years 2010 through 2012 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the United States, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period. In July 2011, the Internal Revenue Service completed its audits of the Company’s 2008 and 2009 tax years. The Company did not record any tax expense related to these audits. The Company has not recorded any interest and penalties on any unrecognized tax benefits since its inception.

10. REGULUS

In September 2007, the Company and Isis established Regulus, a company focused on the discovery, development and commercialization of microRNA therapeutics, a potential new class of drugs to treat the pathways of human disease. Regulus, which initially was established as a limited liability company, converted to a C corporation in January 2009 and changed its name to Regulus Therapeutics Inc. Regulus operates as an independent company with a separate board of directors, scientific advisory board and management team.

In consideration for the Company’s and Isis’ initial interests in Regulus, each party granted Regulus exclusive licenses to its intellectual property for certain microRNA therapeutic applications as well as certain patents in the microRNA field. In addition, the Company made an initial cash contribution to Regulus of $10.0 million, resulting in the Company and Isis making approximately equal aggregate initial capital contributions to Regulus. In March 2009, the Company and Isis each purchased $10.0 million of Series A preferred stock of Regulus. In October 2010, in connection with its strategic alliance with Regulus formed in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

June 2010, Sanofi made a $10.0 million equity investment in Regulus. As a result of the $10.0 million equity investment made by Sanofi, the Company recognized a gain of $4.4 million. This amount was recorded as other income in the Company’s consolidated statements of comprehensive loss for the year ended December 31, 2010.

From the formation of Regulus in September 2007 to October 2012, the Company accounted for its interest in Regulus using the equity method of accounting. The Company reviewed the consolidation guidance that defines a VIE and concluded that Regulus qualified as a VIE during such time period. The Company did not consolidate Regulus as the Company lacked the power to direct the activities that could significantly impact the economic success of this entity.

Summary results of Regulus’ statements of comprehensive loss for the nine months ended September 30, 2012 and the years ended December 31, 2011 and 2010 and the balance sheet at December 31, 2011 are presented in the tables below, in thousands:

	Nine months ended September 30,			Year ended December 31,
	2012			2011			2010
Statements of Comprehensive Loss Data:
Net revenues	$	9,462		$	13,789		$	8,601
Operating expenses		17,733			20,926			24,099
Loss from operations		(8,271	)		(7,137	)		(15,498	)
Other (expense) income		(2,289	)		(259	)		(91	)
Income tax benefit (expense)		28			(206	)		30
Net loss	$	(10,532	)	$	(7,602	)	$	(15,559	)

	December 31, 2011
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	38,144
Current assets		38,666
Total assets		42,881
Current liabilities		12,850
Non-current liabilities		28,834
Notes payable		11,259
Net assets		1,197

Under the equity method of accounting, the Company was required to recognize losses up to the amount of Regulus’ debt, which was guaranteed by the Company. This resulted in a negative carrying amount. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Upon the completion of the Regulus’ initial public offering, the Company’s debt guarantee was terminated.

Based upon the Company’s new ownership percentage of 17%, as well as a review of qualitative factors, the Company does not believe that it has the ability to exercise significant influence over the operating decisions and financial policies of Regulus and has therefore discontinued the equity method of accounting for Regulus at September 30, 2012. The Company determined that the period between September 30, 2012 and the date on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

which Regulus’ closed its initial public offering was immaterial for additional equity method accounting. Accordingly, beginning October 10, 2012, the Company has accounted for its investment in Regulus as an available-for-sale marketable security due to its readily determinable fair value. At December 31, 2012, the fair value of the Regulus equity securities was $38.7 million. As a result of the issuance of additional common stock by Regulus, the Company recognized a gain of $16.1 million. This amount was recorded as other income in the Company’s consolidated statements of comprehensive loss for the year ended December 31, 2012. The Company’s carrying amount in Regulus increased to $12.4 million following the initial public offering, which became the initial basis of its investment in Regulus under the accounting standard for marketable securities. In addition, the Company recorded $15.7 million as an unrealized gain in other comprehensive income, net of an intraperiod tax benefit of $10.6 million.

The Company has historically classified the equity method investment amount in the financial statement caption “Investment in joint venture (Regulus Therapeutics Inc.)” on the Company’s consolidated balance sheets. For the purposes of the 2012 balance sheet, this amount is zero and the Company has reclassified the 2011 balance of $0.6 million to the financial statement caption “Other assets.”

11. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following information has been derived from unaudited consolidated financial statements that, in the opinion of management, include all recurring adjustments necessary for a fair statement of such information.

	Three Months Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
	(In thousands, except per share data)
Revenues	$	20,587		$	20,884		$	16,759		$	8,495
Operating expenses		31,480			32,951			34,906			96,844
Net loss		(11,368	)		(12,956	)		(19,502	)		(62,188	)
Net loss per common share — basic and diluted	$	(0.25	)	$	(0.25	)	$	(0.38	)	$	(1.20	)
Weighted average common shares — basic and diluted		46,210			51,280			51,542			51,821

The increase in operating expenses for the three months ended December 31, 2012 resulted from a $65.0 million charge to operating expenses in connection with the restructuring of the Company’s license agreement with Tekmira in November 2012. This increase in operating expenses was offset by a gain in other income of $16.1 million and a tax benefit of $10.6 million recorded as part of the Company’s accounting for the Regulus initial public offering.

	Three Months Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
	(In thousands, except per share data)
Revenues	$	20,897		$	20,614		$	20,791		$	20,455
Operating expenses		36,573			33,732			33,229			34,041
Net loss		(16,285	)		(13,824	)		(13,237	)		(14,303	)
Net loss per common share — basic and diluted	$	(0.38	)	$	(0.33	)	$	(0.31	)	$	(0.33	)
Weighted average common shares — basic and diluted		42,345			42,379			42,654			42,715

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. SUBSEQUENT EVENT

On February 4, 2013, the Company and MedCo entered into the MedCo Agreement pursuant to which the Company granted to MedCo an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting PCSK9, including ALN-PCS02 and ALN-PCSsc, for the treatment of hypercholesterolemia and other human diseases (collectively, “Licensed Products”). ALN-PCS02 is an intravenously administered RNAi therapeutic for which the Company completed a Phase I clinical trial, and ALN-PCSsc is a subcutaneously administered RNAi therapeutic currently in pre-clinical development.

In consideration for the rights granted to MedCo under the MedCo Agreement, MedCo paid the Company an upfront cash payment of $25.0 million. In addition, MedCo is required to make payments to the Company upon the achievement of specified clinical development, regulatory approval and commercialization milestones totaling up to $180.0 million, and to pay the Company scaled double-digit royalties based on annual worldwide net sales, if any, of Licensed Products by MedCo, its affiliates and sublicensees, subject to reduction under specified circumstances. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from MedCo.

Under the MedCo Agreement, the parties will collaborate in the further development of Licensed Products. The Company will retain responsibility for the development of Licensed Products until Phase I Completion (as defined in the MedCo Agreement) at its cost, up to an agreed upon initial development cost cap. MedCo will assume all other responsibility for the development and commercialization of Licensed Products, at its sole cost. Initially the collaboration will include the development of both ALN-PCS02 and ALN-PSCsc in parallel, provided that the parties intend to select one of ALN-PCS02 or ALN-PSCsc for ongoing development at a specified development stage, in accordance with the terms of the MedCo Agreement. The collaboration between MedCo and the Company will be governed by a joint steering committee that will be comprised of an equal number of representatives from each party.

The Company will be solely responsible for obtaining supply of finished product reasonably required for the conduct of its obligations under the initial development plan through Phase I Completion, and supplying MedCo with finished product reasonably required for the first Phase II study of a Licensed Product conducted by MedCo, at the Company’s expense, provided such costs do not exceed the development costs cap, subject to certain exceptions. After such time, MedCo will have the sole right and responsibility to manufacture and supply Licensed Product for development and commercialization under the MedCo development plan, subject to the terms of the MedCo Agreement. The Company and MedCo intend to enter into a supply and technical transfer agreement to provide for supply of Licensed Products to MedCo within a specified time following the effective date of the MedCo Agreement.

Unless terminated earlier in accordance with the terms of the agreement, the MedCo Agreement expires on a Licensed Product-by-Licensed Product and country-by-country basis upon expiration of the last royalty term for any Licensed Product in any country, where a royalty term is defined as the latest to occur of (1) the expiration of the last valid claim of patent rights covering a Licensed Product, (2) the expiration of the Regulatory Exclusivity (as defined in the MedCo Agreement), and (3) the twelfth anniversary of the first commercial sale of the Licensed Product in such country. The Company estimates that its fundamental RNAi patents covering Licensed Products under the MedCo Agreement will expire both in and outside of the United States generally between 2015 and 2023. The Company also estimates that its ALN-PCS product-specific patents covering Licensed Products under the MedCo Agreement in the United States and elsewhere will expire at the end of 2033. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future.

Either party may terminate the MedCo Agreement in the event the other party fails to cure a material breach or upon patent-related challenges by the other party. The Company may terminate the agreement in the event that

145

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a lead Licensed Product has not been designated by the joint steering committee within a designated time period. In addition, MedCo has the right to terminate the agreement without cause at any time upon four months’ prior written notice.

During the term of the MedCo Agreement, neither party will, alone or with an affiliate or third party, research, develop or commercialize, or grant a license to any third party to research, develop or commercialize, in any country, any product directed to the PCSK9 gene, other than a Licensed Product, without the prior written agreement of the other party, subject to the terms of the MedCo Agreement.

146

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and vice president of finance and treasurer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2012. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2012, the Company’s chief executive officer and vice president of finance and treasurer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s report on our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and the independent registered public accounting firm’s report on the effectiveness of our internal control over financial reporting are included in Item 8 of this annual report on Form 10-K and are incorporated herein by reference.

No change in our internal control over financial reporting occurred during the fiscal quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference to the information contained under the sections captioned “Proposal One — Election of Class III Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” of the Proxy Statement. The information required by this item relating to executive officers is included in Part I, Item 1, “— Business-Executive Officers of the Registrant,” of this annual report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to the information contained under the sections captioned “Information about Executive Officer and Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” “Employment Arrangements” and “Compensation Committee Report” of the Proxy Statement.

147

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference to the information contained under the sections captioned “Security Ownership of Certain Beneficial Owners and Management,” “Information about Executive Officer and Director Compensation” and “Securities Authorized for Issuance Under Equity Compensation Plans” of the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference to the information contained under the sections captioned “Corporate Governance,” “Employment Arrangements” and “Certain Relationships and Related Transactions” of the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference to the information contained under the sections captioned “Corporate Governance,” “Principal Accountant Fees and Services” and “Pre-Approval Policies and Procedures” of the Proxy Statement.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1) Financial Statements

The following consolidated financial statements are filed as part of this report under “Item 8 — Financial Statements and Supplementary Data”:

	Page
Management’s Annual Report on Internal Control Over Financial Reporting		104
Report of Independent Registered Public Accounting Firm		105
Consolidated Balance Sheets at December 31, 2012 and 2011		106
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2012, 2011 and 2010		107
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010		108
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010		109
Notes to Consolidated Financial Statements		110

(a) (2) List of Schedules

All schedules to the consolidated financial statements are omitted as the required information is either inapplicable or presented in the consolidated financial statements.

(a) (3) List of Exhibits

The exhibits which are filed with this report or which are incorporated herein by reference are set forth in the Exhibit Index hereto.

148

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 19, 2013.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ John M. Maraganore, Ph.D.
	John M. Maraganore, Ph.D.
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of February 19, 2013.

Name	Title
/s/    John M. Maraganore, Ph.D. John M. Maraganore, Ph.D.	Director and Chief Executive Officer (Principal Executive Officer)
/s/    Michael P. Mason Michael P. Mason	Vice President of Finance and Treasurer (Principal Financial and Accounting Officer)
/s/    Dennis A. Ausiello Dennis A. Ausiello	Director
/s/    John K. Clarke John K. Clarke	Director
/s/    Victor J. Dzau, M.D. Victor J. Dzau, M.D.	Director
/s/    Marsha H. Fanucci Marsha H. Fanucci	Director
/s/    Steven M. Paul, M.D. Steven M. Paul, M.D.	Director
/s/    Paul R. Schimmel, Ph.D. Paul R. Schimmel, Ph.D.	Director
/s/    Phillip A. Sharp, Ph.D. Phillip A. Sharp, Ph.D.	Director
/s/    Kevin P. Starr Kevin P. Starr	Director

149

EXHIBIT INDEX

Exhibit No.	Exhibit
3.1	Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 11, 2005 (File No. 000-50743) for the quarterly period ended June 30, 2005 and incorporated herein by reference)
3.2	Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
4.1	Specimen certificate evidencing shares of common stock (filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
4.2	Rights Agreement dated as of July 13, 2005 between the Registrant and EquiServe Trust Company, N.A., as Rights Agent, which includes as Exhibit A the Form of Certificate of Designations of Series A Junior Participating Preferred Stock, as Exhibit B the Form of Rights Certificate and as Exhibit C the Summary of Rights to Purchase Preferred Stock (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 14, 2005 (File No. 000-50743) and incorporated herein by reference)
10.1*	2002 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement (filed as Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.2*	2003 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement (filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.3*	Amended and Restated 2004 Stock Incentive Plan (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2009 (File No. 000-50743) for the quarterly period ended June 30, 2009 and incorporated herein by reference)
10.4*	Forms of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement under 2004 Stock Incentive Plan, as amended (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 11, 2005 (File No. 000-50743) for the quarterly period ended June 30, 2005 and incorporated herein by reference)
10.5*	Form of Nonstatutory Stock Option Agreement under 2004 Stock Incentive Plan granted to John M. Maraganore, Ph.D., on December 21, 2004 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 28, 2004 (File No. 000-50743) and incorporated herein by reference)
10.6*	2009 Stock Incentive Plan (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2009 (File No. 000-50743) for the quarterly period ended June 30, 2009 and incorporated herein by reference)
10.7*	Forms of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement under 2009 Stock Incentive Plan (filed as Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2010 (File No. 000-50743) for the year ended December 31, 2009 and incorporated herein by reference)
10.8*	Form of Restricted Stock Agreement under 2009 Stock Incentive Plan (filed as Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed on February 18, 2011 (File No. 000-50743) for the year ended December 31, 2010 and incorporated herein by reference)
10.9*	2004 Employee Stock Purchase Plan, as amended (filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 20, 2010 (File No. 000-50743) and incorporated herein by reference)
10.10	Stock Purchase Agreement, dated as of September 6, 2005, by and between the Registrant and Novartis Pharma AG (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 12, 2005 (File No. 000-50743) and incorporated herein by reference)

150

Exhibit No.	Exhibit
10.11	Investor Rights Agreement, dated as of September 6, 2005, by and between the Registrant. and Novartis Pharma AG (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on September 12, 2005 (File No. 000-50743) and incorporated herein by reference)
10.12	Letter Agreement dated as of September 20, 2012 by and between the Registrant and Novartis Pharma AG (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2012 (File No. 000-50743) for the quarterly period ended September 30, 2012 and incorporated herein by reference)
10.13*	Letter Agreement between the Registrant and John M. Maraganore, Ph.D. dated October 30, 2002 (filed as Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.14*	Letter Agreement between the Registrant and Barry E. Greene dated September 29, 2003 (filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.15*	Separation Agreement effective as of March 21, 2011 by and between the Registrant and Patricia Allen, and related Consulting Agreement dated as of March 22, 2011 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2011 (File No. 000-50743) for the quarterly period ended March 31, 2011 and incorporated herein by reference)
10.16*#	Consulting Agreement dated as of March 1, 2006 by and between the Registrant and Phillip A. Sharp, Ph.D., as amended
10.17*	Consulting Agreement dated as of April 20, 2012 by and between the Registrant and Dennis A. Ausiello, M.D. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 23, 2012 (File No. 000-50743) and incorporated herein by reference)
10.18	Lease, dated as of September 26, 2003 by and between the Registrant and Three Hundred Third Street LLC (filed as Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.19	First Amendment to Lease, dated March 16, 2006, by and between the Registrant and ARE-MA Region No. 28, LLC (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 17, 2006 (File No. 000-50743) and incorporated herein by reference)
10.20	Second Amendment to Lease, dated June 26, 2009, by and between the Registrant and ARE-MA Region No. 28, LLC (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2009 (File No. 000-50743) for the quarterly period ended June 30, 2009 and incorporated herein by reference)
10.21	Third Amendment to Lease, dated May 11, 2010, by and between the Registrant and ARE-MA Region No. 28, LLC (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 5, 2010 (File No. 000-50743) for the quarterly period ended June 30, 2010 and incorporated herein by reference)
10.22	Fourth Amendment to Lease, dated November 4, 2011, by and between the Registrant and ARE-MA Region No. 28, LLC (filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K filed on February 13, 2012 (File No. 000-50743) for the year ended December 31, 2011 and incorporated herein by reference)
10.23	Sublease made as of August 3, 2010, by and between the Registrant and sanofi-aventis U.S. Inc., as amended by the First Amendment to Sublease effective as of November 4, 2011 (filed as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K filed on February 13, 2012 (File No. 000-50743) for the year ended December 31, 2011 and incorporated herein by reference)
10.24†	Lease entered into as of February 10, 2012 by and between BMR-Fresh Pond Research Park LLC and the Registrant (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 3, 2012 (File No. 000-50743) for the quarterly period ended March 31, 2012 and incorporated herein by reference)

151

Exhibit No.	Exhibit
10.25†	Co-exclusive License Agreement between Garching Innovation GmbH (now known as Max Planck Innovation GmbH) and Alnylam U.S., Inc. dated December 20, 2002, as amended by Amendment dated July 8, 2003 together with Indemnification Agreement by and between Garching Innovation GmbH (now known as Max Planck Innovation GmbH) and Alnylam Pharmaceuticals, Inc. effective April 1, 2004 (filed as Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.26†	Co-exclusive License Agreement between Garching Innovation GmbH (now known as Max Planck Innovation GmbH) and Alnylam Europe, AG dated July 30, 2003 (filed as Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) and incorporated herein by reference)
10.27†	Agreement between the Registrant, Garching Innovation GmbH (now known as Max Planck Innovation GmbH), Alnylam U.S., Inc. and Alnylam Europe AG dated June 14, 2005 (filed as Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed on August 11, 2005 (File No. 000-50743) for the quarterly period ended June 30, 2005 and incorporated herein by reference)
10.28†	Confidential Settlement Agreement and Mutual Release entered into as of March 14, 2011 by and between Max-Planck-Gesellschaft zur Förderung der Wissenschaften e. V., Max-Planck-Innovation GmbH and the Registrant, on the one hand, and Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, and the University of Massachusetts, on the other hand (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2011 (File No. 000-50743) for the quarterly period ended March 31, 2011 and incorporated herein by reference)
10.29†	Exclusive License Agreement for Tuschl II United States Patents and Patent Applications dated as of March 14, 2011, by and between the Registrant and University of Massachusetts (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2011 (File No. 000-50743) for the quarterly period ended March 31, 2011 and incorporated herein by reference)
10.30	Amendment to Co-Exclusive License Agreement dated as of March 14, 2011, by and between the Registrant, on the one hand, and Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology and Max-Planck-Innovation GmbH (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2011 (File No. 000-50743) for the quarterly period ended March 31, 2011 and incorporated herein by reference)
10.31†	Research Collaboration and License Agreement effective as of October 12, 2005 by and between the Registrant and Novartis Institutes for BioMedical Research, Inc. (filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K filed on March 2, 2009 (File No. 000-50743) for the quarterly and annual period ended December 31, 2008 and incorporated herein by reference)
10.32†	License and Collaboration Agreement, entered into as of July 8, 2007, by and among F. Hoffmann-La Roche, Ltd, Hoffmann-La Roche Inc., the Registrant and, for limited purposes, Alnylam Europe AG (filed as Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K filed on March 2, 2009 (File No. 000-50743) for the quarterly and annual period ended December 31, 2008 and incorporated herein by reference)
10.33†	Share Purchase Agreement, dated as of July 8, 2007, among Alnylam Europe AG, the Registrant and Roche Pharmaceuticals GmbH (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2007 (File No. 000-50743) for the quarterly period ended September 30, 2007 and incorporated herein by reference)
10.34†	Amended and Restated Collaboration Agreement, entered into as of July 27, 2007, by and between the Registrant and Medtronic, Inc. (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2007 (File No. 000-50743) for the quarterly period ended September 30, 2007 and incorporated herein by reference)

152

Exhibit No.	Exhibit
10.35†	Termination Agreement, dated as of September 18, 2007, by and between Merck & Co., Inc. and the Registrant (filed as Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2007 (File No. 000-50743) for the quarterly period ended September 30, 2007 and incorporated herein by reference)
10.36†	License and Collaboration Agreement entered into as of May 27, 2008 by and among Takeda Pharmaceutical Company Limited and the Registrant (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-50743) for the quarterly period ended June 30, 2008 and incorporated herein by reference)
10.37†	License and Collaboration Agreement entered into as of January 9, 2009 by and between the Registrant and Cubist Pharmaceuticals, Inc. (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2009 (File No. 000-50743) for the quarterly period ended March 31, 2009 and incorporated herein by reference)
10.38†	Amended and Restated License and Collaboration Agreement, entered into as of January 1, 2009, by and among the Registrant, Isis Pharmaceuticals, Inc. and Regulus Therapeutics Inc. (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2009 (File No. 000-50743) for the quarterly period ended March 31, 2009 and incorporated herein by reference)
10.39†	Founding Investor Rights Agreement entered into as of January 1, 2009, by and among Regulus Therapeutics Inc., Isis Pharmaceuticals, Inc. and the Registrant (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2009 (File No. 000-50743) for the quarterly period ended March 31, 2009 and incorporated herein by reference)
10.40†	Amended and Restated Strategic Collaboration and License Agreement effective as of April 28, 2009 between Isis Pharmaceuticals, Inc. and the Registrant (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2009 (File No. 000-50743) for the quarterly period ended June 30, 2009 and incorporated herein by reference)
10.41†	Letter Agreement Amendment dated August 27, 2012, amending the Amended and Restated Strategic Collaboration and License Agreement effective as of April 28, 2009 between Isis Pharmaceuticals, Inc. and the Registrant (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2012 (File No. 000-50743) for the quarterly period ended September 30, 2012 and incorporated herein by reference)
10.42†	First Amendment to License and Collaboration Agreement entered into as of November 2, 2009 by and between the Registrant and Cubist Pharmaceuticals, Inc. (filed as Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2010 (File No. 000-50743) for the year ended December 31, 2009 and incorporated herein by reference)
10.43†	Sublicense Agreement dated effective January 8, 2007 among the Registrant and INEX Pharmaceuticals Corporation (now Tekmira Pharmaceuticals Corporation, as successor in interest) (filed as Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K filed on February 18, 2011 (File No. 000-50743) for the year ended December 31, 2010 and incorporated herein by reference)
10.44†	License and Collaboration Agreement effective as of June 19, 2008 by and between the Registrant and Kyowa Hakko Kirin Co., Ltd. (formerly Kyowa Hakko Kogyo Co., Ltd.), as amended as of February 1, 2010 and June 3, 2010 (filed as Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K filed on February 18, 2011 (File No. 000-50743) for the year ended December 31, 2010 and incorporated herein by reference)
10.45†	Sponsored Research Agreement dated as of July 27, 2009 by and among the Registrant, The University of British Columbia and AlCana Technologies, Inc. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 29, 2011 (File No. 000-50743) and incorporated herein by reference)

153

Exhibit No.	Exhibit
10.46†	Supplemental Agreement effective July 27, 2009 by and among the Registrant, Tekmira Pharmaceuticals Corporation, Protiva Biotherapeutics Inc., The University of British Columbia and AlCana Technologies, Inc. (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on June 29, 2011 (File No. 000-50743) and incorporated herein by reference)
10.47†	Amendment No. 1, dated as of July 27, 2011, to the Sponsored Research Agreement dated as of July 27, 2009 by and among the Registrant, The University of British Columbia and AlCana Technologies, Inc. (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 3, 2011 (File No. 000-50743) for the quarterly period ended September 30, 2011 and incorporated herein by reference)
10.48†	License and Collaboration Agreement dated as of August 27, 2012 by and among Monsanto Company and the Registrant (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 5, 2012 (File No. 000-50743) for the quarterly period ended September 30, 2012 and incorporated herein by reference)
10.49†#	License and Collaboration Agreement dated as of October 18, 2012 by and between the Registrant and Genzyme Corporation, as amended
10.50†#	Cross-License Agreement dated as of November 12, 2012 by and among the Registrant, Tekmira Pharmaceuticals Corporation and Protiva Biotherapeutics Inc.
10.51†#	Settlement Agreement and General Release entered into as of November 12, 2012 by and among Tekmira Pharmaceuticals Corporation, Protiva Biotherapeutics Inc., the Registrant and AlCana Technologies, Inc.
10.52#	Letter Agreement dated as of February 6, 2013 by and between Cubist Pharmaceuticals, Inc. and the Registrant
12#	Computation of Consolidated Ratios of Earnings/Deficiencies to Fixed Charges
21.1#	Subsidiaries of the Registrant
23.1#	Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm
23.2#	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm of Regulus Therapeutics Inc.
31.1#	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Principal Executive Officer
31.2#	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Principal Financial Officer
32.1#	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Principal Executive Officer
32.2#	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Principal Financial Officer
99.1#	Report of Ernst & Young LLP, Independent Registered Public Accounting Firm of Regulus Therapeutics Inc.
101#	The following materials from Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Loss, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

* Management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto pursuant to Item 15(a) of Form 10-K.

† Indicates confidential treatment requested as to certain portions, which portions were omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.

# Filed herewith.

154

EX-10.16

Exhibit 10.16

Standard Alnylam Form

Consultant from Industry/Academia

Approved August 2005

CONSULTANT:	•   Phillip A. Sharp, Ph.D.
ALNYLAM CONTACT:	•   John Maraganore, Ph.D.
EFFECTIVE DATE:	•   March 1,2006

CONSULTING AGREEMENT

This Consulting Agreement (together with its attachments, this “Agreement”) made as of March 1, 2006 (the “Effective Date”), is between Alnylam Pharmaceuticals, Inc. a Delaware corporation having an address at 300 Third Street, 3^rd Floor, Cambridge, MA 02142 (together with its subsidiaries “Alnylam”), and Phillip A. Sharp, having an address at Center for Cancer Research, Room E17-529, Massachusetts Institute of Technology, Cambridge, MA 02139-4307 (“Consultant”). Alnylam desires to have the benefit of Consultant’s knowledge and experience, and Consultant desires to provide Consulting Services (defined below) to Alnylam, all as provided in this Agreement.

1. Consulting Services. Alnylam retains Consultant and Consultant agrees to provide Consulting Services to Alnylam (the “Consulting Services”) as it may from time to time reasonably request and as specified in the business terms exhibit attached to this Agreement (“Business Terms Exhibit”). Any changes to the Consulting Services (and any related compensation adjustments) must be agreed upon in writing between Consultant and Alnylam prior to commencement of the changes.

1.1 Performance. Consultant agrees to render the Consulting Services to Alnylam, or to its designee, (a) at such reasonably convenient times and places as Alnylam may direct, (b) under the general supervision of Alnylam, and (c) on a best efforts basis. Consultant will comply with all rules, procedures and standards promulgated from time to time by Alnylam with regard to Consultant’s access to and use of Alnylam’s property, information, equipment and facilities. Consultant agrees to furnish Alnylam with written reports with respect to the Consulting Services if and when requested by Alnylam.

1.2 Third Party Confidential Information. Consultant agrees not to use any trade secrets or other confidential information of any other person, firm, corporation, institution or other entity in connection with any of the Consulting Services.

1.3 No Conflicts. Consultant is under no contractual or other obligation or restriction which is inconsistent with Consultant’s execution of this Agreement or the performance of the Consulting Services. During the Term (defined below), Consultant will not enter into any agreement, either written or oral, in conflict with Consultant’s obligations under this Agreement. Consultant will arrange to provide the Consulting Services in such manner and at such times that the Consulting Services will not conflict with Consultant’s responsibilities under any other agreement, arrangement or understanding or pursuant to any employment relationship Consultant has at any time with any third party.

1.4 Compliance with Policies. If Consultant is a faculty member at or employee of a university or hospital (“Institution”) or of another company, Consultant represents and warrants that pursuant to Institution’s or company’s policies concerning professional consulting and additional workload, Consultant is permitted to enter into this Agreement. If Consultant is required by Consultant’s Institution to disclose to it any proposed agreements with industry, Consultant has made such disclosure. If Institution’s prior approval of this Agreement is required by Institution policies, Consultant has obtained such consent.

1.5 Absence of Debarment. Consultant represents that neither Consultant nor any Consultant Personnel (defined below) has been debarred, and to the best of Consultant’s knowledge, is not under consideration to be debarred, by the U.S. Food and Drug Administration from working in or providing consulting services to any pharmaceutical or biotechnology company under the Generic Drug Enforcement Act of 1992.

1.6 Consultant Personnel. In the event that others are, or may hereafter become, associated with Consultant or are used by Consultant in connection with the Consulting Services (“Consultant Personnel”), Consultant agrees to procure from them agreements containing obligations substantially identical in form and content to those in this Agreement, and Consultant agrees to cooperate with Alnylam in procuring execution by them of assignments and other papers as may be required by the terms of this Agreement.

2. Compensation. In consideration for the Consulting Services rendered by Consultant to Alnylam, Alnylam agrees to pay Consultant the fees set forth in the Business Terms Exhibit attached hereto.

3. Inventions.

3.1 Definition. Consultant will promptly disclose in confidence to Alnylam all inventions, discoveries, improvements, ideas, designs, processes, products, computer programs, works of authorship, databases, mask works, trade secrets, know-how, research and creations (whether or not patentable or subject to copyright or trade secret protection) that Consultant makes, conceives or reduces to practice, either alone or jointly with others, and that (a) result from the performance of the Consulting Services, and/or (b) result from use of facilities, equipment, supplies, Research Materials (defined below), or Confidential Information (defined below) of Alnylam (“Inventions”).

3.2 Ownership. All Inventions will be the exclusive property of Alnylam. For purposes of the copyright laws of the United States, all Inventions will constitute “works made for hire”, except to the extent such Inventions cannot by law be “works made for hire”. To the extent Inventions have not been previously assigned to Alnylam, Consultant hereby assigns and, to the extent any such assignment cannot be made at present, hereby agrees to assign to Alnylam, without further compensation, all right, title and interest in and to all Inventions and any and all related patents, patent applications, copyrights, copyright applications, trademarks, trade names, trade secrets and other proprietary rights in the United States and throughout the world.

3.3 Research Materials. For Consulting Services which involve laboratory work or experiments, “Research Materials” means all materials (a) furnished by Alnylam, (b)

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developed by Consultant in connection with the Consulting Services, or (c) the cost of which are reimbursed to Consultant by Alnylam. Research Materials include, in the case of biological materials, all progeny and unmodified derivatives of those materials, and in the case of chemical materials, all analogs, formulations, mixtures and compositions of those materials. Research Materials are the sole property of Alnylam. Consultant agrees not use or evaluate Research Materials for any purpose other than as directed by Alnylam, nor transfer the Research Materials to any third party without the prior consent of Alnylam. Consultant will use the Research Materials in compliance with all laws and regulations.

3.4 Records. Consultant shall make and maintain adequate and current written records of all Inventions, which records shall be available to and remain the property of Alnylam at all times.

3.5 Agreement with Institution. This Agreement is made subject to the understanding that Consultant, if affiliated with an Institution, may be required to fulfill certain obligations, including teaching, directing laboratory operations, conducting research, and publishing work. It is further understood that Consultant may have signed an agreement concerning inventions with Institution, under which Consultant may be obligated to assign to Institution certain inventions which arise out of or otherwise relate to Consultant’s work at or for Institution or from Consultant’s use of certain of its facilities or intellectual property. In performing the Consulting Services, Consultant agrees not to utilize Institution facilities or intellectual property if the result of such use is that any Inventions will not be assignable solely to Alnylam. Use of Institution’s telephone, fax machines or computers for communication purposes, however, will not constitute use of Institution’s facilities under this Agreement.

3.6 Work at Third Party Facilities. Consultant agrees not to make any use of any funds, space, personnel, facilities, equipment or other resources of a third party in performing the Consulting Services nor take any other action that would result in a third party owning or having a right in any Inventions, unless agreed upon in writing in advance by Alnylam.

4. Confidential Information.

4.1 Definition. “Confidential Information” means all trade secrets and confidential or proprietary information owned, possessed or used by Alnylam, learned of by Consultant or developed by Consultant in connection with the Consulting Services, whether or not labeled “Confidential”, including but not limited to (a) Research Materials, Inventions, scientific data and sequence information, (b) marketing plans, business strategies, financial information, forecasts, personnel information and customer lists of Alnylam, (c) all information of third parties that Alnylam has an obligation to keep confidential, and (d) the terms and conditions of this Agreement (including the compensation paid to Consultant pursuant to Section 2). Confidential Information does not include information which (i) is in the public domain or which becomes part of the public domain through no wrongful act on Consultant’s part but only after it becomes so publicly known, (ii) is already in Consultant’s possession at the time of disclosure by Alnylam, other than by previous disclosure by Alnylam, as evidenced by written or electronic records, or (iii) that becomes known to Consultant through disclosure by a third party having the right to disclose the information, as evidenced by written or electronic records.

Page 3

4.2 Obligations of Confidentiality. During the Term and for a period of five (5) years thereafter, Consultant will not directly or indirectly publish, disseminate or otherwise disclose, use for Consultant’s own benefit or for the benefit of a third party, deliver or make available to any third party, any Confidential Information, other than in furtherance of the purposes of this Agreement, and only then with the prior written consent of Alnylam. If required, Consultant may disclose the Confidential Information to a governmental authority or by order of a court of competent jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like material and reasonable advance notice is given to Alnylam. Consultant will exercise all reasonable precautions to physically protect the integrity and confidentiality of the Confidential Information and will not remove any Confidential Information or copies thereof from Alnylam’s premises except to the extent necessary to fulfill the Consulting Services, and then only with Alnylam’s prior consent. Consultant may disseminate or permit access to Confidential Information only to Consultant Personnel who have a need to know such Confidential Information in the course of the performance of their duties under this Agreement and who are bound to protect the confidentiality of the Confidential Information consistent with the terms of this Agreement. Anylam will be entitled to seek injunctive relief as a remedy for any breach of the terms of this Section 4.

5. Non-Competition. During the Term and for a period of one (1) year thereafter, Consultant shall not provide (whether for or without compensation) consulting services to any business or entity developing a product which is an siRNA therapeutic. It shall not be considered a competitive activity within the meaning of this Section for Consultant to be a member of the faculty or staff of a university, college or other educational or non-profit research institution.

6. Publication. Consultant agrees to submit to Alnylam a copy of any proposed manuscript or other materials to be published or otherwise publicly disclosed which contains information or any discussion relating to Alnylam or the Consulting Services, in sufficient time to enable Alnylam to determine if patentable Inventions or any Confidential Information of Alnylam would be disclosed. Consultant will cooperate with Alnylam in this respect and will delete from the manuscript or other disclosure any Confidential Information if requested by Alnylam, and will assist Alnylam in filing for patent protection for any patentable Inventions prior to publication or other disclosure.

7. Term and Termination.

7.1 Term. This Agreement will commence on the Effective Date and continue until either party notifies the other party in writing of its intention to terminate, in which event this Agreement shall terminate ninety (90) days after such notice.

7.2 Termination for Breach. If either party breaches in any material respect any of its material obligations under this Agreement, in addition to any other right or remedy, the non-breaching party may terminate this Agreement in the event that the breach is not cured within thirty (30) days after receipt by that party of written notice of the breach.

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7.3 Termination by Alnylam. Alnylam may terminate this Agreement immediately at any time upon written notice to Consultant in the event of a breach of this Agreement by Consultant which cannot be cured (e.g. breach of the confidentiality obligation).

7.4 Effect of Expiration/Termination. Upon expiration or termination, neither Alnylam nor Consultant will have any further obligations under this Agreement, except (a) the liabilities accrued through the date of termination, and (b) the obligations under sections 3, 4, 5, 7 and 8 will survive. Upon expiration or termination, and in any case upon Alnylam’s request, Consultant will return immediately to Alnylam all tangible Confidential Information, including all copies and reproductions thereof, except for one (1) copy which may be retained solely for archival purposes.

8. Miscellaneous.

8.1 Independent Contractor. All Consulting Services will be rendered by Consultant as an independent contractor and this Agreement does not create an employer-employee relationship between Alnylam and Consultant. Consultant will have no rights to receive any employee benefits, such as health and accident insurance, sick leave or vacation which are accorded to regular Alnylam employees. Consultant will not in any way represent himself to be an employee, partner, joint venturer, or agent of Alnylam.

8.2 Taxes. Consultant will pay all required taxes on Consultant’s income from Alnylam under this Agreement. Consultant will provide Alnylam with Consultant’s taxpayer identification number or social security number, as applicable.

8.3 Use of Name. Consultant consents to the use by Alnylam of Consultant’s name and likeness in written materials and oral presentations to current or prospective customers, partners, investors or others, provided that such materials or presentations accurately describe the nature of Consultant’s relationship with or contribution to Alnylam.

8.4 Assignability and Binding Effect. The Consulting Services to be rendered by Consultant are personal in nature. Consultant may not assign or transfer this Agreement or any of Consultant’s rights or obligations hereunder except to a corporation of which Consultant is the sole stockholder. In no event will Consultant assign or delegate responsibility for actual performance of the Consulting Services to any other natural person except to Consultant Personnel as provided for under this Agreement. This Agreement will be binding upon and inure to the benefit of the parties and their respective legal representatives, heirs, successors and permitted assigns.

8.5 Headings. The section headings are included solely for convenience of reference and will not control or affect the meaning or interpretation of any of the provisions of this Agreement.

8.6 Notices. Any notices or other communications from one party to the other will be in writing and will be given by addressing the same to the other at the address or facsimile number set forth in this Agreement. Notices to Alnylam will be marked “Attention: Chief Executive Officer”. Notice will be deemed to have been duly given when (a) deposited in the United States mail with proper postage for first class Registered or Certified Mail prepaid, return receipt requested, (b) sent by any reputable commercial courier, delivery confirmation requested, (c) delivered personally, or (d) if promptly confirmed by mail or commercial courier as provided above, when dispatched by facsimile.

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8.7 No Modification. This Agreement may be changed only by a writing signed by authorized representatives of both parties.

8.8 Severability. In the event that any one or more of the provisions contained in this Agreement will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Agreement, and all other provisions will remain in full force and effect. If any provision of this Agreement is held to be excessively broad, it will be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.

8.9 Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to its subject matter, and supersedes all previous written or oral representations, agreements and understandings between the parties.

8.10 Governing Law. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Massachusetts applicable to contracts made and to be performed therein, without giving effect to the principles thereof relating to the conflict of laws.

8.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

SIGNATURES NEXT PAGE

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Consulting Agreement

Phillip A. Sharp

Effective Date: March 1, 2006

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.
By :	/s/ John Maraganore
Name:	John Maraganore
Title:	President and CEO
	duly authorized
Date:	5 April 2006

CONSULTANT:

/s/ Phillip A. Sharp
Name:	Phillip A. Sharp
Title:	Institute Professor
	duly authorized

Address: Center for Cancer Research, Room E17-529B Massachusetts Institute of Technology 77 Massachusetts Ave. Cambridge MA 02139-4307 (for courier service, add 40 Ames Street)

Telephone: (617) 253-6421

Facsimile:  (617) 253-3867

SS or Tax ID No.: * Intentionally Omitted *

                               (required for payment)

Date: 4/9/06

BUSINESS TERMS EXHIBIT

1. Consulting Services:

Consultant will provide advice and guidance relating to nucleic acids (and modified nucleic acids) and their use as therapeutic agents based on science related to RNA interference.

Consultant will render Consulting Services on a schedule to be determined by mutual arrangement between Consultant and Alnylam’s Chief Executive Officer, to whom Consultant will report.

2. Compensation:

Alnylam shall pay Consultant a consulting fee of $3,000 per month, payable monthly.

Alnylam will reimburse Consultant for such reasonable business expenses as are incurred by Consultant in the performance of Consulting Services for the Company, provided that the Consultant shall have submitted to the Company written expense statements and other supporting documentation in a form that is reasonably satisfactory to the Company. The Company shall provide the Consultant with payment for any amounts due under this Section 2(b) within ten (10) days after the Company receives the documentation described in the preceding sentence. Notwithstanding the foregoing, the Consultant shall not incur total expenses in excess of $250 per month without the prior written approval (including emails) of the Company.

Invoices should reference this Agreement and should be submitted to the following address:

Alnylam Pharmaceuticals, Inc.

Attn: Accounts Payable Dept.

300 Third Street, 3^rd Floor

Cambridge, MA 02142

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CONSULTANT:	•   Phillip A. Sharp, Ph.D.
ALNYLAM CONTACT:	•   John Maraganore, Ph.D.
EFFECTIVE DATE:	•   March l, 2006
AMENDMENT NO. 1 EFFECTIVE DATE:	•   June 9, 2011

AMENDMENT NO. 1

THIS AMENDMENT NO. 1 (“Amendment No. 1”) effective as of June 9, 2011 (“Effective Date”), is between Alnylam Pharmaceuticals, Inc., a Delaware corporation with a principal office at 300 Third Street, Cambridge, MA 02142 (phone: 617-551-8200; fax: 617-551-8104) (“Alnylam”) and Phillip A. Sharp, Ph.D., having an address at Center for Cancer Research, Room E17-529, Massachusetts Institute of Technology, Cambridge, MA 02139-4307 (“Consultant”).

WHEREAS, Alnylam and Consultant are parties to a Consulting Agreement effective March 1, 2006 (the “Agreement”); and

WHEREAS, the parties desire to amend the Agreement as described below.

NOW, THEREFORE, in consideration of the above, with respect to the Agreement, the parties hereby agree to the following:

1. Capitalized terms used but not defined in this Amendment No. 1 will have the meanings ascribed to them in the Agreement.

2. As of the Effective Date of this Amendment No. 1, the Business Terms Exhibit shall be amended to reduce the consulting fee from $3,000 per month to $2,083.33 Per month.

Upon execution, this Amendment No. 1 shall be made a part of the Agreement and shall be incorporated by reference. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed or caused this Amendment No. 1 to be executed by their respective officers or other representatives duly authorized.

ALNYLAM PHARMACEUTICALS, INC.		PHILLIP A.SHARP, PH.D.
By:	/s/ John Maraganore	By:	/s/ Phillip A. Sharp
Print Name:	John Maraganore	Title:	Institute Professor MIT
Title:	CEO

EX-10.49

Exhibit 10.49

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions. EXECUTION COPY

LICENSE AND COLLABORATION AGREEMENT

by and between

ALNYLAM PHARMACEUTICALS, INC.

and

GENZYME CORPORATION

TABLE OF CONTENTS

1.	DEFINITIONS		1
2.	DEVELOPMENT COLLABORATION		16
	2.1	Overview.	16
	2.2	Development Plans.	17
	2.3	Responsibilities for Development Activities and Costs.	18
	2.4	Diligence.	19
	2.5	Records; Reports; Information Sharing.	19
	2.6	Third Parties.	22
3.	REGULATORY MATTERS.		22
	3.1	Regulatory Filings and Interactions.	22
	3.2	Costs of Regulatory Affairs.	23
	3.3	Right of Reference.	23
	3.4	Pharmacovigilance.	24
4.	COMMERCIALIZATION OF THE LICENSED PRODUCTS		24
	4.1	Responsibility, Cost and Diligence.	24
	4.2	Genzyme Commercialization Plan.	24
	4.3	Alnylam Commercialization Plan.	25
	4.4	Advertising and Promotional Materials.	25
	4.5	Reporting Obligations.	26
	4.6	Sales and Distribution.	26
	4.7	Recalls, Market Withdrawals or Corrective Actions.	26
	4.8	Ex-Territory Sales; Export Monitoring.	26
5.	COLLABORATION MANAGEMENT		27
	5.1	Joint Steering Committee.	27
	5.2	Appointment of Subcommittees, Project Teams and Collaboration Managers.	27
	5.3	Meetings.	27
	5.4	Minutes.	28
	5.5	Decision-Making.	29
	5.6	Term of JSC.	30
	5.7	Alnylam Third Party Partner.	30
6.	MANUFACTURE AND SUPPLY OF THE LICENSED PRODUCT		32
	6.1	Supply Agreements.	32

Confidential

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	6.2	Transfer of Manufacturing Know-How.	32
7.	LICENSES		32
	7.1	License Grants to Genzyme.	32
	7.2	License Grants to Alnylam.	34
	7.3	Joint Collaboration IP.	35
	7.4	In-Licenses.	35
	7.5	Improvement Products Option.	39
	7.6	Alnylam Territory Right of First Negotiation.	42
	7.7	Bankruptcy.	43
	7.8	[**]
	7.9	No Other Rights.	44
8.	CERTAIN FINANCIAL TERMS		44
	8.1	Upfront Fee.	44
	8.2	Development Milestone Fees.	44
	8.3	Royalties.	46
	8.4	Audits.	50
	8.5	Payment Exchange Rate.	50
	8.6	Late Payments.	51
	8.7	Blocked Payments.	51
	8.8	Taxes.	51
9.	CONFIDENTIALITY AND PUBLICATION		52
	9.1	Nondisclosure Obligation.	52
	9.2	Publication and Publicity.	53
10.	REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION		55
	10.1	Mutual Representations and Warranties.	55
	10.2	Representations and Warranties of Alnylam.	55
	10.3	Representations and Warranties of Genzyme.	57
	10.4	Warranty Disclaimer.	57
	10.5	Certain Covenants.	58
11.	INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE		58
	11.1	General Indemnification by Genzyme.	58
	11.2	General Indemnification by Alnylam.	59
	11.3	Product Liability.	59
	11.4	Ongoing Litigation.	59
	11.5	[**]	60

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	11.6	Indemnification Procedure.	60
	11.7	Limitation of Liability.	60
	11.8	Insurance.	61
12.	INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS		61
	12.1	Inventorship.	61
	12.2	Ownership.	61
	12.3	Prosecution and Maintenance of Patent Rights.	61
	12.4	Third Party Infringement.	63
	12.5	Patent Term Extensions.	65
	12.6	Common Interest.	66
	12.7	Trademarks.	66
	12.8	Cooperative Research and Technology (CREATE) Act Acknowledgment.	67
13.	TERM AND TERMINATION		67
	13.1	Term.	67
	13.2	Termination Rights.	67
	13.3	Effect of Termination.	69
	13.4	Fundamental Breach of Alnylam’s Development Obligations.	71
	13.5	Effect of Expiration or Termination; Survival.	71
14.	MISCELLANEOUS		71
	14.1	Assignment.	71
	14.2	Governing Law.	72
	14.3	Jurisdiction.	72
	14.4	Venue.	72
	14.5	Entire Agreement; Amendments.	72
	14.6	Severability.	73
	14.7	Headings.	73
	14.8	Waiver of Rule of Construction.	73
	14.9	Interpretation.	73
	14.10	No Implied Waivers; Rights Cumulative.	73
	14.11	Notices.	74
	14.12	Compliance with Export Regulations.	75
	14.13	Force Majeure.	75
	14.14	Independent Contractors.	75

Confidential

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14.15	Counterparts.	75
14.16	Performance by Affiliates.	75
14.17	Binding Effect; No Third Party Beneficiaries.	76

Confidential

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SCHEDULES

Schedule 1.4	Additional Alnylam In-Licenses
Schedule 1.7	ALN-TTR02
Schedule 1.8	ALN-TTRsc
Schedule 1.9	Alnylam Core Technology Patents
Schedule 1.16	Alnylam Product-Specific Patents
Schedule 1.47	Existing Alnylam In-Licenses
Schedule 1.52	First Phase II Success Objectives
Schedule 2.2.1	Global Development Strategy
Schedule 2.2.2	Alnylam Territory Development Plan
Schedule 2.2.3	Genzyme Territory Development Plan
Schedule 6.1	Supply Agreement Principles
Schedule 7.4.3.2	Baseball Arbitration Procedure Regarding JPAC/LP Milestone Allocation
Schedule 9.2.2(a)	Joint Press Release
Schedule 10.2	Disclosure Schedule

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LICENSE AND COLLABORATION AGREEMENT

THIS LICENSE AND COLLABORATION AGREEMENT (this “Agreement”), effective as of October 18, 2012 (the “Effective Date”), by and between Alnylam Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (“Alnylam”) and, Genzyme Corporation, a corporation organized and existing under the laws of the Commonwealth of Massachusetts (“Genzyme”).

RECITALS:

WHEREAS, Alnylam owns or controls certain fundamental intellectual property relating to RNA interference, and is developing proprietary therapeutic products in the Field (as defined below) targeting the human TTR gene known as ALN-TTR02 and ALN-TTRsc (each, as defined below);

WHEREAS, Genzyme desires to develop and commercialize such therapeutic RNA interference products in the Genzyme Territory (as defined below);

WHEREAS, Alnylam desires to continue to develop and to commercialize such therapeutic RNA interference products in the Alnylam Territory (as defined below); and

WHEREAS, Alnylam and Genzyme believe that a license and collaboration for such purpose on the terms and conditions of this Agreement would be desirable.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:

1. DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:

1.1 “Acquired Business” has the meaning set forth in Section 14.16.2.

1.2 “Acquirer” has the meaning set forth in Section 14.16.2.

1.3 “Action” has the meaning set forth in Section 14.3.

1.4 “Additional Alnylam In-Licenses” means the agreements set forth on Schedule 1.4.

1.5 “Affiliate” means, with respect to a Person, any other Person which controls, is controlled by, or is under common control with the applicable Person. For purposes of this definition, “control” shall mean: (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) entitled to vote for the election of directors, or otherwise having the power to control or direct the affairs of such Person; and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest or the power to direct the management and policies of such non-corporate entities.

Confidential

1.6 “AF11 Lipid Nanoparticle Formulation” means a lipid-based nanoparticle consisting of the following lipid species: [**].

1.7 “ALN-TTR02” means an siRNA Product Controlled by Alnylam, comprising the siRNA (#AD[**]) formulated in an AF11 Lipid Nanoparticle Formulation, as further described on Schedule 1.7.

1.8 “ALN-TTRsc” means an siRNA Product Controlled by Alnylam, comprising the siRNA (#AD[**]) conjugated to a Ga1NAc Conjugate, as further described on Schedule 1.8.

1.9 “Alnylam Core Technology Patents” means Patent Rights Controlled by Alnylam during the Term that are reasonably necessary or useful to Develop, Commercialize, and/or Manufacture Licensed Products, other than Alnylam Product-Specific Patents or Alnylam’s interest in Patent Rights included in Joint Collaboration IP. Alnylam Core Technology Patents include Patent Rights Controlled by Alnylam that claim [**], or (ii) subject matter applicable to siRNA or siRNA delivery in general. The Alnylam Core Technology Patents existing as of the Effective Date are identified on Schedule 1.9.

1.10 “Alnylam Developed siRNA Product” means an siRNA product with respect to which (a) Alnylam Controls Patent Rights Covering such siRNA product; provided that, once a product first satisfies the criterion set forth in this clause (a) such criterion shall be deemed satisfied at all times thereafter as to such product; and (b) Alnylam or an Affiliate of Alnylam plays(ed) a material role in the Development.

1.11 “Alnylam Development Candidate” means an siRNA Product for which Alnylam or its Affiliates have initiated IND-Enabling Toxicology Studies and as to which Alnylam and its Related Parties have not abandoned development and commercialization.

1.12 “Alnylam Indemnitees” has the meaning set forth in Section 11.1.

1.13 “Alnylam In-Licenses” means (a) the Existing Alnylam In-Licenses, and (b) any agreement between Alnylam and a Third Party entered into after the Effective Date pursuant to which Alnylam acquires Control of Know-How or Patent Rights that are necessary or useful to Develop, Manufacture or Commercialize Licensed Products in the Field in the Genzyme Territory, but in the case of any such agreement described in clause (b), solely to the extent that such agreement is designated as an Alnylam In-License pursuant to Section 7.4.2.2.

1.14 “Alnylam Know-How” means Know-How Controlled by Alnylam during the Term that is reasonably necessary or useful for Genzyme to Develop, Manufacture and/or Commercialize Licensed Products in the Field in the Genzyme Territory, other than Alnylam’s interest in Know-How included in Joint Collaboration IP.

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1.15 “Alnylam Patents” means Alnylam Core Technology Patents and Alnylam Product-Specific Patents.

1.16 “Alnylam Product-Specific Patents” means Patent Rights Controlled by Alnylam during the Term that claim (a) an siRNA targeting the human TTR gene contained in a Licensed Product, (b) during the Exclusivity Period, an siRNA targeting the human TTR gene not contained in a Licensed Product and not contained in an Alnylam Development Candidate, (c) the composition of matter of (i) a Licensed Product or (ii) an siRNA targeting the human TTR gene together with a formulation or compound that mediates delivery of an siRNA Product, which combination is contained in a Licensed Product, (d) methods of using a Licensed Product as a human therapeutic or prophylactic, methods of using a Licensed Product to modulate human TTR, or methods of using a Licensed Product to inhibit expression of human TTR, or (e) methods and materials specific to the synthesis or analysis of a Licensed Product; provided however, patents that include claims that are directed to subject matter applicable to siRNA or siRNA delivery in general will not be considered Alnylam Product Specific Patents but will be considered Alnylam Core Technology Patents. Notwithstanding the foregoing, for the purposes of clause (b) above, Alnylam Product-Specific Patents shall not include any Patent Right that claims any siRNA targeting the human TTR gene that (A) is contained in an Alnylam Development Candidate and (B) is not contained in a Licensed Product. The Alnylam Product-Specific Patents existing as of the Effective Date are identified on Schedule 1.16. Notwithstanding the foregoing, Alnylam Product-Specific Patents shall exclude Alnylam’s interest in Patent Rights included in Joint Collaboration IP.

1.17 “Alnylam Technology” means, collectively, Alnylam Know-How, Alnylam Patents and Alnylam’s interest in Joint Collaboration IP.

1.18 “Alnylam Territory” means all countries and territories of the world other than the Genzyme Territory.

1.19 “Alnylam Territory Commercialization Plan” has the meaning set forth in Section 4.3.

1.20 “Alnylam Territory Development Plan” has the meaning set forth in Section 2.2.2.

1.21 “Alnylam Trademark” has the meaning set forth in Section 12.7(b).

1.22 “ANDA” means an Abbreviated New Drug Application (or any successor application or procedure) as defined in regulations promulgated by the FDA under the FDCA, which ANDA is filed with or intended to be filed with the FDA (and, as applicable, any other analogous application filed with a Regulatory Authority in any country other than the U.S. in the Genzyme Territory) for regulatory approval for marketing and selling a Licensed Product in the Genzyme Territory

1.23 “ATTR” means the human disease TTR-mediated amyloidosis.

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1.24 “Backup Compound” means as to either of ALN-TTR02 or ALN-TTRsc, as applicable, a replacement product that (a) Alnylam brings forward as a substitute for ALN-TTR02 or ALN-TTRsc, as applicable, pursuant to Section 2.5.3.3; and (b) (i) in the case of such a replacement product for ALN-TTR02, is [**], (ii) in the case of such a replacement product for ALN-TTRsc, is [**], (iii) in the event that Alnylam discontinues the Development of ALN-TTR02 because an [**], then, notwithstanding clause (b)(i) above, is any siRNA Product in the Field that Alnylam advances into Clinical Studies (as evidenced by filing of an IND) within [**] years after the Effective Date or (iv) in the event that both ALN-TTR02 and ALN-TTRsc are discontinued prior to receipt of Regulatory Approval thereof, then, notwithstanding clauses (b)(i) and (b)(ii) above, is any siRNA Product in the Field that Alnylam advances into Clinical Studies (as evidenced by filing of an IND) within [**] years after the Effective Date.

1.25 “Bankrupt Party” has the meaning set forth in Section 7.7.

1.26 “Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31 of each Calendar Year; provided that (a) the first Calendar Quarter of the Term shall begin on the Effective Date and end on the first to occur of March 31, June 30, September 30 or December 31 thereafter and the last Calendar Quarter of the Term shall end on the last day of the Term and (b) the first Calendar Quarter of a Royalty Term for a Licensed Product in a country shall begin on the First Commercial Sale of a Licensed Product in such country and end on the first to occur of March 31, June 30, September 30 or December 31 thereafter and the last Calendar Quarter of a Royalty Term shall end on the last day of such Royalty Term.

1.27 “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31; provided that (a) the first Calendar Year of the Term shall begin on the Effective Date and end on the first December 31 thereafter and the last Calendar Year of the Term shall end on the last day of the Term and (b) the first Calendar Year of a Royalty Term for a Licensed Product in a country shall begin on the First Commercial Sale of a Licensed Product in such country and end on the first December 31 thereafter and the last Calendar Year of the Term shall end on the last day of such Royalty Term.

1.28 [**]

1.29 “Clinical Study” means a Phase I Study, Phase II Study, Phase III Study, or Post-Marketing Commitment Study, as applicable; but excluding any Post-Approval Studies.

1.30 “Collaboration” means the collaboration of the Parties in the Development, Manufacture and Commercialization of Licensed Products under this Agreement.

1.31 “Collaboration Manager” has the meaning set forth in Section 5.2.

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1.32 “Commercialization” or “Commercialize” means any and all activities directed to marketing, promoting, distributing, importing, exporting, offering to sell and/or selling a product, including the conduct of Post-Approval Studies, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

1.33 “Commercially Reasonable Efforts” means (a) with respect to each Party’s obligations under this Agreement that relate to a Licensed Product (including Development, Manufacture or Commercialization obligations), those efforts reasonably used by an entity in the biotechnology/pharmaceutical industry of similar resources and expertise as such Party, for such similar entity’s own products (including internally developed, acquired and in-licensed products) of similar market potential at a similar stage in development or product life, taking into account all relevant factors, including (i) issues of safety, tolerability and efficacy, (ii) product profile, (iii) difficulty in and costs of developing or manufacturing the Licensed Product, (iv) competitiveness of the Licensed Product and competitive products (but not taking into account Exempted Complementary TTR Products Controlled by the Party to which the efforts obligation applies) in the marketplace, (v) the extent of market exclusivity, (vi) the patent or other proprietary position of the Licensed Product, (vii) the regulatory structure involved, and (viii) the potential profitability of the Licensed Product, (but not taking into account the profitability relative to or the potential profitability of other products Controlled by the Party to which the efforts obligations applies); and (b) with respect to such Party’s other obligations under this Agreement, the carrying out of such obligations in a diligent, expeditious and sustained manner using efforts and resources, including reasonably necessary personnel and financial resources, that biopharmaceutical companies of comparable size and resources typically devote to similar tasks under similar circumstances.

1.34 “Competitive Infringement” has the meaning set forth in Section 12.4.1.

1.35 “Confidential Information” means any and all confidential or proprietary information and data, including Alnylam Technology, Genzyme Technology, and Joint Collaboration IP and all other scientific, pre-clinical, clinical, regulatory, manufacturing, marketing, financial and commercial information or data, whether communicated in writing or orally or by any other method, which is provided by one Party to the other Party in connection with this Agreement. Alnylam Technology is the Confidential Information of Alnylam. Genzyme Technology is the Confidential Information of Genzyme. Joint Collaboration IP and the terms of this Agreement are the Confidential Information of both Parties, subject to Section 9.2.2.

1.36 “Control”, “Controls” or “Controlled by” means, with respect to any Know-How, Patent Rights or other intellectual property right, the possession of (whether by ownership or license, other than pursuant to this Agreement), and the ability of a Person or its Affiliates to assign, transfer, or grant access to, or to grant a license or sublicense of, such item or right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party existing at the time such Person would be required hereunder to assign, transfer or grant another Person such access or license or sublicense, provided that, with respect to rights to any Third Party Know-How, Patent Rights or other

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intellectual property right that are licensed to, or otherwise obtained by, (i) a Party pursuant to an agreement entered into by such Party after the Effective Date or (ii) Alnylam pursuant to any Additional Alnylam In-License, such Third Party Know-How, Patent Rights or other intellectual property right shall be deemed not to be under the Control of such Party or Alnylam, respectively, unless and until the agreement pursuant to which such rights are obtained becomes an In-License pursuant to Section 7.4.2.

1.37 “Cover,” “Covering” or “Covers” means, as to a product and Patent Rights, that, in the absence of a license granted under, or ownership of, such Patent Rights, the manufacture, use, offer for sale, sale, or importation of such product would infringe such Patent Rights or, as to a pending claim included in such Patent Rights, the manufacture, use, offer for sale, sale, or importation of such product would infringe such Patent Rights if such pending claim were to issue in an issued patent.

1.38 “CPI” shall mean the Consumer Price Index – Urban Wage Earners and Clerical Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United States Department of Labor, Bureau of Labor Statistics (or its successor equivalent index) in the United States.

1.39 “Development,” “Developing” or “Develop” means the research and development activities related to the generation, characterization, optimization, construction, expression, use and production of Licensed Products, any other non-clinical, pre-clinical or clinical research and development activities related to the testing and qualification of Licensed Products, including toxicology studies, statistical analysis and report writing, pre-clinical testing, formulation development, Clinical Studies, regulatory affairs, product approval and registration activities, and all other activities necessary to seek, obtain and maintain Regulatory Approval, but excluding Post-Approval Studies.

1.40 “Development Plan” means (a) with respect to Alnylam, the Alnylam Territory Development Plan and (b) with respect to Genzyme, the Genzyme Territory Development Plan.

1.41 “[**].

1.42 “Effective Date” has the meaning set forth in the preamble.

1.43 “EMA” means the European Medicines Agency and any successor governmental authority having substantially the same function.

1.44 “EU” means the European Union, as its membership may be altered from time to time, and any successor thereto.

1.45 “Exclusivity Period” means, on a country-by-country basis within the Genzyme Territory, from the Effective Date until the First Commercial Sale of a Licensed Product in a country, and thereafter until the end of the last Royalty Term in such country to terminate or expire.

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1.46 “Exempted Complementary TTR Product” means a product for administration to ATTR patients that the JSC determines would not, if Commercialized in a country of the Genzyme Territory, reasonably be expected to adversely affect the Development or Commercialization of any Licensed Product in such country.

1.47 “Existing Alnylam In-Licenses” means (a) the Third Party agreements set forth on Schedule 1.47 and (b) any Additional Alnylam In-License included within the definition of Existing Alnylam In-Licenses pursuant to Section 7.4.2.3.

1.48 “FDA” means the United States Food and Drug Administration and any successor governmental authority having substantially the same function.

1.49 “FDCA” means the United States Federal Food, Drug, and Cosmetic Act of 1938, as amended from time to time, and the regulations and guidelines promulgated thereunder.

1.50 “Field” means the treatment and/or prevention of all human diseases, including treatment and/or prevention of ATTR, including familial amyloid polyneuropathy (FAP), familial amyloid cardiomyopathy (FAC) and senile systemic amyloidosis (SSA) in humans.

1.51 “First Commercial Sale” means, with respect to a country, the first sale for end use or consumption of the Licensed Product in such country after all Regulatory Approvals legally required for such sale have been granted by the Regulatory Authority of such country.

1.52 “First Phase II Success” means the completion of a Phase II Clinical Trial the results of which satisfy the criteria set forth in Schedule 1.52.

1.53 “FTE” means [**] hours of work devoted to or in support of the Development or Manufacture of a Licensed Product, that is carried out by one or more qualified scientific or technical employees of a Party or its Affiliates.

1.54 “FTE Cost” means, for any period, the FTE Rate multiplied by the number of FTEs in such period.

1.55 “FTE Rate” means [**] U.S. Dollars ($[**]) per FTE, increased annually beginning on January 1, 2014 and thereafter on January 1 of each succeeding year by the percentage increase in the CPI as of December 31 of the then most recently ended calendar year over the level of the CPI on December 31, 2012.

1.56 “Fundamental Breach” means a substantial abandonment of Alnylam’s Development obligations hereunder as a whole resulting from either (a) Alnylam’s willful failure to exercise Commercially Reasonable Efforts to perform such Development obligations, or (b) Alnylam’s lack of the financial resources necessary to perform such Development obligations. For the avoidance of doubt, a discontinuation of Development of ALN-TTR02 and/or ALN-TTRsc that is consistent with the exercise of Commercially

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Reasonable Efforts shall not constitute a Fundamental Breach, and Alnylam’s failure to Develop a Backup Compound or Improvement Product, or Alnylam’s failure to conduct any Post-Approval Study, shall not constitute a Fundamental Breach. For clarity, the Parties agree that a breach of Alnylam’s diligence obligations under Section 2.4.2 need not rise to the level of a Fundamental Breach to be considered a material breach of the Agreement.

1.57 “Future Alnylam In-License” has the meaning set forth in Section 7.4.3.1.

1.58 “GAAP” means generally accepted accounting principles as practiced in the United States or, to the extent applicable, IFRS (International Financial Reporting Standards), in each case, consistently applied.

1.59 [**].

1.60 “Generic Competition” means, with respect to a Licensed Product in any country in the Genzyme Territory in a given Calendar Quarter, that, during such Calendar Quarter, (a) [**] Generic Products are commercially available in such country, and (b) aggregate Net Sales of such Licensed Product in such country in such Calendar Quarter equal less than [**] percent ([**]%) of the average aggregate Net Sales of the Licensed Product over the four (4) consecutive Calendar Quarters immediately prior to the Calendar Quarter in which [**] Generic Products first became commercially available in such country.

1.61 “Generic Product” for a given country means a pharmaceutical product that (a) is sold by a Person that is not a Related Party of Genzyme under a marketing authorization granted by a Regulatory Authority to a Third Party, (b) contains the same active ingredient(s) as are contained in a Licensed Product, where the term “active ingredient” means the siRNA Product(s) responsible for the pharmacological or physiological action of the Licensed Product, and (c) is approved by the Regulatory Authority pursuant to an approval process that relies in part on pivotal safety and/or efficacy data in such Regulatory Authority’s previous grant of marketing authorization to a Licensed Product.

1.62 “Genzyme Collaboration IP” means (a) any Know-How, first identified, discovered or developed solely by employees of Genzyme or its Affiliates or other persons not employed by Alnylam acting on behalf of Genzyme, in the conduct of the Collaboration and (b) any Patent Rights that claim or cover such Know-How and are Controlled by Genzyme at any time during the Term. Genzyme Collaboration IP excludes Genzyme’s interest in Joint Collaboration IP, in each case, (a) and (b) other than Genzyme Manufacturing IP.

1.63 “Genzyme Disclosed Manufacturing Know-How” means Know-How (a) Controlled by Genzyme at any time during the Term that is useful in the Manufacture of a Licensed Product, and (b) that Genzyme, in its sole discretion, discloses in writing to Alnylam in the course of the Collaboration.

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1.64 “Genzyme Indemnitees” has the meaning set forth in Section 11.2.

1.65 “Genzyme In-Licenses” means (a) any agreement between Genzyme and a Third Party entered into after the Effective Date pursuant to which Genzyme Controls Know-How or Patent Rights, other than Genzyme Manufacturing IP, used to Develop, Manufacture or Commercialize Licensed Products in the Field and (b) that is designated as a Genzyme In-License pursuant to Section 7.4.2.2.

1.66 “Genzyme Know-How” means Know-How Controlled by Genzyme during the Term that is reasonably necessary or useful for Alnylam to Develop, Commercialize and/or Manufacture Licensed Products in the Field in the Alnylam Territory (other than Genzyme’s rights in Joint Collaboration IP, Genzyme Collaboration IP and Genzyme Manufacturing IP).

1.67 “Genzyme Manufacturing IP” means (a) any Know-How related to the Manufacture of Licensed Products (or oligonucleotides generally) Controlled by Genzyme at any time during the Term, and (b) any Patent Rights that claim or cover such or Know-How and are Controlled by Genzyme at any time during the Term.

1.68 “Genzyme Patent Rights” means those Patent Rights Controlled by Genzyme during the Term that are reasonably necessary or useful to Develop, Commercialize and/or Manufacture Licensed Products in the Field in the Alnylam Territory. Genzyme Patent Rights excludes Patent Rights included in Genzyme Collaboration IP, Genzyme’s interest in Joint Collaboration IP and Genzyme Manufacturing IP.

1.69 “Genzyme Technology” means, collectively, Genzyme Know-How and Genzyme Patent Rights, Genzyme Collaboration IP and Genzyme’s interest in Joint Collaboration IP, but excluding Genzyme Manufacturing IP.

1.70 “Genzyme Territory” means the countries of Australia, Bangladesh, Cambodia, China, East Timor, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, Micronesia, Mongolia, Myanmar, Nepal, New Zealand, North Korea, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

1.71 “Genzyme Territory Commercialization Plan” has the meaning set forth in Section 4.2.

1.72 “Genzyme Territory Development Plan” has the meaning set forth in Section 2.2.3.

1.73 “Genzyme Trademark” has the meaning set forth in Section 12.7(b).

1.74 “Global Branding Strategy” has the meaning set forth in Section 4.4.1.

1.75 “Global Development Strategy” has the meaning set forth in Section 2.2.1.

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1.76 “Governmental Authority” means any applicable government authority, court, tribunal, arbitrator, agency, department, legislative body, commission or other instrumentality of (a) any government of any country or territory, (b) any nation, state, province, county, city or other political subdivision thereof or (c) any supranational body.

1.77 “Improvement Manufacturing Patent Right” means a Patent Right owned exclusively by Genzyme or its Affiliates that claims an invention related to the Manufacture of a Licensed Product that was made (a) by Genzyme or its Affiliates after the Effective Date in connection with Manufacturing Licensed Products and (b) using Alnylam Know-How that, at the time such Alnylam Know-How was disclosed to Genzyme or its Affiliates, constituted Alnylam’s Confidential Information under Section 9.1.

1.78 “Improvement Product” means any siRNA Product Controlled by Alnylam, other than (a) ALN-TTR02, (b) ALN-TTRsc or (c) a Back-Up Compound that becomes a Licensed Product pursuant to Section 2.5.3.3.

1.79 “Improvement Product Development Budget” has the meaning set forth in Section 7.5.

1.80 “Improvement Product Development Costs” has the meaning set forth in Section 7.5.3.1.

1.81 “Improvement Product Development Plan” has the meaning set forth in Section 7.5.

1.82 “Incremental Amounts” has the meaning set forth in Section 11.4.2.

1.83 “IND” means an Investigational New Drug application, Clinical Trial Application or similar application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory Authority in conformance with the requirements of such Regulatory Authority.

1.84 “IND-Enabling Toxicology Studies” means the pharmacokinetic and toxicology studies required to meet the requirements for filing an IND.

1.85 “Indemnitee” has the meaning set forth in Section 11.6.

1.86 “In-Licenses” means, collectively, the Alnylam In-Licenses and the Genzyme In-Licenses.

1.87 “Joint Collaboration IP” means, collectively, (a) any Know-How first identified, discovered or developed jointly by employee(s), agent(s) or consultant(s) acting on behalf of Alnylam or its Affiliates, on the one hand, and employee(s), agent(s) or consultant(s) acting on behalf of Genzyme or its Affiliates, on the other hand, in the conduct of the Collaboration that is Controlled by Alnylam and Genzyme, and (b) any Patent Rights that Cover such Know-How and is Controlled by Alnylam and Genzyme.

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1.88 “Joint Development Budget” has the meaning set forth in Section 2.3.3.

1.89 “Joint Clinical Study” has the meaning set forth in Section 2.3.3.

1.90 “Joint Development Costs” has the meaning set forth in Section 2.3.3.

1.91 “Joint Development Plan” has the meaning set forth in Section 2.3.3.

1.92 “Joint Steering Committee” or “JSC” means the joint steering committee as more fully described in Section 5.1.

1.93 “JPAC/LP Milestone” has the meaning set forth in Section 7.4.3.2(b).

1.94 “JPAC/LP-Specific Milestone” has the meaning set forth in Section 7.4.3.2(b).

1.95 “Know-How” means, all chemical or biological materials and other tangible materials, inventions, improvements, practices, discoveries, developments, data, information, technology, methods, protocols, formulas, knowledge, know-how, trade secrets, processes, assays, skills, experience, techniques and results of experimentation and testing, including pharmacological, toxicological and pre-clinical and clinical data and analytical and quality control data; provided, however, excluding in any event any Patent Right and Trademarks.

1.96 “Laws” means all applicable laws, statutes, rules, regulations, orders, judgments, injunctions, ordinances or other pronouncements having the binding effect of law of any Governmental Authority.

1.97 “Licensed Product” means any of the following siRNA Products: (a) ALN-TTR02, (b) ALN-TTRsc, (c) a Backup Compound that becomes a Licensed Product pursuant to Section 2.5.3.3 or other siRNA Product that becomes a Licensed Product pursuant to Section 2.5.3.4, or (d) an Improvement Product that becomes a Licensed Product pursuant to Section 7.5.

1.98 “Licensing Party” has the meaning set forth in Section 7.4.2.2.

1.99 “Lipid Nanoparticle Formulation” means a lipid-based nanoparticle comprising more than one lipid species designed to enable delivery of siRNAs to mammalian cells.

1.100 [**].

1.101 “Losses” has the meaning set forth in Section 11.1.

1.102 “Manufacturing” or “Manufacture” means, as applicable, all activities associated with the production, manufacture, process of formulating, processing, filling, finishing, packaging, labeling, shipping, importing, and storage of Licensed Products

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(including Bulk Drug Product, Bulk Drug Substance, and Finished Product, each as defined in the Supply Agreements), including process development, process validation, stability testing, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and quality control development, testing and release.

1.103 “Manufacturing Claim” means a claim within a Patent Right directed solely to Manufacturing a Licensed Product.

1.104 “MC3” has the meaning set forth in Section 1.6.

1.105 “MHLW” has the meaning set forth in Section 1.129.

1.106 “MicroRNA” or “miRNA” means a structurally defined functional RNA molecule usually between 19 and 25 nucleotides in length, which is derived from an endogenous, genetically-encoded non-coding RNA which is predicted to be processed into a hairpin RNA structure that is a substrate for the double-stranded RNA-specific ribonuclease Drosha and subsequently is predicted to serve as a substrate for the enzyme Dicer, a member of the RNase III enzyme family.

1.107 “MicroRNA Mimic” means a single-stranded or double-stranded oligonucleotide with the same or substantially similar-base composition and sequence (including chemically modified bases) as a particular natural, miRNA and which is designed to mimic the activity of such miRNA. For clarity, miRNA Mimic excludes a double-stranded oligonucleotide which functions or is designed to function as an siRNA.

1.108 “NDA” means a New Drug Application, Biologics License Application, Marketing Authorization Application or similar application or submission filed with a Regulatory Authority in a country or group of countries to obtain marketing approval for a biological, pharmaceutical or other therapeutic or prophylactic product in that country or in that group of countries.

1.109 “Net Sales” means the aggregate gross invoiced sales prices from sales of all units of Licensed Products sold by Genzyme and its Related Parties to independent Third Parties (other than a Sublicensee) after deducting, if not previously deducted, from the amount invoiced or received:

(b) trade, quantity and cash discounts, credits or allowances actually given;

(c) returns, rejections, recalls, rebates, chargebacks and other credits or allowances actually given;

(d) retroactive price reductions or billing corrections;

(e) value added, sales and use, excise and other similar taxes and surcharges, customary transportation and insurance, custom duties, and other governmental charges; and

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(f) amounts previously included in Net Sales of such Licensed Products that are adjusted or written-off by Genzyme or its Related Parties as bad debt or otherwise uncollectible in accordance with the standard practices of Genzyme or its Related Parties for writing off uncollectible amounts consistently applied; provided that if any such written-off amounts are subsequently collected, such collected amounts shall be included in Net Sales in the period in which they are subsequently collected.

Such amounts shall be determined from the books and records of Genzyme or its Related Parties, maintained in accordance with GAAP.

In the case of any sale or other disposal for value, such as barter or counter-trade, of Licensed Product, or part thereof, other than in an arm’s length transaction exclusively for cash, Net Sales shall be calculated as above on the value of the non-cash consideration received or the fair market price (if higher) of the Licensed Product in the country of sale or disposal, as determined in accordance with GAAP.

Notwithstanding the foregoing, the following will not be included in Net Sales: (1) sales between or among Genzyme and its Related Parties shall be excluded from the computation of Net Sales, (but Net Sales shall include sales to the first Third Party (other than a Sublicensee) by Genzyme or its Related Parties); and (2) Licensed Product used as samples to promote additional Net Sales, in amounts consistent with normal business practices of Genzyme.

1.110 “Non-Bankrupt Party” has the meaning set forth in Section 7.7.

1.111 “Ongoing Litigation” means (a) any litigation ongoing as of the Effective Date that was brought against Alnylam regarding or relating to any Alnylam Technology or (b) all related or similar actions arising from substantially the same underlying facts as any litigation described in clause (a), whether brought prior to, on or after the Effective Date.

1.112 “Option” has the meaning set forth in Section 7.5.

1.113 “Option Exercise Package” has the meaning set forth in Section 7.5.

1.114 “Option Exercise Period” has the meaning set forth in Section 7.5.

1.115 “Out-of-Pocket Costs” means, with respect to certain activities hereunder, direct expenses paid or payable by either Party or its Affiliates to Third Parties and specifically identifiable and incurred to conduct such activities for a Licensed Product, including payments to contract personnel.

1.116 “Party” means Genzyme and/or Alnylam.

1.117 “Patent Rights” means (a) all issued patents (extensions, restorations by existing or future extension or registration mechanism, including patent term adjustments, patent term extension, supplemental protection certificates or the equivalent thereof, substitutions, confirmations, re-registrations, re-examinations, and patents of addition), (b) patent applications (including all provisional applications, substitutions, requests for continuation, continuations, continuations-in-part, divisionals and renewals), (c) inventor’s certificates, and (d) and all equivalents of the foregoing in any country of the world.

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1.118 “Person” shall mean any natural person, corporation, unincorporated organization, partnership, association, sole proprietorship joint stock company, joint venture, limited liability company, trust or government, or any agency or political subdivision of any government, or any other similar entity.

1.119 “Phase I Study” means a study in humans which provides for the introduction into humans of a product, conducted in healthy volunteers or patients, to obtain initial information on product safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in 21 C.F.R. § 312.21(a) (or the equivalent thereof outside the United States).

1.120 “Phase II Study” means a study in humans of the safety, dose ranging or efficacy of a product, as further defined in 21 C.F.R. § 312.21(b) (or the equivalent thereof outside the United States).

1.121 “Phase III Study” means a study in humans of the efficacy and safety of a product, which is prospectively designed to demonstrate statistically whether such product is effective and safe for use in a particular indication in a manner sufficient (alone or together with one or more other such studies) to file an application for Regulatory Approval for the product. For the avoidance of doubt, the Parties acknowledge that, because of the nature of ATTR, a Phase III Study for a Licensed Product may not include all of the elements that a Phase III Study for other kinds of drug products may include (e.g., a Phase III Study for a Licensed Product may be a single study and there may be no prospective plan to run a second pivotal clinical trial independent of such Phase III Study).

1.122 “PMDA” has the meaning set forth in Section 1.129.

1.123 “Positive Reimbursement Decision” means The National Health Insurance Bureau issues a pricing recommendation to MHLW in Japan.

1.124 “Post-Approval Study” means a human clinical study of a Licensed Product initiated after receipt of Regulatory Approval for such Licensed Product in a country or territory, other than a Post-Marketing Commitment Study.

1.125 “Post-Marketing Commitment Study” means a non-human or human clinical study of a Licensed Product initiated after receipt of Regulatory Approval for such Licensed Product in a country or territory that is required by the Regulatory Authority in such country or territory to maintain the Regulatory Approval for such Licensed Product in such country or territory.

1.126 “Product Trademark(s)” means the Trademarks for use in connection with the distribution, marketing, promotion and sale of the Licensed Products. Product Trademarks specifically excludes the corporate names and logos of the Parties and their Affiliates. Product Trademark includes both the Alnylam Trademarks and the Genzyme Trademarks.

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1.127 “Promotional Materials” has the meaning set forth in Section 4.4.2.

1.128 “Regulatory Approval” means any and all approvals, licenses, registrations or authorizations of any Regulatory Authority that are necessary for the marketing and sale of a product in a country or group of countries.

1.129 “Regulatory Authority” means any applicable government regulatory authority involved in granting approvals for the Development, Manufacturing, Commercialization, reimbursement and/or pricing of Licensed Products, including the FDA, the EMA, the Japanese Ministry of Health, Labour and Welfare (“MHLW”) and the Pharmaceuticals and Medical Devices Agency in Japan (“PMDA”).

1.130 “Regulatory Exclusivity” means, with respect to a Licensed Product in a country, any exclusive marketing right, data exclusivity right, orphan drug designation or other country-wide exclusive right conferred by any Governmental Authority with respect to such Licensed Product in such country, other than a Patent Right.

1.131 “Related Party” means a Party’s Affiliates, permitted Sublicensees and, with respect to Alnylam, licensees in the Alnylam Territory.

1.132 “Royalty Term” has the meaning set forth in Section 8.3.2.

1.133 “SDEA” has the meaning set forth in Section 3.4.

1.134 “siRNA” means a small interfering ribonucleic acid.

1.135 “siRNA Product” means an oligonucleotide composition of native or chemically modified RNA, designed to modulate the human TTR gene through activation of the RNA interference pathway which is not a MicroRNA, MicroRNA antagonist or MicroRNA Mimic.

1.136 “SPC” has the meaning set forth in Section 12.5.

1.137 “Sublicensee” means a Third Party to whom a Party grants a sublicense under any Alnylam Technology or Genzyme Technology, as the case may be, to Develop, Manufacture or Commercialize Licensed Product in the Field pursuant to Section 7.1.3 or Section 7.2.4.

1.138 “Supply Agreements” means the Clinical Supply Agreement and the Commercial Supply Agreement.

1.139 “Term” has the meaning set forth in Section 13.1.

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1.140 “Territory” means (a) with respect to Alnylam, the Alnylam Territory and (b) with respect to Genzyme, the Genzyme Territory.

1.141 “Third Party” means an entity other than a Party and its Affiliates.

1.142 “Third Party Collaboration Agreement” has the meaning set forth in Section 5.7.

1.143 “Third Party License Payment” means royalties, upfront fees, milestones or other amounts payable under an In-License.

1.144 “Third Party Partner” has the meaning set forth in Section 5.7.

1.145 “Trademark” means any trademark, trade name, service mark, service name, brand, domain name, trade dress, logo, slogan or other indicia of origin or ownership, including the goodwill and activities associated with each of the foregoing.

1.146 “TTR” means the human TTR gene and its protein product, transthyretin. As of the Effective Date, the NCBI RefSeq code for the TTR gene is NM_000371.3 and the NCBI RefSeq code for the TTR protein product is NP_000362.1.

1.147 “United States” means the United States of America and its territories, possessions and commonwealths.

1.148 “Valid Claim” means a claim of: (a) an issued and unexpired patent, which claim has not been withdrawn, cancelled, abandoned, disclaimed, revoked or held unenforceable or invalid by an unappealable decision of a court or other governmental agency of competent jurisdiction, or has not been appealed within the time allowed for appeal, or by an appealed decision of a court or other governmental agency of competent jurisdiction where the appeal has been pending for more than [**] years (unless and until such decision is subsequently overturned on appeal) and which has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise, or (b) a patent application that has been pending less than [**] years from the date of filing of the earliest patent application from which such patent application claims priority, which claim has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.

2. DEVELOPMENT COLLABORATION

2.1 Overview. Prior to the Effective Date, Alnylam has been engaged in the Development of the Licensed Products. Under this Agreement, the Parties will collaborate in the further Development of Licensed Products, with Alnylam retaining primary responsibility for the Development of Licensed Products in the Alnylam Territory and Genzyme assuming primary responsibility for the Development of Licensed Products in the Genzyme Territory.

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2.2 Development Plans.

2.2.1 Global Development Strategy. The global Development strategy for the Licensed Products (“Global Development Strategy”) is attached hereto as Schedule 2.2.1. Alnylam may amend the Global Development Strategy from time to time by providing notice and a copy of such changes to the JSC. [**] will have final decision-making authority over all such amendments; provided, however, that [**] may not amend the Global Development Strategy in a manner that would [**] the Development of Licensed Products in the [**] Territory if [**] would [**] Development in the [**] Territory [**] Development in the [**] Territory. [**] will present any proposed amendments to the Global Development Strategy to the JSC reasonably in advance of implementing such amendments, and [**] shall have the right to review and comment thereon, and [**] shall consider in good faith [**] timely comments.

2.2.2 Alnylam Territory Development Plan. The Development activities and Post-Approval Studies to be undertaken with respect to each Licensed Product by or on behalf of Alnylam will be set forth in a written work plan and time table (each, a “Alnylam Territory Development Plan”), a draft framework of which is attached hereto as Schedule 2.2.2, and Alnylam will provide to Genzyme the first complete Alnylam Territory Development Plan for ALN-TTR02 and the then-current draft Development Plan for ALN-TTRsc by [**]. Each Alnylam Territory Development Plan will set forth a rolling written work plan and time table with respect to the Development of and Post-Approval Studies for a Licensed Product from the Effective Date until the later of (a) [**] years from date of such plan, and (b) receipt of Regulatory Approval for such Licensed Product. Each Alnylam Territory Development Plan shall subsequently be updated by Alnylam from time to time not later than [**] of each Calendar Year until such time as no further Development or Post-Approval Studies are occurring or expected to occur with respect to the applicable Licensed Product. Alnylam will have final decision-making authority over the Alnylam Territory Development Plans; provided, however, that the Alnylam Territory Development Plans shall at all times be materially consistent with the Global Development Strategy and shall not be amended in a manner that would have a material adverse effect on the Development of Licensed Products in the Genzyme Territory if such material adverse effect would have a disproportionately significant impact on Development in the Genzyme Territory as compared to any such impact on Development in the Alnylam Territory. Alnylam will present the Alnylam Territory Development Plans and any proposed amendments thereto to the JSC reasonably in advance of implementing such plans or amendments, and Genzyme shall have the right to review and comment thereon, and Alnylam shall consider in good faith Genzyme’s timely comments.

2.2.3 Genzyme Territory Development Plan. The Development activities and Post-Approval Studies to be undertaken with respect to each Licensed Product by or on behalf of Genzyme will be set forth in a written work plan and time table (each, a “Genzyme Territory Development Plan”), which will be prepared by Genzyme by [**] and following review and approval, subject to Section 5.5.3(a), by the JSC, will then be attached hereto as Schedule 2.2.3. Each Genzyme Territory Development Plan will set forth a rolling written work plan and time table with respect to the Development of and Post-Approval Studies for a Licensed Product from the Effective Date until the later of (a) [**] years from the date of such plan, and (b) receipt of Regulatory Approval for such Licensed Product. The Genzyme Territory Development Plans shall subsequently be updated by Genzyme from time to time not later than [**] of each Calendar Year until such time as no further Development or Post-Approval Studies are occurring

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or expected to occur with respect to the applicable Licensed Product in the Genzyme Territory. Genzyme will have final decision-making authority over the Genzyme Territory Development Plans; provided, however, that the Genzyme Territory Development Plans shall at all times be materially consistent with the Global Development Strategy and shall not be amended in a manner that would have a material adverse effect on the Development of Licensed Products in the Alnylam Territory; provided, however, that Genzyme may, in accordance with Section 5.5, amend the Genzyme Territory Development Plan in a manner that materially adversely affects the Development of Licensed Products in the Alnylam Territory if the Development activities contemplated by such amendment are reasonably required to obtain Regulatory Approval of a Licensed Product in the Genzyme Territory and there is no reasonable alternative to such activity that would similarly enable Genzyme or its Related Parties to obtain such Regulatory Approval in the Genzyme Territory with a lesser adverse effect on the Development of Licensed Products in the Alnylam Territory. Genzyme will present the Genzyme Territory Development Plans and any proposed amendments thereto to the JSC reasonably in advance of implementing such plans or amendments, and Alnylam shall have the right to review and comment thereon and Genzyme shall consider in good faith Alnylam’s timely comments.

2.3 Responsibilities for Development Activities and Costs.

2.3.1 Alnylam Development. Alnylam shall be primarily responsible for the global Development of Licensed Products and all Development activities the primary purpose of which is to obtain or maintain Regulatory Approval of Licensed Products in the Alnylam Territory. Except as otherwise provided in a Joint Development Plan with respect to Joint Development Costs agreed to pursuant to Section 2.3.3, Alnylam shall be responsible for one hundred percent (100%) of all Development costs with respect to Development activities that are conducted by Alnylam for the Licensed Products in the Alnylam Territory pursuant to the Alnylam Territory Development Plan. Alnylam will promptly provide Genzyme with written notice of any decision by Alnylam to commence the first [**] of a Licensed Product by Alnylam or any of its Related Parties, but in any event, Alnylam will provide such notice no later than [**] days prior to commencement thereof. Except as otherwise agreed by the Parties pursuant to Section 2.3.3 with respect to joint Development activities or pursuant to Section 7.5 with respect to the Development of an Improvement Product, Alnylam will conduct all Development of the Licensed Products for the Alnylam Territory solely in accordance with the Alnylam Territory Development Plan, as such Alnylam Territory Development Plan may be amended in accordance with this Agreement.

2.3.2 Genzyme Development. Genzyme shall be responsible for the Development of Licensed Products under the Genzyme Territory Development Plan. Except as otherwise provided in a Joint Development Plan with respect to Joint Development Costs agreed to pursuant to Section 2.3.3, Genzyme shall be responsible for one hundred percent (100%) of all Development costs with respect to Development activities that are conducted by Genzyme pursuant to the Genzyme Territory Development Plan. Except as otherwise agreed by the Parties pursuant to Section 2.3.3 with respect to joint Development activities or pursuant to Section 7.5 with respect to the Development of an Improvement Product, Genzyme will conduct all Development of the Licensed Products for the Genzyme Territory solely in accordance with the applicable Genzyme Territory Development Plan, as such Genzyme Territory Development Plan may be amended in accordance with this Agreement.

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2.3.3 Joint Development. In the event that the Parties mutually agree to conduct a Clinical Study of a Licensed Product specifically designed for the purpose of facilitating Regulatory Approval of a Licensed Product in either (a) both the Alnylam Territory and the Genzyme Territory or (b) solely the Genzyme Territory (a “Joint Clinical Study”), the Parties will (i) agree in writing to a written work plan and time table for conducting such Joint Clinical Study (the “Joint Development Plan”) and a mechanism for adopting amendments thereto, (ii) agree in writing to governance and management mechanisms for such Joint Clinical Study, including coordination of such Clinical Study through the JSC and (iii) negotiate in good faith a budget therefor (the “Joint Development Budget”), a mechanism for adopting amendments thereto, and an equitable allocation of costs (“Joint Development Costs”) between the Parties.

2.4 Diligence.

2.4.1 Genzyme Diligence. Genzyme will use Commercially Reasonable Efforts to (a) Develop at least [**] and obtain Regulatory Approval therefor in each of (i) Japan and (ii) any other country(ies) within the Genzyme Territory where Genzyme determines that it is commercially reasonable to seek Regulatory Approval (taking into account all relevant factors as provided in the definition of “Commercially Reasonable Efforts”), (b) perform the Development activities under the Genzyme Territory Development Plan and (c) if applicable as to Joint Clinical Studies, the activities allocated to Genzyme under the Joint Development Plan. For clarity, it may be consistent with Genzyme’s Commercially Reasonable Effort’s obligation to abandon Development of a Licensed Product in favor of another Licensed Product.

2.4.2 Alnylam Diligence. Alnylam will use Commercially Reasonable Efforts to (a) Develop at least [**] and obtain Regulatory Approval therefor by the FDA in the U.S. or by the EMA in the European Union, (b) perform the Development activities under the Alnylam Territory Development Plan and (c) if applicable as to Joint Clinical Studies, the activities allocated to Alnylam under the Joint Development Plan. For clarity, Alnylam’s election not to bring forward a Backup Compound or Improvement Product for Development as a Licensed Product shall not constitute a breach of Alnylam’s obligations under this Section 2.4.2.

2.5 Records; Reports; Information Sharing.

2.5.1 Development Activities. Each Party will periodically provide to the JSC, but in no event less than [**], or more frequently as reasonably requested by the other Party, an update regarding Development activities conducted by or on behalf of such Party, as well as any Post-Approval Studies conducted by the other Party. The Parties will periodically report to the JSC, but in no event less than [**], regarding their respective activities conducted under the Joint Development Plan.

2.5.2 Improvement Products. Alnylam will periodically provide to the JSC updates regarding the status of potential Improvement Products, if any, for discussion pursuant to Section 5.4.1(a).

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2.5.3 Backup Compounds.

2.5.3.1. Alnylam will periodically provide to the JSC updates regarding the status of potential Backup Products, if any, for discussion pursuant to Section 5.4.1(a).

2.5.3.2. In the event that Alnylam determines, following discussion pursuant to Section 5.4.1(a) and subject to its diligence obligations under Section 2.4.2, to discontinue Development of ALN-TTR02 or ALN-TTRsc prior to receipt of Regulatory Approval therefor in the Alnylam Territory, Alnylam will provide written notice thereof to Genzyme within [**] days following such determination.

2.5.3.3. In the event that Alnylam, at its election following discussion pursuant to Section 5.4.1(a), intends to bring forward a Backup Compound as a substitute Licensed Product for a product that has been discontinued under Section 2.5.3.2, Alnylam will provide Genzyme with written notice thereof, together with a statement detailing the results and data of any pre-clinical or Clinical Studies for such proposed Backup Compound. Genzyme will have [**] days following the receipt of such notice and statement to review the proposed Backup Compound and to decide whether to include such Backup Compound as a Licensed Product under this Agreement. In the event that Genzyme notifies Alnylam within such [**] day period that it desires to include such proposed Backup Compound as a Licensed Product under this Agreement, such proposed Backup Compound will thereafter become a Licensed Product for all purposes of this Agreement. Notwithstanding the foregoing, if Alnylam brings forward a Backup Compound as a substitute Licensed Product for a product that has been discontinued under Section 2.5.3.2, without providing Genzyme with the written notice and information required by this Section 2.5.3.3, such Backup Compound shall automatically become a Licensed Product for all purposes of this Agreement until such time as Genzyme notifies Alnylam in writing that it does not wish such Backup Compound to be a Licensed Product, in which case such Backup Compound shall cease to be a Licensed Product for all purposes of this Agreement from the date of such notice. If a Backup Compound becomes a Licensed Product pursuant to this Section 2.5.3, the Licensed Product for which Development has been discontinued that is being replaced by such Backup Compound shall cease to be a Licensed Product for the purposes of this Agreement.

2.5.3.4. In the event that Genzyme determines, subject to its obligations under Section 2.4.1, to discontinue Development of ALN-TTR02 prior to receipt of Regulatory Approval for ALN-TTR02 in the Genzyme Territory, but Alnylam has not discontinued Development of ALN-TTR02 in the Alnylam Territory prior to receipt of Regulatory Approval for ALN-TTR02 in the Alnylam Territory, Genzyme may provide Alnylam with written notice of its desire to abandon Development of ALN-TTR02 in the Genzyme Territory and to pursue an alternative siRNA Product that is an siRNA targeting the human TTR gene formulated in an AF11 Lipid Nanoparticle Formulation. After Alnylam’s receipt of such notice, Alnylam will provide Genzyme with any information in Alnylam’s possession that Genzyme may reasonably request regarding

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such siRNA Products. After its evaluation of such information, Genzyme may, by providing written notice to Alnylam, cause any one of such siRNA Products to become a Licensed Product for all purposes of this Agreement from the date of such notice, and may Develop such siRNA Product for the Genzyme Territory; provided, however, that if Genzyme causes such an siRNA Product to become a Licensed Product, Alnylam shall have no obligation to Develop such siRNA Product in the Alnylam Territory pursuant to this Agreement. If such an siRNA Product becomes a Licensed Product pursuant to this Section 2.5.3.4, then (a) the licenses granted by Alnylam to Genzyme with respect to ALN-TTR02 under this Agreement shall terminate; (b) without limiting Genzyme’s obligations under Sections 2.4.1 and 4.1.1 as to the Development and Commercialization of Licensed Products generally, Genzyme’s obligations to Develop and Commercialize ALN-TTR02 shall terminate, including all obligations under Section 2, Section 3, and Section 4 with respect to ALN-TTR02; (c) the development milestone payment under Section 8.2(iv) shall not be payable by Genzyme with respect to Alnylam’s or its Related Parties’ development of ALN-TTR02 if such development milestone payment has not become payable prior to Genzyme’s discontinuation of development of ALN-TTR02; (d) the JSC shall have no further responsibilities with respect to decision making or governance relating to the Development or Commercialization of ALN-TTR02, but Alnylam shall continue to provide informational updates to Genzyme regarding ALN-TTR02 to the extent such information is reasonably useful or necessary to Genzyme with regard to the Development or Commercialization of Licensed Products in the Genzyme Territory; (e) Alnylam’s continued Development of ALN-TTR02 shall continue to count toward the satisfaction of Alnylam’s obligations under Section 2.4.2; and (f) Alnylam’s obligations set forth in Section 5.7.1 shall cease to apply with respect to Alnylam’s licensing of ALN-TTR02.

2.5.4 Scientific Records. Each Party will maintain scientific records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which will fully and properly reflect all work done and results achieved in the performance of the Development activities and Post-Approval Studies with respect to Licensed Products by such Party.

2.5.5 Information Exchange and Development Assistance. During the Term, upon the reasonable request of the other Party, each Party shall provide to the other Party, without additional compensation (except as provided in Section 6.2) and in a commercially reasonable format, Know-How Controlled by such Party and/or its Related Parties that is licensed to the other Party under this Agreement (i.e. Know-How included in Genzyme Technology for Genzyme and Know-How included in Alnylam Technology for Alnylam) to the extent that it is reasonably necessary or useful for Developing a Licensed Product in the requesting Party’s Territory or for obtaining or maintaining Regulatory Approval for a Licensed Product in the requesting Party’s Territory, including copies of (a) all scientific information and data related to the Licensed Products (including all data made, collected or otherwise generated in the conduct of any pre-clinical studies, Clinical Studies, Post-Approval Studies or early access/named patient programs for the Licensed Products, as well as CMC information), and (b) protocols and investigator brochures, in each case, that are reasonably necessary for the other Party (or its Related Parties) to perform its obligations or exploit its rights under this Agreement with respect

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to Licensed Products. Notwithstanding the foregoing, Genzyme shall have no obligation to transfer or disclose to Alnylam any Know-How included in the Genzyme Manufacturing IP; provided however, that if Genzyme elects, in its sole discretion, to transfer or disclose any such Know-How to Alnylam in writing, it shall be “Genzyme Disclosed Manufacturing Know-How” under this Agreement and licensed to Alnylam in accordance with Section 7.2.3.

2.5.6 Personnel. Each Party may request, through the JSC or the other Party’s Collaboration Manager, if the JSC appoints Collaboration Managers, that the other Party reasonably make available for consultation regarding the Development of Licensed Products certain of its employees engaged in Development activities and Post-Approval Studies with respect to Licensed Products. The JSC or the Collaboration Managers will reasonably coordinate, upon reasonable notice during normal business hours and at their respective places of employment, consultation between the Parties on the progress of Licensed Product Development and Post-Approval Studies.

2.5.7 Confidentiality. All information exchanged by the Parties under this Section 2.5 will be deemed to be Confidential Information of the disclosing Party and maintained in accordance with Section 9.

2.6 Third Parties. The Parties shall be entitled to utilize the services of Third Party contract research and contract manufacturing organizations to perform their respective Development and Manufacturing activities under this Agreement; provided that (a) each Party shall require that such Third Party operates in a manner consistent with the terms of this Agreement and (b) each Party shall remain at all times fully liable for its respective responsibilities. Each Party shall require that any such Third Party agreement include confidentiality and non-use provisions that are no less stringent than those set forth in Section 9 of this Agreement and shall use Commercially Reasonable Efforts to obtain ownership of, and/or a fully sublicenseable license under and to, any Know-How and Patent Rights that are developed by such Third Party in the performance of such agreement and are reasonably necessary or useful to Develop, Manufacture and/or Commercialize Licensed Products in the Field.

3. REGULATORY MATTERS.

3.1 Regulatory Filings and Interactions.

3.1.1 Responsibilities. Except as otherwise provided in the Joint Development Plan, (a) each Party will own the INDs, the NDAs and related regulatory documents submitted to the applicable Regulatory Authorities in its Territory with respect to Licensed Products and (b) each Party will, as to Licensed Products in its Territory (i) oversee, monitor and coordinate all regulatory actions, communications and filings with, and submissions to, each Regulatory Authority, (ii) be responsible for interfacing, corresponding and meeting with each Regulatory Authority and(iii) be responsible for maintaining all regulatory filings.

3.1.2 Communications. Each Party will, as to Licensed Products in its Territory, notify the JSC in writing, including a brief description in English of the principal issues raised, of all material communications from Regulatory Authorities within [**] days, provide the JSC with a summary translation of such material communications in English as soon as reasonably

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possible but in any event within [**] days, and provide a full translation of such material communications in English as soon as reasonably possible thereafter. Each Party will provide the complete copies of the original correspondence in their native language to the other Party upon request.

3.1.3 Meetings. Each Party shall provide the other Party with reasonable advance notice of all substantive meetings with the Government Authorities in its Territory pertaining to any Licensed Products, or with as much advance notice as practicable under the circumstances. Each Party shall use Commercially Reasonable Efforts, to the extent reasonably practicable, to permit the other Party to have, at the other Party’s expense, one (1) mutually acceptable representative of the other Party to attend, solely as a non-participating observer, material, substantive meetings with the Governmental Authorities within such Party’s Territory pertaining to any Licensed Product; provided, however, that neither Party shall be obligated to change the schedule of such a meeting in order to accommodate the schedule of the other Party’s representative.

3.1.4 Submissions. In addition, each Party shall provide the other Party with written notice of (a) all filings and submissions for Regulatory Approval (including orphan drug applications and designations) regarding any Licensed Product in such Party’s Territory in a timely manner; (b) all Regulatory Approvals obtained or denied; and (c) the filing of any IND for any Licensed Product within [**] days after such event; provided, however, that in all circumstances, each Party shall inform the other Party of such event prior to public disclosure of such event by such Party.

3.2 Costs of Regulatory Affairs. Unless otherwise agreed to pursuant to Section 2.3.3, each Party shall be responsible for all costs incurred by such Party connection with applying for Regulatory Approval with respect to Licensed Products in its Territory, and related regulatory affairs activities.

3.3 Right of Reference. Each Party hereby grants to the other Party, and at the request of the other Party will grant to the other Party’s Related Parties, a “Right of Reference,” as that term is defined in 21 C.F.R. § 314.3(b) (or any successor rule or analogous Law recognized outside of the United States), to, and a right to copy, access, and otherwise use, all information and data (including all CMC information as well as data made, collected or otherwise generated in the conduct of any Clinical Studies or Post-Approval Studies or early access/named patient programs for the Licensed Products) included in any regulatory filing, Regulatory Approval, drug master file or other regulatory documentation (including orphan drug applications and designations) owned or controlled by such Party or its Related Parties that relates to (a) any Licensed Product or (b) with respect to such information and materials provided to Genzyme, to the extent necessary or useful to obtain Regulatory Approval of a Licensed Product in the Genzyme Territory, the siRNA Product Controlled by Alnylam and known as ALN-TTR01, and such Party shall provide a signed statement to this effect, if requested by the other Party, in accordance with 21 C.F.R. § 314.50(g)(3) (or any successor or analogous Law outside of the United States).

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3.4 Pharmacovigilance. At least [**] months prior to Genzyme obtaining the authorization to conduct any Genzyme sponsored study, the Parties will negotiate a Safety Data Exchange Agreement (“SDEA”) to be agreed upon in writing, that will define the pharmacovigilance responsibilities of the Parties and include safety data exchange procedures governing the coordination of collection, investigation, reporting, and exchange of information concerning any adverse experiences, and any product quality and product complaints associated with adverse experiences, related to Licensed Products, sufficient to enable each Party (and their respective Related Parties, if any) to comply with its legal and regulatory obligations.

4. COMMERCIALIZATION OF THE LICENSED PRODUCTS

4.1 Responsibility, Cost and Diligence.

4.1.1 Genzyme. Genzyme shall be solely responsible, at its expense, for all Commercialization activities relating to Licensed Products in the Field in the Genzyme Territory. Genzyme shall use Commercially Reasonable Efforts to Commercialize Licensed Products in each country within the Genzyme Territory where Genzyme has obtained Regulatory Approval for a Licensed Product. For clarity, it may be consistent with Genzyme’s Commercially Reasonable Effort’s obligation to abandon Commercialization of a Licensed Product in favor of another Licensed Product.

4.1.2 Alnylam. Alnylam shall be solely responsible, at its expense, for all Commercialization activities relating to Licensed Products in the Field in the Alnylam Territory.

4.1.3 Joint Commercialization. In the event that the Parties mutually agree to conduct any joint Commercialization activities regarding a Licensed Product, the Parties will (a) agree in writing to a written work plan and time table for conducting such activities, (b) agree in writing to management and governance mechanisms for such joint activities, including coordination of such activities through the JSC and (c) negotiate in good faith a budget therefor and an equitable allocation of costs between the Parties.

4.2 Genzyme Commercialization Plan. No less than [**] months in advance of [**] in the Genzyme Territory with respect to a Licensed Product, and on [**] basis thereafter, Genzyme shall prepare and deliver to the JSC for review a reasonable written plan that summarizes the Commercialization activities to be undertaken with respect to Licensed Products in the Genzyme Territory in the [**] and, to the extent commercially reasonable, Genzyme’s plans to obtain further Regulatory Approvals and Commercialize Licensed Products in countries in the Genzyme Territory in which Genzyme is not then Commercializing Licensed Products, and the dates by which such activities are targeted to be accomplished (the “Genzyme Territory Commercialization Plan”). The Genzyme Territory Commercialization Plan shall subsequently be updated and modified by Genzyme, from time to time at its discretion and no less frequently than [**], based upon, among other things, Genzyme’s Commercialization activities with respect to Licensed Products in the Genzyme Territory, a copy of which updated plan Genzyme will provide to the JSC. Notwithstanding the foregoing, in the event of any disagreement between the Parties regarding the Genzyme Territory Commercialization Plan pursuant to Section 5.5, the Genzyme representatives on the JSC shall have final decision-making authority over the preparation and updating of the Genzyme Territory Commercialization Plan; provided that, such decisions do not materially adversely affect the Commercialization of a Licensed Product in the Alnylam Territory.

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4.3 Alnylam Commercialization Plan. Reasonably in advance of the expected [**] in the Alnylam Territory with respect to a Licensed Product, and on [**] basis promptly as it becomes available, Alnylam will deliver to Genzyme its written plan, generated by Alnylam for its internal purposes, that summarizes the Commercialization activities to be undertaken with respect to Licensed Products in the Alnylam Territory in the [**] (the “Alnylam Territory Commercialization Plan”).

4.4 Advertising and Promotional Materials.

4.4.1 Global Branding. Alnylam shall have the right, from time to time during the Term, to develop (and thereafter modify and update) a global branding strategy (including global positioning, messages, logo, colors and other visual branding elements) for Licensed Products for use in the Field throughout the world (the “Global Branding Strategy”), which the JSC shall, in accordance with Sections 5.4.2(b) and 5.5, review and approve, and which the Parties shall, following such review and approval, implement. Alnylam will submit the Global Branding Strategy to the JSC at least [**] (or more frequently if reasonably requested by Genzyme). Alnylam shall consider in good faith any timely comments Genzyme may have with respect to the Global Branding Strategy, but shall have final decision-making authority with respect to such Global Branding Strategy.

4.4.2 Alnylam. Alnylam will be responsible for the creation, preparation, production, reproduction and filing with the applicable Regulatory Authorities, of relevant written sales, promotion and advertising materials relating to Licensed Products (“Promotional Materials”) for use in the Alnylam Territory. All such Promotional Material will be (a) compliant with applicable Law, and (b) if applicable, consistent in all material respects with the Global Branding Strategy. Alnylam will submit representative samples of its Promotional Materials developed by it for use in the Alnylam Territory to the JSC, at least [**] (or more frequently if reasonably requested by Genzyme). Alnylam shall consider in good faith any timely comments Genzyme may have with respect to such Promotional Materials, but shall have final decision-making authority with respect to such Promotional Materials.

4.4.3 Genzyme. Genzyme will be responsible for the creation, preparation, production, reproduction and filing with the applicable Regulatory Authorities, of relevant Promotional Materials for use in the Genzyme Territory. All such Promotional Materials will be (a) compliant with applicable Law, (b) consistent in all material respects with the Genzyme Territory Commercialization Plan, and (c) if applicable, consistent in all material respects with the Global Branding Strategy. Genzyme will submit representative samples of its Promotional Materials developed by it for use in the Genzyme Territory to the JSC at least [**] thereafter (or more frequently if reasonably requested by Alnylam). Genzyme shall consider in good faith any timely comments Alnylam may have with respect to such Promotional Materials, but shall have final decision-making authority with respect to such Promotional Materials.

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4.5 Reporting Obligations. Genzyme shall report to the JSC in writing, by no later than each [**] following the first Regulatory Approval of a Licensed Product in the Field in the Genzyme Territory (for the period ending December 31 of the prior Calendar Year), summarizing in reasonable detail Genzyme’s Commercialization activities for Licensed Products performed to date (or updating such report for activities performed since the last such report was given hereunder, as applicable). In addition, Genzyme shall provide Alnylam with written notice of the First Commercial Sale of each Licensed Product in the Genzyme Territory within [**] days after such event; provided, however, that in all circumstances, Genzyme shall inform Alnylam of such event prior to public disclosure of such event by Genzyme. Each Party shall provide such other information to the JSC as the other Party may reasonably request and shall keep the JSC reasonably informed of such Party’s Commercialization activities with respect to Licensed Products.

4.6 Sales and Distribution. Each Party and its Related Parties shall be responsible for booking sales and shall warehouse and distribute Licensed Products in its Territory. If a Party receives any orders for any Licensed Product in the other Party’s Territory, it shall refer such orders to the other Party. Moreover, each Party and its Related Parties shall be solely responsible for handling all returns of Licensed Product sold in its Territory, as well as all aspects of Licensed Product order processing, invoicing and collection, distribution, inventory and receivables of Licensed Products sold in its Territory.

4.7 Recalls, Market Withdrawals or Corrective Actions. In the event that any Regulatory Authority issues or requests a recall or takes a similar action in connection with the Licensed Product in a Territory, or in the event either Party determines that an event, incident or circumstance has occurred that may result in the need for a recall or market withdrawal in its own Territory, the Party notified of such recall or similar action, or the Party that desires such recall or similar action, shall within [**] advise the other Party thereof by telephone, facsimile or e-mail. Each Party, in consultation with the other Party, shall decide whether to conduct a recall in its own Territory and the manner in which any such recall shall be conducted (except in the case of a government mandated recall, when such Party may act without such advance notice but shall notify the other Party as soon as possible). Each Party shall bear the expense of any such recall in its own Territory. Each Party will make available all of its pertinent records that may be reasonably requested by the other Party in order to effect a recall in the other Party’s Territory.

4.8 Ex-Territory Sales; Export Monitoring.

4.8.1 Ex-Territory Sales. Subject to applicable Law, neither Party shall engage in any advertising or promotional activities relating to any Licensed Product directed primarily to customers or other buyers or users of such Licensed Product located outside its Territory or accept orders for Licensed Products from or sell Licensed Products into such other Party’s Territory for its own account, and if a Party receives any order for Licensed Products in the other Party’s Territory, it shall refer such orders to the other Party.

4.8.2 Export Monitoring. Each Party and its Related Parties will use Commercially Reasonable Efforts to monitor and prevent exports of Licensed Products from its own Territory for Commercialization in the other Party’s Territory using methods commonly used in the industry for such purpose, and shall promptly inform the other Party of any such exports of

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Licensed Products from its Territory, and the actions taken to prevent such exports. Each Party agrees to take reasonable actions requested in writing by the other Party that are consistent with Law to prevent exports of Licensed Products from its Territory for Commercialization in the other Party’s Territory.

5. COLLABORATION MANAGEMENT

5.1 Joint Steering Committee. The Parties hereby establish a joint steering committee (the “JSC”) to facilitate the Collaboration as follows:

5.1.1 Composition of the Joint Steering Committee. The Collaboration shall be conducted under the oversight of the JSC, which shall comprise [**] representatives of each Party. Each Party shall appoint its respective representatives to the JSC from time to time, and may substitute one or more of its representatives, in its sole discretion, effective upon notice to the other Party of such change. Each Party shall have at least one JSC representative who is a senior employee [**], and all JSC representatives shall have appropriate expertise and ongoing familiarity with the Collaboration. Additional representatives or consultants may from time to time, by mutual consent of the Parties, be invited to attend JSC meetings, subject to such representatives and consultants undertaking confidentiality obligations, whether in a written agreement or by operation of law, no less stringent than the requirements of Section 9.1.

5.1.2 JSC Chairperson. The JSC chairperson shall rotate every [**] months between a JSC representative of Alnylam and a JSC representative of Genzyme. The initial JSC chairperson shall be a representative of [**]. The JSC chairperson’s responsibilities shall include (a) scheduling meetings at least [**], but more frequently if the JSC determines it necessary; (b) setting agendas for meetings with solicited input from other members; (c) coordinating the delivery of draft minutes to the JSC for review and final approval; and (d) conducting meetings, including ensuring that objectives for each meeting are set and achieved.

5.2 Appointment of Subcommittees, Project Teams and Collaboration Managers. The JSC shall be empowered to create such subcommittees of itself and project teams as it may deem appropriate or necessary, such as for specific oversight of Development, Manufacturing, Commercialization or intellectual property issues. Each such subcommittee and project team shall report to the JSC, which shall have authority to approve or reject recommendations or actions proposed thereby subject to the terms of this Agreement. The JSC may direct each Party to designate a Collaboration manager (the “Collaboration Manager”) to serve as a primary point of contact for the other Party under the Collaboration. Each Party may change its Collaboration Manager at any time in its sole discretion with written notice to the other Party.

5.3 Meetings. The JSC shall meet in accordance with a schedule established by mutual written agreement of the Parties, but no less frequently than [**] during the Term, with the location for such meetings alternating between Alnylam and Genzyme facilities (or such other locations as are mutually agreed by the Parties). Alternatively, the JSC may meet by means of teleconference, videoconference or other similar communications equipment, but at least [**] meetings per [**] shall be conducted in person. All proceedings for the JSC shall take place in English. Each Party shall bear its own expenses relating to attendance at such meetings by its representatives.

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5.4 Minutes. A secretary shall be appointed for each meeting of the JSC and shall prepare minutes of the meeting, which shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations approved by the JSC.

5.4.1 JSC Development Responsibilities. The JSC shall have the following responsibilities with respect to the Development of Licensed Products pursuant to the Collaboration:

(a) reviewing and discussing updates to be provided by Alnylam pursuant to Section 2.5.1 and Section 7.5 regarding the Development status of potential Backup Compounds and Improvement Products;

(b) reviewing and approving, subject to Section 5.5.3(a), the initial Genzyme Territory Development Plan and reviewing and discussing updates provided by each Party regarding the Development of Licensed Products in such Party’s Territory, including updates to the Global Development Strategy, the Genzyme Territory Development Plan or Alnylam Territory Development Plan, as applicable, provided by the applicable Party in accordance with Section 2.2, and providing each Party with feedback regarding the same;

(c) monitoring and coordinating Development activities in the Genzyme Territory and the Alnylam Territory for Licensed Products, and regulatory and pharmacovigilance requirements and matters;

(d) monitoring, planning and coordinating any Joint Clinical Studies in accordance with any Joint Development Plan, Joint Development Budget, and written agreement between the Parties with respect to the governance and management of such Joint Clinical Studies;

(e) overseeing the manufacturing and supply relationship between the Parties with respect to the Manufacture of Licensed Products for Development activities (subject to the terms of the Clinical Supply Agreement); and

(f) performing such other activities as the Parties agree in writing shall be the responsibility of the JSC.

5.4.2 JSC Commercialization Responsibilities. The JSC shall have the following responsibilities with respect to the Commercialization of Licensed Products pursuant to the Collaboration, to the extent permissible under applicable Laws:

(a) reviewing and discussing updates to be provided by each Party regarding the Commercialization of Licensed Products in such Party’s Territory;

(b) reviewing and approving, subject to Section 5.5.3(b), any Global Branding Strategy developed by Alnylam;

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(c) reviewing and discussing the Genzyme Territory Commercialization Plan and updates thereto provided by Genzyme pursuant to Section 4.2;

(d) reviewing and discussing Promotional Material of both Parties in accordance with Sections 4.4.2 and 4.4.3;

(e) providing a forum for the Parties to discuss the Commercialization of Licensed Products in the Field worldwide, including coordination regarding Licensed Product positioning and messaging, key opinion leader relationship management, medical affairs, and marketing and selling materials;

(f) providing a forum for the Parties to discuss collaborating on commercial activities that can be leveraged for both Parties’ respective Territories and how the Parties would share the costs of such mutually agreed joint Commercialization activities;

(g) overseeing the manufacturing and supply relationship between the Parties with respect to the Manufacture of Licensed Products for Commercialization activities (subject to the terms of the Commercial Supply Agreement); and

(h) performing such other activities as the Parties agree in writing shall be the responsibility of the JSC.

5.5 Decision-Making.

5.5.1 With respect to decisions of the JSC, the representatives of each Party shall have collectively one vote on behalf of such Party. For each meeting of the JSC, at least [**] representatives of each Party shall constitute a quorum. Action on any matter may be taken at a meeting, by teleconference, videoconference or by written agreement. The JSC shall attempt to resolve any and all disputes before it for decision by consensus.

5.5.2 If the JSC is unable to reach a consensus with respect to a dispute for a period in excess of [**] days, then the dispute shall be submitted to the Chief Executive Officers, or his or her designee (any such designee to be a senior member of the designating Chief Executive Officer’s management team), of Alnylam and Genzyme for resolution.

5.5.3 If such dispute cannot be resolved for a period in excess of [**] days following escalation, then:

(a) subject to Section 5.5.4, the Chief Executive Officer of Genzyme or his or her designee shall have the deciding vote on any matter involving the Development or Commercialization of Licensed Products in the Field in the Genzyme Territory, including the Genzyme Territory Development Plan and the Genzyme Territory Commercialization Plan; and

(b) subject to Section 5.5.4, the Chief Executive Officer of Alnylam or his or her designee shall have the deciding vote on any matter involving the Development or Commercialization of Licensed Products in the Field in the Alnylam Territory, including the Alnylam Territory Development Plan and the Alnylam Territory Commercialization Plan, and on any matter involving the content of the Global Branding Strategy.

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5.5.4 Neither Party shall have the deciding vote on, and the JSC shall not have decision-making authority regarding, any of the following matters:

(i) the allocation of milestone payments to Third Parties under Future Alnylam In-Licenses pursuant to Section 7.4.3.2;

(ii) the imposition of any requirements on the other Party to undertake obligations beyond those for which it is responsible, or forgo any rights, under this Agreement or the Supply Agreements;

(iii) any matters that would cause a material increase in costs that the other Party is required to expend, as determined in the reasonable discretion of such other Party;

(iv) the imposition of any requirements that the other Party take or decline to take any action that would result in a violation of any Law or any agreement with any Third Party or the infringement of intellectual property rights of Third Parties;

(v) any matters that would excuse such Party from any of its obligations specifically enumerated under this Agreement or the Supply Agreements; or

(vi) modifying the terms of this Agreement or any Supply Agreement or taking any action to expand or narrow the responsibilities of the JSC.

5.6 Term of JSC. After the [**] anniversary of the Effective Date Alnylam shall have the right to terminate its participation in the JSC. Following any such termination, the Parties will discuss in good faith and agree upon reasonable processes regarding decision making and information sharing in order to provide each Party with substantially the same rights and information as such Party enjoyed during the period during which the JSC was constituted.

5.7 Alnylam Third Party Partner. If, at any time during the Term, Alnylam enters into an agreement (a “Third Party Collaboration Agreement”) with one or more Third Party(ies) (the “Third Party Partner”) to Develop and/or Commercialize a Licensed Product in the Field in the Alnylam Territory, Alnylam shall ensure that such agreement is consistent with the terms and conditions of this Agreement.

5.7.1 Required Terms. Without limitation, Alnylam shall negotiate terms in the Third Party Collaboration Agreement (a) regarding intellectual property necessary to permit Alnylam to license or sublicense to Genzyme any Patent Rights and Know-How developed in the course of activities pursuant to the Third Party Collaboration Agreement that are necessary for Genzyme to Develop, Manufacture and Commercialize Licensed Products in accordance with this Agreement, if any, (b) providing Genzyme with a right of reference as set forth in Section 3.3 (Right of Reference), (c) requiring such Third Party Partner to maintain records substantially as set forth in Section 2.5.4 (Scientific Records), (d) enabling Alnylam to provide Genzyme with

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copies of data and reports, including Clinical Study reports, in a commercially reasonable format, made, collected or otherwise generated by or on behalf of the Third Party Partner in the conduct of any pre-clinical studies, Clinical Studies or early access/named patient programs for the Licensed Products (excluding, for clarity, information generated in Post-Approval Studies and CMC information), and protocols and investigator brochures related to the Licensed Product, in each case that are reasonably necessary for Genzyme (or its Related Parties) to Develop and obtain Regulatory Approval for the Licensed Products in the Genzyme Territory, (e) enabling Alnylam to provide Genzyme with information with respect to matters in the Third Party Partner’s territory as are required to be provided to Genzyme under Sections 2.5.1 (Development Activities), 3.1.2 (Communications), to the extent requiring a brief description in English of principal issues raised in material communications from Regulatory Authorities and otherwise to the extent reasonably necessary to assist Genzyme with obtaining Regulatory Approvals of Licensed Products, and 3.1.4 (Submissions), (f) regarding pharmacovigilance that are consistent with Section 3.4 and the SDEA, and (g) regarding recalls that are consistent with Section 4.6.

5.7.2 Terms Subject to Commercially Reasonable Efforts. In addition, Alnylam shall use Commercially Reasonable Efforts to negotiate terms in the Third Party Collaboration Agreement (a) related to intellectual property that would give Genzyme substantially similar rights with respect to intellectual property developed in the course of activities under the Third Party Collaboration Agreement as Genzyme would have received with respect to intellectual property developed in the course of the Collaboration, and (b) enabling Alnylam to provide Genzyme with reciprocal information, rights and benefits with respect to the Development of Licensed Products and the conduct of Post Approval Studies for the Third Party Partner’s territory as are provided to Alnylam by Genzyme in this Agreement.

5.7.3 Global Coordination Committee. Alnylam shall use reasonable efforts to include in any Third Party Collaboration Agreement relating to rights licensed to a Third Party Partner in the United States and/or major markets in Europe, the discretionary participation by such Third Party Partner with Genzyme and Alnylam in a global coordination committee, which shall include representatives of Alnylam, Genzyme and the Third Party Partner and which shall be responsible for facilitating discussions between the parties with respect to the global Development, Manufacture, and Commercialization of Licensed Products.

5.7.4 Notice. Alnylam shall promptly provide Genzyme with a copy of any fully executed Third Party Collaboration Agreement, which may be redacted to remove terms and conditions which are not necessary to monitor compliance with this Section 5.7 and such Third Party Collaboration Agreement will be Alnylam Confidential Information for the purposes of Section 9 (Confidentiality and Publication).

5.7.5 Sublicenses. In addition, if the Third Party Collaboration Agreement grants the Third Party Partner a sublicense under the Genzyme Technology, Alnylam shall ensure that such Third Party Collaboration agreement complies with Section 7.2.4 (Sublicensing Terms).

5.7.6 Breach; Responsibility. If Alnylam becomes aware of a material breach of the terms of any Third Party Collaboration Agreement by a Third Party Partner compliance with which is necessary for Alnylam’s compliance with the terms of this Agreement, Alnylam shall

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promptly notify Genzyme of the particulars of the same and use Commercially Reasonable Efforts to cause the Third Party Partner to comply with all the terms of the Third Party Collaboration Agreement necessary for Alnylam’s compliance with the terms of this Agreement. Notwithstanding any Third Party Collaboration Agreement, Alnylam shall remain primarily liable to Genzyme for the performance of all of Alnylam’s obligations under, and Alnylam’s compliance with all terms and conditions of, this Agreement with respect to the entire Alnylam Territory.

6. MANUFACTURE AND SUPPLY OF THE LICENSED PRODUCT

6.1 Supply Agreements. Within [**] months after the Effective Date, the Parties will negotiate in good faith and enter into a supply agreement for clinical supply of Licensed Product (the “Clinical Supply Agreement”), which will be consistent with the terms set forth on Schedule 6.1. In addition, at the request of Genzyme reasonably in advance of the first commercial launch of a Licensed Product in the Genzyme Territory, the Parties will negotiate in good faith and enter into a supply agreement for commercial supply of Licensed Product (the “Commercial Supply Agreement”), which will also be consistent with the terms set forth on Schedule 6.1.

6.2 Transfer of Manufacturing Know-How. At Genzyme’s request at any time during the Term, Alnylam shall transfer to Genzyme, a Genzyme Related Party, or a Third Party manufacturer, all Alnylam Know-How necessary or useful to enable the Manufacture of the Licensed Products and not previously transferred to Genzyme, a Genzyme Related Party, or such Third Party manufacturer, in bulk and/or finished form (as requested by Genzyme), by providing copies or samples of relevant documentation, materials and other embodiments of such Know-How and by making available its qualified technical personnel on a reasonable basis to consult with Genzyme, its Related Party, or such Third Party manufacturer with respect to such Know-How. If requested by Genzyme, such Know-How transfer shall be conducted pursuant to a mutually-agreed technology transfer plan developed by the parties for the purpose of ensuring the complete and timely transfer of such Know-How that is consistent with Genzyme’s then current internal Technology Transfer Corporate Standard (or equivalent policy) that have been provided to Alnylam. Such Know-How transfer shall be conducted at Alnylam’s sole expense for the first [**] hours of Alnylam employees’ time, and thereafter at Genzyme’s expense at the cost of Alnylam employees’ time at the FTE Rate. Genzyme will reimburse Alnylam for its Out-of-Pocket Costs incurred in the course of such transfer, provided that such Out-of-Pocket Costs are approved in advance by Genzyme and itemized in Alnylam’s invoice. Genzyme shall pay Alnylam such FTE Rate and reimburse Alnylam for such Out-of-Pocket Costs within [**] days after receipt of an invoice therefor.

7. LICENSES

7.1 License Grants to Genzyme.

7.1.1 Development and Commercialization License in the Genzyme Territory. Subject to the terms and conditions of this Agreement, Alnylam hereby grants Genzyme a non-transferable (except as provided in Section 14.1), sublicensable (subject to Section 7.1.3)

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exclusive (even as to Alnylam) license under Alnylam Technology to Develop and Commercialize Licensed Products in the Field in the Genzyme Territory. Such license shall be royalty-bearing for the Royalty Term applicable to each Licensed Product in each country in the Genzyme Territory, and, after the Royalty Term applicable to such Licensed Product in such country, shall convert to a fully-paid license to Develop and Commercialize such Licensed Product in the Field in such country.

7.1.2 Manufacturing License. Subject to the terms and conditions of this Agreement, Alnylam hereby grants Genzyme a non-transferable (except as provided in Section 14.1), sublicensable (subject to Section 7.1.3), worldwide, exclusive license under Alnylam Technology to Manufacture Licensed Products inside or outside of the Genzyme Territory solely for Development and Commercialization in the Genzyme Territory and, to the extent permitted pursuant to Section 2.3.3, for Development in the Alnylam Territory. Notwithstanding the foregoing, Alnylam retains the exclusive right under the Alnylam Technology, with the right to grant licenses through multiple tiers without restriction, to Manufacture Licensed Products anywhere in the world (i) for Development and Commercialization in the Alnylam Territory and, to the extent permitted pursuant to Section 2.3.3 for Development in the Genzyme Territory, and (ii) to supply Genzyme pursuant to the Supply Agreements to be agreed by the Parties pursuant to Section 6.1.

7.1.3 Sublicensing Terms.

(a) Genzyme shall have the right to sublicense any of its rights under Section 7.1.1 and 7.1.2 to any of its Affiliates or to any Third Party (which sublicensed rights may be further sublicensable through multiple tiers) without the prior consent of Alnylam, subject to the requirements of this Section 7.1.3. Notwithstanding the foregoing, Genzyme shall not have the right to sublicense to a Third Party either (i) its primary Development or Commercialization rights in Japan; or (ii) all or substantially all of its rights under this Agreement.

(b) Each sublicense granted by Genzyme pursuant to this Section 7.1.3 shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement. Genzyme shall promptly provide Alnylam with a copy of the fully executed sublicense agreement covering any sublicense granted hereunder (which copy may be redacted to remove terms and conditions which are not necessary to monitor compliance with this Section 7.1.3), and each such sublicense agreement shall contain the following provisions: (i) a requirement that the Sublicensee comply with the confidentiality and non-use provisions of Section 9 with respect to Alnylam’s Confidential Information, (ii) if such sublicense agreement contains a sublicense of Licensed Product Commercialization rights, such sublicense agreement shall also contain the following provisions: (x) a requirement that the Sublicensee submit applicable sales or other reports to Genzyme to the extent necessary or relevant to the reports required to be made or records required to be maintained under this Agreement; and (y) the audit requirement set forth in Section 8.4; and (iii) a requirement that the Sublicensee comply with the applicable provisions under any Alnylam In-License.

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(c) If Genzyme becomes aware of a material breach of the terms of any sublicense by any Genzyme Sublicensee, compliance with which is necessary for Genzyme’s compliance with the terms of this Agreement, Genzyme shall promptly notify Alnylam of the particulars of the same and use Commercially Reasonable Efforts to cause the Sublicensee to comply with all the terms of the sublicense necessary for Genzyme’s compliance with the terms of this Agreement. In the event that (i) the Sublicensee has failed to cure a material breach within [**] days after notice of such breach and (ii) such material breach also constitutes a breach of this Agreement, Genzyme shall terminate the sublicense at the request of Alnylam. Notwithstanding any sublicense, Genzyme shall remain primarily liable to Alnylam for the performance of all of Genzyme’s obligations under, and Genzyme’s compliance with all terms and conditions of, this Agreement.

7.2 License Grants to Alnylam.

7.2.1 Development and Commercialization License in the Alnylam Territory. Genzyme hereby grants Alnylam a non-transferable (except as provided in Section 14.1), sublicensable (subject to Section 7.2.4), exclusive, royalty-free license, under (a) Genzyme Collaboration IP, Genzyme’s interest in Joint Collaboration IP and (b) any Genzyme Technology that is produced, generated, conceived and reduced to practice as a result of, or used by Genzyme or its Related Parties in, the Development or Commercialization activities of Genzyme and its Related Parties under this Agreement, in each case of (a) and (b), to Develop and Commercialize Licensed Products in the Field in the Alnylam Territory.

7.2.2 License to Improvement Manufacturing Patent Rights. Subject to the terms and conditions of this Agreement, Genzyme hereby grants Alnylam a non-transferable (except as provided in Section 14.1), sublicensable (subject to Section 7.2.4), worldwide, non-exclusive license under the Improvement Manufacturing Patent Rights, to Manufacture (a) Alnylam Developed siRNA Products targeting any human gene; and (b) Licensed Products for Development and Commercialization in the Alnylam Territory and, to the extent permitted pursuant to Section 2.3.3, for Development in the Field in the Genzyme Territory.

7.2.3 License to Genzyme Disclosed Manufacturing Know-How. Subject to the terms and conditions of this Agreement, Genzyme hereby grants Alnylam a non-transferable (except as provided in Section 14.1), sublicensable (subject to Section 7.2.4), worldwide, non-exclusive license under the Genzyme Disclosed Manufacturing Know-How, to Manufacture Licensed Products for Development and Commercialization in the Alnylam Territory and, to the extent permitted pursuant to Section 2.3.3, for Development in the Field in the Genzyme Territory.

7.2.4 Sublicensing Terms.

(a) Alnylam shall have the right to sublicense any of its rights under Section 7.2.1, 7.2.2 and 7.2.3 (which sublicensed rights may be further sublicensable through multiple tiers) to any of its Affiliates or to any Third Party without the prior consent of Genzyme, and subject to the requirements of this Section 7.2.4; provided that Alnylam’s right to sublicense the rights granted to it under Section 7.2.2(a) to Third Parties shall be limited to licensees of Alnylam that

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have been granted the right to develop and/or commercialize Alnylam Developed siRNA Products and have been granted the right to use Alnylam manufacturing technology to manufacture Alnylam Developed siRNA Products.

(b) Each sublicense granted by Alnylam pursuant to this Section 7.2.4 shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement. Alnylam shall promptly provide Genzyme with a copy of the fully executed sublicense agreement covering any sublicense granted hereunder (which copy may be redacted to remove terms and conditions which are not necessary to monitor compliance with this Section 7.2.4), and each such sublicense agreement shall contain the following provisions: (i) a requirement that the Sublicensee comply with the confidentiality and non-use provisions of Section 9 with respect to Genzyme’s Confidential Information and (ii) a requirement that the Sublicensee comply with the applicable provisions under any Genzyme In-License.

(c) If Alnylam becomes aware of a material breach of any sublicense by any Alnylam Sublicensee, compliance with which is necessary for Alnylam’s compliance with the terms of this Agreement, Alnylam shall promptly notify Genzyme of the particulars of the same and use Commercially Reasonable Efforts to cause the Sublicensee to comply with all the terms of the sublicense necessary for Alnylam’s compliance with the terms of this Agreement. In the event that (i) the Sublicensee has failed to cure a material breach within [**] days after notice of such breach and (ii) such material breach also constitutes a breach of this Agreement, Alnylam shall terminate the sublicense at the request of Genzyme. Notwithstanding any sublicense, Alnylam shall remain primarily liable to Genzyme for the performance of all of Alnylam’s obligations under, and Alnylam’s compliance with all terms and conditions of, this Agreement.

7.3 Joint Collaboration IP. Subject to the rights and licenses granted to, and the obligations (including royalty obligations) of, each Party under this Agreement, either Party is entitled to practice Joint Collaboration IP for all purposes on a worldwide basis and license without consent of and without a duty of accounting to the other Party. Each Party will grant and hereby does grant all permissions, consents and waivers with respect to, and all licenses under, the Joint Collaboration IP, throughout the world, necessary to provide the other Party with such rights of use and exploitation of the Joint Collaboration IP, and will execute documents as necessary to accomplish the foregoing.

7.4 In-Licenses.

7.4.1 Compliance with In-Licenses. All licenses and other rights granted to Genzyme under this Section 7 are subject to the rights and obligations of Alnylam under the Alnylam In-Licenses. All licenses and other rights granted to Alnylam under this Section 7 are subject to the rights and obligations of Genzyme under the Genzyme In-Licenses. Each Party shall comply with all applicable terms and conditions of the In-Licenses, and shall perform and take such actions as may be required to allow the Party that is party to such In-License to comply with its obligations thereunder, including obligations relating to sublicensing, patent matters, confidentiality, reporting, audit rights, indemnification and diligence. Without limiting the foregoing, each Party shall prepare and deliver to the other Party any additional reports required

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under the applicable In-Licenses and requested by such other Party, in each case sufficiently in advance to enable the Party that is party to such In-License to comply with its obligations under the applicable In-Licenses. Each Party agrees, upon the other Party’s request, to provide the other Party with copies of any In-Licenses to which it is a party. Confidential Information of the providing Party or its counterparty may be redacted from such copies, except to the extent that such information is required in order to enable the other Party to comply with its obligations to the providing Party under this Agreement with respect to such In-License or in order to enable the providing Party to ascertain compliance with the provisions of this Agreement.

7.4.2 New In-Licenses; Additional Alnylam In-Licenses.

7.4.2.1. Alnylam Negotiation of Future Alnylam In-Licenses. In the event that Alnylam determines to enter into an agreement with a Third Party after the Effective Date pursuant to which Alnylam would acquire a license under Patent Rights that are necessary or useful to Develop, Manufacture or Commercialize Licensed Products in the Field in the Alnylam Territory, Alnylam shall, if counterparts of such Patent Rights exist in the Genzyme Territory and a license under such Patent Rights is available for the Genzyme Territory, also obtain a comparable license under such Patent Rights with respect to Licensed Products in the Genzyme Territory.

7.4.2.2. Acceptance of Future In-Licenses. In the event that a Party (the “Licensing Party”) enters into an agreement with a Third Party after the Effective Date that meets the criteria set forth in clause (a) of the definition of Genzyme In-License (in the case of Genzyme) or that meets the criteria set forth in clause (b) of the definition of Alnylam In-License (in the case of Alnylam), then the Licensing Party will promptly provide the other Party with notice and a copy of the applicable Third Party agreement. Within [**] days following receipt of such notice, such other Party will decide, in its sole discretion, whether to accept the applicable Third Party agreement as a Genzyme In-License or Alnylam In-License, as applicable, and provide notice of such other Party’s decision to the Licensing Party. In the event that such other Party declines to accept such agreement as a Genzyme In-License or Alnylam In-License, as applicable, any rights granted to such Party thereunder will not be deemed to be “Controlled” by the Licensing Party or licensed to such other Party under this Agreement, and will not be subject to the payment provisions under this Agreement relating to In-Licenses. In the event that such other Party accepts such Third Party agreement as a Genzyme In-License or Alnylam In-License, as applicable, such agreement will thereafter be included within the definition of Genzyme In-License or Alnylam In-License, respectively, and any rights granted to the Licensing Party thereunder will be deemed to be “Controlled” by the Licensing Party and sublicensed to such other Party under this Agreement. Notwithstanding the foregoing, in the event that Genzyme enters into a Third Party agreement that meets the criteria set forth in clause (a) of the definition of Genzyme In-License and such Agreement relates solely to the Genzyme Territory, then such agreement shall automatically be included within the definition of Genzyme In-License.

7.4.2.3. Additional Alnylam In-Licenses. In the event that a Patent Right licensed to Alnylam under an Additional Alnylam In-License issues that actually is

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or will be infringed by Genzyme’s Commercialization of Licensed Products in the Genzyme Territory or Genzyme’s Manufacture or Development of Licensed Products in accordance with this Agreement, then such agreement will thereafter be included within the definition of Existing Alnylam In-Licenses, and all rights granted to Alnylam thereunder will be deemed to be “Controlled” by Alnylam and sublicensed to Genzyme under this Agreement effective as of the later of the date the applicable Patent Right issues or the date that Genzyme’s Commercialization of Licensed Products in the Genzyme Territory or Genzyme’s Manufacture or Development of Licensed Products in accordance with this Agreement would infringe such Patent Right in the absence of a license thereunder from Alnylam.

7.4.3 Payments Under In-Licenses.

7.4.3.1. Existing Alnylam In-Licenses and Alnylam In-Licenses Related to Existing Products. Subject to Sections 7.4.2 (New In-Licenses-Additional Alnylam In-Licenses), 7.4.4 (Amendments to In-Licenses), 7.5.4 (Improvement Product - Royalty Adjustments) and 8.3.5 (Royalty Floor), Alnylam shall bear one hundred percent (100%) of any Third Party License Payments under (a) the Existing Alnylam In-Licenses, and (b) Alnylam In-Licenses entered into after the Effective Date (“Future Alnylam In-Licenses”) in which Alnylam obtains licenses under Patent Rights that Cover ALN-TTR02 or ALN-TTRsc, which Third Party License Payments become payable based on the licensing or sublicensing to, or exercise by, Genzyme or its Related Parties of rights thereunder with respect to Licensed Products.

7.4.3.2. Future Alnylam In-Licenses Related to New Products. Subject to Section 7.4.4 (Amendments to In-Licenses), 7.5.4 (Improvement Products - Royalty Adjustments) and 8.3.5 (Royalty Floor), with respect to Future Alnylam In-Licenses accepted by Genzyme pursuant to Sections 7.4.2 (New In-Licenses; Additional Alnylam In-Licenses) that do not include licenses under Patent Rights that Cover ALN-TTR02 or ALN-TTRsc, (x) Alnylam shall bear one hundred percent (100%) of any Third Party License Payments under such Future Alnylam In-Licenses other than milestone payments and (y) milestone payments under Future Alnylam In-Licenses that do not include licenses under Patent Rights that Cover ALN-TTR02 or ALN-TTRsc shall be allocated between Genzyme and Alnylam as follows:

(a) Base Rule – Alnylam Pays 100%. Except as allocated to Genzyme in this Section 7.4.3.2 below, Alnylam shall bear one hundred percent (100%) of such milestone payments.

(b) [**]% of JPAC/LP-Specific Milestones. Genzyme shall, subject to its right to apply credits against royalties as set forth in Section 7.4.3.2(e), pay [**] percent ([**]%) of milestone payments that become payable based on (i) [**] for a Licensed Product in the Genzyme Territory, (ii) [**] of a Licensed Product in the Genzyme Territory or (iii) [**] of a Licensed Product in the Genzyme Territory (any such milestone ((i) through (iii)) a “JPAC/LP Milestone”), but only if such JPAC/LP Milestone could only have been triggered by a Licensed Product in the Genzyme Territory (such a JPAC/LP Milestone, a “JPAC/LP-Specific Milestone”). For clarity, a JPAC/LP Milestone is a JPAC/LP-Specific Milestone (and allocated

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one hundred percent (100%) to Genzyme) only if the JPAC/LP Milestone could not have been triggered, in whole or in part, (A) by a product other than a Licensed Product (e.g., in the case of a milestone for [**] in Japan, if such milestone was first achieved by a Licensed Product, but could have been achieved by a product other than a Licensed Product in Japan, or, in the case of a sales milestone, if sales in the Genzyme Territory of products other than Licensed Products could have contributed to the achievement of such milestone), or (B) by the occurrence of an event outside the Genzyme Territory (e.g., in the case of a milestone for [**] Japan and countries outside the Genzyme Territory, if [**] Japan, or, in the case of a sales milestone, if worldwide sales could have contributed to the achievement of such milestone).

(c) [**] Non-Specific JPAC/LP Milestones. With respect to JPAC/LP Milestones that are not JPAC/LP-Specific Milestones (and therefore are not [**] percent ([**]%) payable by Genzyme under subsection 7.4.3.2(b) above), the [**] of such JPAC/LP Milestone payments between the Parties, and Genzyme shall, subject to crediting against royalties as set forth in Section 7.4.3.2(e), pay the portion of such milestone payments allocated by the JSC to Genzyme. In the event that [**] or if the Parties cannot agree as to whether a JPAC/LP Milestone payment is or is not a JPAC/LP-Specific Milestone following escalation pursuant to Section 5.5, the Parties shall submit the matter to “baseball” style arbitration in accordance with the arbitration procedure set forth in Schedule 7.4.3.2.

(d) Ceiling on Genzyme Share of JPAC/LP Milestones. Notwithstanding clauses (b) and (c) of this Section 7.4.3.2, if the amount of any JPAC/LP Milestone payment payable under a Future Alnylam In-License exceeds the amount payable for the achievement of a comparable milestone in either the United States or the EU under such Future Alnylam In-License, then the amount of such JPAC/LP Milestone payment that is allocable to [**] pursuant to this Section 7.4.3.2(b) and 7.4.3.2(c) shall be deemed to be the lowest amount that would be payable under such Future Alnylam In-License for achievement of the comparable milestone in either the United States or the EU.

(e) Genzyme Credit for JPAC/LP Milestones. Subject to Sections 7.5.4 (Improvement Products - Royalty Adjustments) and 8.3.5 (Royalty Floor), Genzyme shall be entitled to credit against the royalties due to Alnylam on Net Sales of Licensed Products to which the relevant Alnylam In-License applies the amount [**] of any JPAC/LP Milestone paid by Genzyme pursuant to this Section 7.4.3.2, and Genzyme shall have the right to carry forward unused portions of such credit amounts for application against royalties payable to Alnylam with respect to Net Sales of such Licensed Products to future royalty periods until such credit amounts have been fully applied against such royalty obligations.

7.4.3.3. Genzyme In-Licenses. Genzyme shall bear one hundred percent (100%) of any Third Party License Payments under the Genzyme In-Licenses that become payable based on the licensing or sublicensing to or exercise by Genzyme or its Related Parties of rights thereunder with respect to Licensed Products in or for the Genzyme Territory. If Alnylam accepts such Genzyme In-License pursuant to Section 7.4.2.2, then Alnylam will pay for one hundred percent (100%) of any portion of Third Party License Payments that become payable based on the licensing or sublicensing to or exercise by Alnylam of rights thereunder in the Alnylam Territory.

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7.4.4 Amendments to In-Licenses. If a Party amends an In-License to which it is a Party in a manner that increases the royalty payable by the other Party under such In-License without the prior written consent of the other Party, such Party shall be solely responsible for any such additional payments due under such In-License.

7.4.5 Stand-by Licenses. Upon Genzyme’s reasonable request during the Term, Alnylam shall reasonably cooperate in good faith with Genzyme’s efforts to obtain stand-by license agreements with Alnylam In-License licensors pursuant to which, upon a termination of such Alnylam In-License, Genzyme would receive a direct license from such licensor of the Patent Rights and Know-How licensed to Alnylam pursuant to such Alnylam In-License that are sublicensed to Genzyme pursuant to this Agreement. Such stand-by agreement will be in a form approved in advance by Alnylam. Any costs incurred by Alnylam in cooperating with Genzyme’s efforts to obtain any such stand-by license agreement shall be reimbursed by Genzyme.

7.4.6 Breach or Termination of In-Licenses. In the event that (a) a Party receives notice of an alleged breach by such Party under an In-License Agreement to which it is a party, or (b) a Party intends to terminate an In-Licensed Agreement to which it is a party, then such Party will promptly, but in no event less than [**] days thereafter, provide written notice thereof to the other Party.

7.5 Improvement Products Option.

7.5.1 Option Grant. During the Term, Alnylam will provide the JSC with timely updates regarding Alnylam’s development plans and progress developing, or having developed, any Improvement Product. So long as the Exclusivity Period in Japan continues, Genzyme shall have the option to designate any particular Improvement Product as a Licensed Product under this Agreement (the “Option”) as provided in this Section 7.5. Following the completion of the [**] of an Improvement Product and prior to the commencement of the [**] of such Improvement Product, Alnylam shall provide Genzyme with a written notice to such effect accompanied by copies of the development plan for development through Regulatory Approval for such Improvement Product in the Alnylam Territory (the “Improvement Product Development Plan”) and development budget for such Improvement Product for the Alnylam Territory (the “Improvement Product Development Budget”), a statement detailing all Improvement Product Development Costs incurred by Alnylam with respect to the Development of such Improvement Product from the date of commencement of [**] for such Improvement Product to the present date, and the [**], including a copy of the [**], for such Improvement Product (such notice and accompanying information, the “Option Exercise Package”). At any time prior to the completion of the [**] of an Improvement Product but after the [**] for such Improvement Product, Genzyme may request that Alnylam provide reasonable information, of the type to be included in the Option Exercise Package, regarding the Development of an Improvement Product. Alnylam will use good faith efforts to provide such information, and Alnylam will thereafter permit Genzyme to exercise its Option with respect to such Licensed Product prior to the Option Exercise Period; provided, however, that, if Genzyme exercises the Option prior to the Option Exercise Period, the cost sharing provisions of Section 7.5.3 shall apply commencing upon Genzyme’s early exercise of the Option, but the budgeting process in

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Section 7.5.3 shall not apply during the period commencing with Genzyme’s early exercise of the Option and ending on the [**]. Such request will not relieve Alnylam of its obligation to provide the Option Exercise Package as set forth above if Genzyme does not exercise the Option early with respect to such Improvement Product. Genzyme may exercise the Option by providing written notice of exercise to Alnylam at any time following Genzyme’s receipt of the Option Exercise Package until [**] days following Genzyme’s receipt of the Option Exercise Package (the “Option Exercise Period”). During such Option Exercise Period, Alnylam will promptly provide any patent, regulatory, or other information that Genzyme may reasonably request regarding such Improvement Product to assist Genzyme in deciding whether to exercise the Option for such Improvement Product.

7.5.2 Option Not Exercised. If Genzyme does not exercise the Option as to an Improvement Product during the Option Exercise Period applicable to such Improvement Product, Genzyme’s Option with respect to such Improvement Product shall expire, Genzyme’s rights under this Section 7.5 shall lapse and Alnylam shall thereafter be free to develop and/or commercialize, alone or with one or more Third Parties, such Improvement Product without further obligation to Genzyme with respect to such Improvement Product; provided that, the restrictions set forth in Section 10.5.1 as to such Improvement Products, if applicable, shall continue to apply in accordance with their terms.

7.5.3 Option Exercised. If Genzyme exercises the Option as to an Improvement Product during the Option Exercise Period applicable to such Improvement Product, such Improvement Product shall become a Licensed Product hereunder and the following shall apply:

7.5.3.1. Genzyme shall, within [**] days after Alnylam’s invoice therefor, pay Alnylam [**] percent ([**]%) of Alnylam’s worldwide Development costs and expenses (including Alnylam’s Out-of-Pocket Costs and FTE Costs) incurred by Alnylam with respect to such Improvement Product (“Improvement Product Development Costs”) from the date of commencement of [**] for such Improvement Product to the present date of Genzyme’s exercise of the Option.

7.5.3.2. Additionally, following Genzyme’s exercise of the Option, the Development of such Improvement Product for the Alnylam Territory shall be included in the Alnylam Territory Development Plan and the Development of such Improvement Product for the Genzyme Territory shall be included in the Genzyme Territory Development Plan. Genzyme shall pay [**] percent ([**]%) and Alnylam shall pay [**] percent ([**]%) of the Improvement Product Development Costs incurred by the Parties with respect to Development of the Improvement Product pursuant to the Alnylam Territory Development Plan (which costs shall be reflected in the Improvement Product Development Budget).

7.5.3.3. Genzyme shall pay [**] percent ([**]%) of the Improvement Product Development Costs incurred by the Parties with respect to such Improvement Product for the Genzyme Territory pursuant to the Genzyme Territory Development Plan.

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7.5.3.4. Alnylam will provide Genzyme with updates to the Improvement Product Development Budget for such Improvement Product (a) prior to the commencement of [**] that Alnylam plans to conduct concurrently for such Improvement Product following the [**] conducted concurrently following Genzyme’s exercise of the Option for such Improvement Product and (b) otherwise with each update to the Alnylam Territory Development Plan that Alnylam provides in accordance with Section 2.2.2. The Improvement Product Development Budget provided to Genzyme prior to its exercise of the Option shall be binding on the Parties with respect to the Improvement Product Development Costs budgeted for the [**] to be conducted concurrently for such Improvement Product following such Option exercise, and each updated Improvement Product Development Budget provided by Alnylam to Genzyme in accordance with clause (a) above for each subsequent [**] to be conducted concurrently for such Improvement Product shall be binding on the Parties with respect to such [**] for such Improvement Product; provided, however that to the extent that a Party (or its Related Parties) incurs Improvement Product Development Costs for any such [**] for which such Party is responsible under the Improvement Product Development Plan that exceed the amounts set forth in the Improvement Product Development Budget for such activities by [**] percent ([**]%) or less, then such overage amount shall automatically be included in the Improvement Product Development Budget and the Parties shall share such costs as set forth in this Section 7.5.3. Following Genzyme’s receipt of each updated Improvement Product Development Budget as provided in clause (a) above, Genzyme shall have the right, exercisable within [**] days after receipt of such Improvement Product Development Budget, to opt-out of the Development of such Improvement Product (other than with respect to then-ongoing [**], for which Genzyme will remain obligated to continue to participate in funding) by providing Alnylam written notice thereof, in which case such Improvement Product shall no longer be a Licensed Product for the purposes of this Agreement.

7.5.4 Improvement Products - Royalty Adjustments. Notwithstanding Section 7.4.3.2 (Future Alnylam In-Licenses Related to New Products), Section 8.3.1 (Royalties Payable on Licensed Products), Section 8.3.3 (No Alnylam Patents or Regulatory Exclusivity), and Section 8.3.4 (Royalty Adjustments for Generic Products) (which Sections 8.3.3 and 8.3.4 will apply in part as expressly provided for below), in no event will the royalties payable by Genzyme to Alnylam on Net Sales of Improvement Products in the Genzyme Territory for any Calendar Quarter during the applicable Royalty Term for such Improvement Product be less than the sum of (a) the amount necessary to fully cover Alnylam’s obligations to pay sales milestones and royalties due under Alnylam In-Licenses with respect to sales of such Improvement Product in the Genzyme Territory during such Calendar Quarter in accordance with Section 7.4.3 and (b) [**] percent ([**]%) of Net Sales of such Improvement Product, subject to adjustment of the component set forth in this clause (b) as provided in Sections 8.3.3 and 8.3.4. Furthermore, in no event will the royalties payable by Genzyme to Alnylam on Net Sales of an Improvement Product in any country in the Genzyme Territory for any Calendar Quarter after the applicable Royalty Term for such Improvement Product, after all reductions to such royalties are applied, be less than the royalty floor established in clause (b) of Section 8.3.5. For the avoidance of doubt, Genzyme will not be entitled to apply any credit pursuant to Section 7.4.3.2(e) against the royalty payment payable by Genzyme to Alnylam on Net Sales of an Improvement Product in

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the Genzyme Territory for any Calendar Quarter to the extent such credit would reduce the amount of such royalty payment to an amount less than the applicable minimum payment established by the two immediately preceding sentences. Notwithstanding the foregoing, no portion of any sales milestone payment under any Future Alnylam In-License paid by Genzyme pursuant to Section 7.4.3.2 shall be taken into account for the purpose of calculating the royalty floor under this Section 7.5.4 (i.e., no double-counting). The following two examples are provided for illustrative purposes only:

(x) Example #1. In the event that (i) Net Sales of an Improvement Product by made Genzyme or its Related Parties in the Genzyme Territory are less than [**] dollars ($[**]) in the first Calendar Quarter of a Calendar Year and therefore the royalty percentage due under Section 8.3.1 with respect to such Improvement Product would be [**] percent ([**]%), (ii) Alnylam is responsible for paying aggregate royalties equal to [**] percent ([**]%) of Net Sales of such Improvement Product in the Genzyme Territory under Alnylam In-License Agreements, (iii) Genzyme is not entitled to credit any amounts against such royalties pursuant to Section 7.4.3.2(e) (Genzyme Credit for JPAC/LP Milestones), and (iv) no reductions are applicable pursuant to Section 8.3.3 (No Alnylam Patents or Regulatory Exclusivity) or 8.3.4 (Royalty Adjustment for Generic Products), then the royalty due under this Agreement on such Net Sales, as adjusted based on this Section 7.5.4, would be [**] percent ([**]%) plus [**] percent ([**]%), or [**] percent ([**]%) of such Net Sales.

(y) Example #2. In the event that (i) Net Sales of an Improvement Product by made Genzyme or its Related Parties in the Genzyme Territory are less than [**] dollars ($[**]) in the first Calendar Quarter of a Calendar Year and therefore the royalty percentage due under Section 8.3.1 with respect to such Improvement Product would be [**] percent ([**]%), (ii) Alnylam is responsible for paying aggregate royalties equal to [**] percent ([**]%) of Net Sales of such Improvement Product in the Genzyme Territory under Alnylam In-License Agreements, (iii) Genzyme is not entitled to credit any amounts against such royalties pursuant to Section 7.4.3.2(e) (Genzyme Credit for JPAC/LP Milestones), and (iv) a reduction is applicable pursuant to Section 8.3.4 (Royalty Adjustment for Generic Products), then the royalty due under this Agreement on such Net Sales, as adjusted based on this Section 7.5.4 would be [**]% plus [**]% (i.e., [**]%), or [**]% of such Net Sales.

7.5.5 Improvement Products. All other provisions of this Agreement applicable to Licensed Products, including without limitation the royalty provisions in Section 8.3, shall apply to such Improvement Product.

7.6 Alnylam Territory Right of First Negotiation. If, at any time during the Term, Alnylam desires to grant any Third Party rights to Develop and/or Commercialize one or more Licensed Product(s) in the Field in any portion of the Alnylam Territory, Alnylam shall notify Genzyme in writing of its intent. Genzyme shall have [**] days from receipt of such written notice to notify Alnylam in writing as to whether Genzyme desires to negotiate for such rights in such territory, and if Genzyme so notifies Alnylam that it does desire to negotiate for such rights in such territory, Genzyme shall have the exclusive right for [**] days from the date of such notification to Alnylam to negotiate with Alnylam and to make one or more written non-binding offers to Alnylam concerning the acquisition of such rights in such territory by Genzyme.

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Genzyme shall have the exclusive right for [**] days (or such longer period as may be mutually agreed by the Parties) after such [**] day period, to finalize and enter into a definitive agreement with Alnylam for such rights in such territory; provided that, if either Genzyme does not provide such written notice within such [**] day period or Genzyme does provide such written non-binding offer within such subsequent [**] day period, or Genzyme provides such notice of interest and such written offer but for any reason Genzyme and Alnylam do not enter into a definitive agreement within the [**] day negotiation period, Alnylam shall be free to enter into an agreement with a Third Party(ies) relating to such rights in such territory, without further obligation to Genzyme. Alnylam shall not, during the exclusive [**] and [**] day negotiating periods described above, enter into discussions, exchange information, or otherwise negotiate with any Third Party with respect to an agreement with respect to the Development and/or Commercialization of a Licensed Product in the Field in the Alnylam Territory. Notwithstanding the foregoing, during the period of [**] months after the termination of any such negotiation that does not result in a definitive agreement between Alnylam and Genzyme, Alnylam shall not enter into a transaction with respect to such rights in such territory with any Third Party on terms that in the aggregate are materially more favorable to the Third Party than the last terms offered in writing by Genzyme to Alnylam unless Alnylam first re-offers such transaction to Genzyme on such more favorable terms and Genzyme does not accept such offer and enter into such transaction with Alnylam within [**] days after such re-offer. For clarity, prior to the exclusive negotiating periods described above, Alnylam shall be free to engage in discussions and exchange information with Third Parties with respect to such Licensed Product rights, but shall not enter into any binding agreement with any Third Party with respect to such rights.

7.7 Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by a Party to the other, including those set forth in Sections 7.1, 7.2, and 3.3, are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties and their respective Sublicensees, as sublicensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code and any foreign counterpart thereto. The Parties further agree that that upon commencement of a bankruptcy proceeding by or against a Party (the “Bankrupt Party”) under the Bankruptcy Code, the other Party (the “Non-Bankrupt Party”) will be entitled to a complete duplicate of, or complete access to (as the Non-Bankrupt Party deems appropriate), all such intellectual property and all embodiments of such intellectual property. Such intellectual property and all embodiments of such intellectual property will be promptly delivered to the Non-Bankrupt Party (a) upon any such commencement of a bankruptcy proceeding and upon written request by the Non-Bankrupt Party, unless the Bankrupt Party elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the Bankrupt Party and upon written request by the Non-Bankrupt Party. Without limiting the foregoing, Alnylam hereby grants to Genzyme a right of access to and to obtain possession of (a) copies of research data, (b) laboratory samples, (c) samples of Licensed Product, (d) formulas, (e) laboratory notes and notebooks, (f) data and results related to clinical trials, (g) regulatory filings and approvals, (h) rights of reference in respect of regulatory filings and approvals, (i) pre-clinical research data and results, (j) marketing, advertising and promotional materials, all of which (in clauses (a) through (j)) constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy

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Code and (k) all other embodiments of such intellectual property, and in respect of each of the foregoing clauses (a) through (k), solely for the purpose of the exercise of Genzyme’s rights and licenses under this Agreement, whether any of the foregoing are in Alnylam’s possession or control or in the possession and control of Third Parties. The Bankrupt Party (in any capacity, including debtor-in-possession) and its successors and assigns (including any trustee) agrees not to interfere with the exercise by Non-Bankrupt Party or its Related Parties of its rights and licenses to such intellectual property and such embodiments of intellectual property in accordance with this Agreement, and agrees to assist the Non-Bankrupt Party and its Related Parties in obtaining such intellectual property and such embodiments of intellectual property in the possession or control of Third Parties as reasonably necessary or desirable for the Non-Bankrupt Party to exercise such rights and licenses in accordance with this Agreement. The foregoing provisions are without prejudice to any rights the Non-Bankrupt Party may have arising under the Bankruptcy Code or other Laws.

7.8 [**].

7.9 No Other Rights. Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party, as a result of this Agreement, obtain any ownership interest or other right in any Know-How, Patent Rights or other intellectual property rights of the other Party, including items owned, controlled or developed by the other Party, or provided by the other Party to the receiving Party at any time pursuant to this Agreement.

8. CERTAIN FINANCIAL TERMS

8.1 Upfront Fee. In consideration for the rights, licenses and options granted by Alnylam to Genzyme under this Agreement, within [**] days after the Effective Date, Genzyme shall pay Alnylam a non-creditable initial payment of Twenty-Two Million Five Hundred Thousand U.S. Dollars ($22,500,000).

8.2 Development Milestone Fees. Genzyme shall make the non-creditable milestone payments to Alnylam set forth below, each payable once, no later than [**] days after either the earliest date on which the corresponding milestone event has first been achieved with respect to a Licensed Product, with respect to milestone events achieved by Genzyme or its Related Parties, or the date on which Genzyme receives notice from Alnylam of completion of the milestone event, with respect to milestone events achieved by Alnylam or its Related Parties.

Milestone Event	Milestone Payment
(i) First Phase II Success by Alnylam or any of its Related Parties	$	7,000,000
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]

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(a) If following the completion of a Phase II Study the Parties either (I) do not agree whether First Phase II Success has been achieved or (II) agree that the First Phase II Success has not been achieved, then, in each case of either (I) or (II):

(i) Genzyme shall have the right to terminate this Agreement by providing forty-five (45) days prior written notice to Alnylam. Genzyme shall have no obligation to pay to Alnylam the milestone payment for the milestone event described in Section 8.2(i) if Genzyme so terminates prior to the later of (1) Alnylam’s or any of its Related Parties’ commencement of the first [**] with respect to a Licensed Product, or (2) forty-five (45) days following the date on which Alnylam delivers written notice pursuant to Section 2.3.1 to Genzyme of its intent to commence such a [**] with respect to a Licensed Product.

(ii) If Genzyme does not terminate this Agreement in accordance with Section 8.2(a)(i) above prior to the later of (1) [**] with respect to the Licensed Product conducted by Alnylam or any of its Related Parties, or (2) forty-five (45) days following the date on which Alnylam delivers written notice pursuant to Section 2.3.1 to Genzyme of its intent to commence such a [**] with respect to a Licensed Product, then the milestone payment for milestone event described in Section 8.2(i) shall be paid by Genzyme to Alnylam as follows: (x) [**] U.S. Dollars ($[**]) shall be paid together with the milestone payment described in Section 8.2(ii) and (y) [**] U.S. Dollars ($[**]) shall be paid upon the earliest of (A) the first filing by Alnylam or any of its Related Parties of [**] in (I) the United States, (II) in the EU (with the EMA), or (III) in any one of the following countries: France, Germany, Portugal, Sweden and the United Kingdom, or (B) the first filing by Genzyme or any of its Related Parties of [**] in a country in the Genzyme Territory or the [**] for the Licensed Product in Japan. For clarity, payment under (x) and (y) above is in addition to payments due under 8.2(ii) and 8.2(iii).

(b) If Alnylam or any of its Related Parties [**], but (i) Genzyme or any of its Related Parties [**] as contemplated by the Genzyme Territory Development Plan, and, (ii) Alnylam or any of its Related Parties [**], then the milestone payment for the milestone event described in Section 8.2(iv) shall be paid by Genzyme to Alnylam within [**] days following the events described in both clause (i) and (ii) of this paragraph being satisfied.

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(c) Each milestone payment by Genzyme to Alnylam hereunder shall be payable only once, regardless of the number of times achieved with respect to a Licensed Product.

(d) Genzyme shall provide Alnylam with written notice of the achievement by Genzyme or any of its Related Parties of any milestone event set forth in Section 8.2(iii), (v) and (vi) and Alnylam shall provide Genzyme with written notice of the achievement by Alnylam or any of its Related Parties of any milestone event set forth in Section 8.2(i), (ii) and (iv), in each case within [**] days after such event; provided, however, that the notifying Party shall inform the other Party of such event prior to any public disclosure of such event by the notifying Party.

8.3 Royalties.

8.3.1 Royalties Payable on Licensed Products. Subject to the terms and conditions of this Agreement, Genzyme shall pay to Alnylam royalties on aggregate Net Sales by Genzyme and its Related Parties of all Licensed Products in the Genzyme Territory, as follows:

Aggregate Calendar Year Net Sales in the Genzyme Territory	Royalty (as a percentage  of Net Sales)
[**]		[**	]
[**]		[**	]
[**]		[**	]
Greater than $[**]		[**	]

By way of example only, if Genzyme receives [**] U.S. Dollars ($[**]) in Net Sales in the Genzyme Territory during a given Calendar Year, then the royalties payable by Genzyme under Section 8.3.1 during such Calendar Year would be calculated as follows:

[**]

Royalties on aggregate Net Sales shall be paid at the rate applicable to the portion of such aggregate Net Sales within each of the Net Sales levels above during such Calendar Year.

If (i) more than one Licensed Product is sold in the Genzyme Territory during any Calendar Quarter, (ii) all portions of aggregate Net Sales during such Calendar Quarter fall within the same Net Sales level during such Calendar Quarter, (iii) such Licensed Products are subject to different royalty rates pursuant to Section 8.3.3 or 8.3.4, and (iv) the aggregate Net Sales of such Licensed Products during the Calendar Year fall within different Net Sales levels, then the Net Sales of each Licensed Product shall be deemed to be distributed proportionally on a percentage basis relative to the Net Sales of each Licensed Product in the Calendar Year, according to such differing royalty rates. For example, if:

• [**] U.S. Dollars ($[**]) of aggregate Net Sales occur for two Licensed Products during the first Calendar Quarter of a Calendar Year during which aggregate Net Sales total [**] U.S. Dollars ($[**]), and

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• [**] percent ([**]%) of aggregate Net Sales during such Calendar Year are attributed to the first Licensed Product and [**] percent ([**]%) to the second Licensed Product, and

• the first Licensed Product is subject to a full royalty and the second is subject to a [**] percent ([**]%) royalty pursuant to Section 8.3.4,

then royalties during such Calendar Quarter will be calculated as follows:

[**]

If (i) more than one Licensed Product is sold in the Genzyme Territory during any Calendar Quarter, (ii) portions of aggregate Net Sales during such Calendar Quarter fall within more than one of the above Net Sales levels, (iii) such Licensed Products are subject to different royalty rates pursuant to Section 8.3.3 or 8.3.4, and (iv) the aggregate Net Sales of such Licensed Products during the Calendar Year fall within different Net Sales levels, then the Net Sales of each Licensed Product shall be deemed to be distributed proportionally on a percentage basis relative to the Net Sales of each Licensed Product in the Calendar Year, according to such differing royalty rates and between the applicable Net Sales levels. For example, if:

• [**] U.S. Dollars ($[**]) of aggregate Net Sales occur for two Licensed Products during the fourth Calendar Quarter of a Calendar Year during which aggregate Net Sales total [**] U.S. Dollars ($[**]),

• [**] percent ([**]%) of aggregate Net Sales during such Calendar Year are attributed to the first Licensed Product and [**] percent ([**]%) to the second Licensed Product,

• [**] U.S. Dollars ($[**]) of aggregate Net Sales during such Calendar Quarter fall into the $[**] Net Sales level and [**] U.S. Dollars ($[**]) fall into the $[**] Net Sales level, and

• and the first Licensed Product is subject to a full royalty and the second is subject to a [**] percent ([**]%) royalty pursuant to Section 8.3.4,

then royalties during such Calendar Quarter will be calculated as follows:

[**]

8.3.2 Royalty Term. Subject to Section 8.3.5, the period during which the royalties set forth in Section 8.3.1 shall be payable, on a Licensed Product-by-Licensed Product and country-by-country basis, shall commence with the First Commercial Sale of the Licensed

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Product in such country and continue until the latest of (a) the expiration of the last Valid Claim of the Alnylam Patents or any Patent Right included in the Joint Collaboration IP Covering the Manufacture, use, offer for sale, sale or importation of the Licensed Product in the country of sale, (b) the expiration of Regulatory Exclusivity for such Licensed Product in such country, or (c) subject to Section 8.3.3, the twenty-fifth (25th) anniversary of the First Commercial Sale of the Licensed Product in such country (each such period, a “Royalty Term”). For purposes of the foregoing clause (a), following the twelfth (12) anniversary of the First Commercial Sale of a Licensed Product in a country, Manufacturing Claims shall no longer constitute Valid Claims with respect to such Licensed Product in such country. Notwithstanding the foregoing, at any time during the Royalty Term for a Licensed Product in a country following the latest of (a) the expiration of the last Valid Claim of the Alnylam Patents or any Patent Right included in the Joint Collaboration IP Covering the Manufacture, use, offer for sale, sale or importation of such Licensed Product in such country, (b) the expiration of Regulatory Exclusivity for such Licensed Product in such country, or (c) the twelfth (12th) anniversary of the First Commercial Sale of such Licensed Product in such country, Genzyme may terminate the Royalty Term with respect to such Licensed Product in such country (and its obligation to pay royalties under this Section 8.3 with respect to such Licensed Product in such country) by providing written notice to Alnylam, which termination will be effective commencing in the next full Calendar Quarter commencing at least thirty (30) days following the date of such notice.

8.3.3 No Alnylam Patents or Regulatory Exclusivity. The royalties to be paid by Genzyme to Alnylam pursuant to Section 8.3.1 shall be reduced to [**] percent ([**]%) of the amounts otherwise payable pursuant to Section 8.3.1 with respect to Net Sales in a country of the Genzyme Territory of Licensed Products as to which both (i) the Manufacture, use, offer for sale, sale or importation of which is not Covered by any Valid Claim in any Alnylam Patent or in any Patent Right included in the Joint Collaboration IP in such country and (ii) there is no applicable Regulatory Exclusivity in such country.

8.3.4 Royalty Adjustments for Generic Products. If, during a given Calendar Quarter when a Licensed Product is being Commercialized by or on behalf of Genzyme in a particular country in the Genzyme Territory, there is Generic Competition in such country with respect to a Licensed Product, then, subject to Section 8.3.5, the royalties payable pursuant to Section 8.3.1 on the Net Sales of such Licensed Product in such country shall thereafter be reduced to [**] percent ([**]%) of the amounts otherwise payable pursuant to Section 8.3.1 with respect to such Licensed Product in such country for such Calendar Quarter for so long as such Generic Competition remains.

8.3.5 Royalty Floor. Notwithstanding Section 7.4.3 or the foregoing provisions of this Section 8.3 (a) in no event during the applicable Royalty Term for a Licensed Product in a country of the Genzyme Territory shall the royalties payable to Alnylam hereunder for such Licensed Product in such country for any Calendar Quarter be reduced pursuant to Sections 8.3.3 and 8.3.4 to less than [**] percent ([**]%) of the royalties payable pursuant to Section 8.3.1 as to such Licensed Product in such country for such Calendar Quarter and (b) in no event shall the royalties payable to Alnylam hereunder for a Licensed Product in a country of the Genzyme Territory for any Calendar Quarter, whether or not reduced pursuant to Section 8.3.3 or 8.3.4, and whether or not during or after the applicable Royalty Term for such Licensed Product in

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such country, be less than the amount necessary to fully cover Alnylam’s obligations to pay royalties and sales milestones due under Alnylam In-Licenses with respect to sales of such Licensed Product in such country during such Calendar Quarter in accordance with Section 7.4.3. If the royalties payable to Alnylam hereunder for a Licensed Product in a country of the Genzyme Territory for any Calendar Quarter would otherwise not be sufficient to fully cover Alnylam’s obligations to pay royalties and sales milestones due under Alnylam In-Licenses with respect to sales of such Licensed Product in such country during such Calendar Quarter in accordance with Section 7.4.3, Genzyme shall pay Alnylam such additional royalty amounts with respect to sales of such Licensed Product in such country for such Calendar Quarter as are necessary to fully cover Alnylam’s obligations to pay such royalties and sales milestones and Genzyme shall not be entitled to credit any amount pursuant to Section 7.4.3 against royalties payable to Alnylam on sales of such Licensed Product in such country during such Calendar Quarter. If the royalties payable to Alnylam hereunder for a Licensed Product in a country of the Genzyme Territory for any Calendar Quarter exceed the amount necessary to fully cover Alnylam’s obligations to pay royalties and sales milestones with respect to sales of such Licensed Product in such country during such Calendar Quarter in accordance with Section 7.4.3, Genzyme shall be entitled to credit amounts pursuant to Section 7.4.3 with respect to sales of such Licensed Product in such country during such Calendar Quarter against the portion of such royalties payable to Alnylam that exceeds Alnylam’s obligations to pay royalties and sales milestones due under Alnylam In-Licenses with respect to sales of such Licensed Product in such country during such Calendar Quarter. Notwithstanding the foregoing, no portion of any sales milestone that is a JPAC/LP Milestone payment under any Future Alnylam In-License paid by Genzyme pursuant to Section 7.4.3.2 shall be taken into account for the purpose of calculating the royalty floor under this Section 8.3.5 (i.e., no double-counting).

8.3.6 Validation Information. At Genzyme’s request, Alnylam will provide Genzyme with such information as Genzyme may reasonably request to validate the amount of the royalty floor described in Section 8.3.5.

8.3.7 Reports; Payment of Royalty. During the Term, following the First Commercial Sale of the Licensed Product in the Genzyme Territory, Genzyme shall furnish to Alnylam a written report within [**] days after the end of each Calendar Quarter showing, on a Licensed Product-by-Licensed Product and country-by-country basis, the Net Sales of each Licensed Product in each country of the Genzyme Territory, royalties payable under Genzyme In-Licenses with respect to such Net Sales and the royalties payable under this Agreement. Quarterly reports shall be due no later than the [**] day following the end of each Calendar Quarter. Royalties shown to have accrued by each royalty report shall be due and payable on the date such royalty report is due. In addition Genzyme shall prepare and deliver to Alnylam (a) any additional reports as required under the Alnylam In-Licenses and requested by Alnylam; and (b) an annual report no later than [**] of each Calendar Year listing gross sales and Net Sales of Licensed Products in each Calendar Quarter in the prior Calendar Year (A) in Japan and (B) in all other countries in the Genzyme Territory in the aggregate. Upon Alnylam’s reasonable request no more than [**], Genzyme shall prepare a report detailing the deductions from gross sales (itemized by deduction category) included in the calculation of Net Sales for each Licensed Product in Japan and the Genzyme Territory as a whole. Genzyme and its Related Parties involved in Commercializing Licensed Products shall keep complete and accurate records in sufficient detail to enable the royalties and other payments payable hereunder and by Alnylam to Third Parties under the Alnylam In-Licenses to be determined.

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8.4 Audits.

8.4.1 Upon the written request of a Party and not more than [**], the other Party and its Related Parties shall permit an independent certified public accounting firm of internationally-recognized standing selected by the requesting Party and reasonably acceptable to the other Party, at the requesting Party’s expense except as set forth below, to have access during normal business hours to such of the records of the other Party as may be reasonably necessary to verify the accuracy of the royalty, Improvement Product Development Cost, and other amounts payable or reports under this Agreement for any year ending not more than [**] years prior to the date of such request for the sole purpose of verifying the basis and accuracy of payments made under Sections 6, 7.5 and 8.

8.4.2 If such accounting firm identifies a discrepancy made during such period, the appropriate Party shall pay the other Party the amount of the discrepancy, together with late-payment interest in accordance with Section 8.6, within [**] days after the date the requesting Party delivers to the other Party such accounting firm’s written report so concluding, or as otherwise agreed by the Parties in writing. The fees charged by such accounting firm shall be paid by the requesting Party, unless such discrepancy represents an underpayment by the other Party of at least five percent (5%) of the total amounts due hereunder in the audited period, in which case such fees shall be paid by the other Party.

8.4.3 Each Party shall comply with all applicable audit requirements in the In-Licenses and shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to make reports to the Party that is party to such In-License, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by the independent accountant of the Party that is party to such In-License to the same extent required of a Party under this Agreement.

8.4.4 Unless an audit for such year has been commenced prior to and is ongoing upon the [**] anniversary of the end of such year, the calculation of royalties, expense reimbursement and other payments payable with respect to such year shall be binding and conclusive upon both Parties, and each Party and its Related Parties shall be released from any further liability or accountability with respect to such royalties or expense reimbursement for such year.

8.4.5 Each Party shall treat all financial information subject to review under this Section 8.4 or under any sublicense agreement in accordance with the confidentiality and non-use provisions of this Agreement, and shall cause its accounting firm to enter into a confidentiality agreement with the other Party and/or its Related Parties obligating it to retain all such information in confidence pursuant to such confidentiality agreement, which terms shall be no less stringent than the provisions of Section 9.

8.5 Payment Exchange Rate. All payments to be made under this Agreement shall be made in United States dollars and shall be paid by bank wire transfer in immediately available funds to such bank account in the United States as may be designated in writing by the receiving

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Party from time to time. In the case of Net Sales made or expenses incurred by a Party and its Related Parties in currencies other than United States dollars during a Calendar Quarter, the rate of exchange to be used in computing the amount of United States dollars due shall be the rate of exchange utilized by such Party in its worldwide accounting system and calculated in accordance with GAAP.

8.6 Late Payments. Any amount owed by a Party to the other Party under this Agreement that is not paid on or before the date such payment is due shall bear interest at a rate per annum equal to the lesser of (a) the then current one (1) month London Inter-Bank Offering Rate for US Dollars, as quoted on the British Banker’s Association’s website currently located at www.bba.org.uk (or such other source as may be mutually agreed by the Parties) plus [**] percentage points per annum or (b) the highest rate permitted by Law, calculated on the number of days such payments are paid after such payments are due and compounded monthly.

8.7 Blocked Payments. If, by reason of Laws in any jurisdiction in a Party’s Territory, it becomes impossible or illegal for a Party to transfer milestone payments, royalties or other payments under this Agreement to the other Party, the payor shall promptly notify the payee. During any such period described above, the payor shall deposit such payments in local currency in the relevant jurisdiction to the credit of the payee in a recognized banking institution designated by the payee or, if none is designated by the payee within a period of [**] days, in a recognized banking institution selected by the payor and identified in a written notice given to the payee.

8.8 Taxes. If a timely and appropriately completed and executed Internal Revenue Service Form W-9 is provided by the receiving Party to the paying Party, the Parties acknowledge and agree that no United States tax withholding shall be applied with respect to the payments due under Sections 8.1 and 8.2. Each Party shall use reasonable efforts to minimize tax withholding on payments made to the other Party. Notwithstanding such efforts, if such Party concludes that tax withholdings under the Laws of any country are required with respect to payments to the other Party, such Party shall first notify the other Party and provide such Party with [**] days to determine whether there are actions such receiving Party can undertake to avoid such withholding. During this notice period, the paying Party shall refrain from making such payment until the receiving Party instructs the paying Party that (a) the receiving Party intends to take actions (satisfactory to both Parties) that will obviate the need for such withholding, in which case the paying Party shall make such payment only after it is instructed to do so by the receiving Party, or (b) the paying Party should make such payment and withhold the required amount and pay it to the appropriate governmental authority. In such case, the withholding Party shall promptly provide the other Party with copies of receipts or other evidence reasonably required and sufficient to allow the other Party to document such tax withholdings adequately for purposes of claiming foreign tax credits and similar benefits. The Parties will cooperate reasonably in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable law, in connection with the making of any required tax payment or withholding payment, or in connection with any claim to a refund of or credit for any such payment. The Parties will cooperate to minimize such taxes in accordance with applicable Laws, including using reasonable efforts to access the benefits of any applicable treaties. Notwithstanding the foregoing, if, as a result of (i) the assignment of this

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Agreement by Genzyme to an Affiliate or a Third Party outside of the United States or (ii) the exercise by Genzyme of its rights under this Agreement through an Affiliate or Third Party outside of the United States (or the direct exercise of such rights by an Affiliate of Genzyme outside of the United States), foreign withholding tax in excess of the foreign withholding tax amount that would have been payable in the absence of such assignment or exercise of rights becomes payable with respect to amounts due to Alnylam hereunder, such amount due to Alnylam will be increased so that the amount actually paid to Alnylam equals the amount that would have been payable to Alnylam in the absence of such excess withholding (after withholding of the excess withholding tax and any additional withholding tax on such increased amount). However, if a similar assignment or exercise of rights described in (i) or (ii) of the preceding sentence by Alnylam results in foreign withholding tax in excess of the foreign withholding tax amount that would have been payable in the absence of such assignment or exercise of rights, any amount due to Alnylam will not be increased for such excess withholding and, subject to the terms of this Agreement, the required amount will be withheld and submitted to the appropriate governmental authority.

9. CONFIDENTIALITY AND PUBLICATION

9.1 Nondisclosure Obligation. (a) All Confidential Information disclosed by one Party to the other Party hereunder shall be maintained in confidence by the receiving Party and shall not be disclosed to a Third Party or used for any purpose except as set forth herein without the prior written consent of the disclosing Party, except to the extent that such Confidential Information:

(i) is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by the receiving Party’s business records;

(ii) is known to the public before its receipt from the disclosing Party, or thereafter becomes generally known to the public through no breach of this Agreement by the receiving Party;

(iii) is subsequently disclosed to the receiving Party by a Third Party who is not known by the receiving Party to be under an obligation of confidentiality to the disclosing Party; or

(iv) is developed by the receiving Party independently of Confidential Information received from the disclosing Party, as documented by the receiving Party’s business records.

(b) Notwithstanding the obligations of confidentiality and non-use set forth above and in Section 9.1(c) below, a receiving Party may provide Confidential Information disclosed to it, and disclose the existence and terms of this Agreement as may be reasonably required in order to perform its obligations and to exploit its rights under this Agreement, and specifically to (i) Related Parties, and their employees, directors, agents, consultants, advisors and/or other Third Parties for the performance of its obligations hereunder (or for such entities to determine their interest in performing such activities) in accordance with this Agreement in each case who are

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under an obligation of confidentiality with respect to such information that is no less stringent than the terms of this Section 9.1(b); (ii) governmental or other Regulatory Authorities in order to obtain patents or perform its obligations or exploit its rights under this Agreement; provided that such Confidential Information shall be disclosed only to the extent reasonably necessary to do so, (iii) the extent required by Law, including by the rules or regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States or of any stock exchange or listing entity, (iv) any bona fide actual or prospective acquirers, underwriters, investors, lenders or other financing sources and any bona fide actual or prospective collaborators or strategic partners and to consultants and advisors of such Party, in each case who are under an obligation or confidentiality with respect to such information that is no less stringent than the terms of this Section 9.1(b) and (v) to Third Parties to the extent a Party is required to do so pursuant to the terms of an Existing Alnylam In-License. If a Party is required by Law to disclose Confidential Information that is subject to the non-disclosure provisions of this Section 9.1(b) or Section 9.1(c), such Party shall promptly inform the other Party of the disclosure that is being sought in order to provide the other Party an opportunity to challenge or limit the disclosure obligations. Confidential Information that is required to be disclosed by Law shall remain otherwise subject to the confidentiality and non-use provisions of this Section 9.1(b) and Section 9.1(c). If either Party concludes that a copy of this Agreement must be filed with the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States, such Party will provide the other Party with a copy of this Agreement showing any provisions hereof as to which the Party proposes to request confidential treatment, will provide the other Party with an opportunity to comment on any such proposed redactions and to suggest additional redactions, and will take such Party’s reasonable comments into consideration before filing the Agreement.

(c) Alnylam recognizes the value of the license granted in this Agreement depends, in part, on Alnylam protecting the secrecy of the Alnylam Know-How. Therefore, without limiting Alnylam’s right to license the Alnylam Know-How in any way it chooses, Alnylam shall use Commercially Reasonable Efforts to protect the confidentiality of the Alnylam Know-How as determined by Alnylam in its reasonable business judgment.

9.2 Publication and Publicity.

9.2.1 Publication. Genzyme and Alnylam each acknowledge the other Party’s interest in publishing certain key results of the Collaboration. Each Party also recognizes the mutual interest in obtaining valid patent protection and in protecting trade secret information. Consequently, except for disclosures permitted pursuant to Section 9.1 and 9.2.2(a), either Party wishing to make a publication or public presentation that contains the Confidential Information of the other Party shall deliver to the other Party a copy of the proposed written publication or presentation at least [**] days prior to submission for publication or presentation. The reviewing Party shall have the right (a) to propose modifications to the publication or presentation for patent reasons, trade secret reasons or business reasons, and the publishing Party will remove all Confidential Information of the other Party if requested by the reviewing Party, and (b) to request a reasonable delay in publication or presentation in order to protect patentable information. If the reviewing Party requests a delay, the publishing Party shall delay submission or presentation for a period of [**] days (or such shorter period as may be mutually agreed by the

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Parties) to enable the non-publishing Party to file patent applications protecting such Party’s rights in such information in accordance with Section 12. With respect to any proposed publications or disclosures by investigators or academic or non-profit collaborators, such materials shall be subject to review under this Section 9.1(c) to the extent that Genzyme or Alnylam, as the case may be, has the right and ability (after using Commercially Reasonable Efforts to obtain such right and ability) to do so.

9.2.2 Publicity. Except as set forth in Section 9.1 above and Section 9.2.2(a) and 9.2.2(b) below, the terms of this Agreement may not be disclosed by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement, its subject matter, or the activities of the Parties hereunder without the prior express written permission of the other Party, except as may be required by Law or expressly permitted by the terms hereof.

(a) Following the execution of this Agreement, the Parties shall issue a joint press release in the form set forth in Schedule 9.2.2(a). After such initial press release, except as provided in Section 9.2.2(b), neither Party shall issue a press release or public announcement relating to this Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed, except that a Party may (i) once a press release or other public statement is approved in writing by both Parties, make subsequent public disclosure of the information contained in such press release or other written statement without the further approval of the other Party, and (ii) issue a press release or public announcement as required, in the reasonable judgment of such Party, by Law, including by the rules or regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States or of any stock exchange or listing entity.

(b) Notwithstanding anything in this Section 9.2.2 to the contrary, either Party may issue a press release or make a public disclosure relating to such Party’s Development, Manufacturing or Commercialization activities with respect to Licensed Products in such Party’s Territory, provided that such press release or public disclosure does not disclose Confidential Information of the other Party. Furthermore, either Party may issue a press release or make a public disclosure relating to the other Party’s Development, Manufacturing or Commercialization activities with respect to the Licensed Products in the other Party’s Territory, provided that (i) such press release or public disclosure does not disclose Confidential Information of the other Party and (ii) such press release or public disclosure merely repeats subject matter previously disclosed by the other Party in a manner that is substantially consistent with such prior disclosure. Prior to making any such disclosure, however, the Party making the disclosure shall provide the other Party with a draft of such proposed disclosure a reasonable time prior to disclosure to allow the other Party to review and comment prior to making any such disclosure, for the other Party’s review and comment, and the disclosing Party shall consider in good faith any timely comments provided by the other Party.

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10. REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION

10.1 Mutual Representations and Warranties. Each Party represents and warrants to the other Party that as of the Effective Date:

10.1.1 It is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and authority to enter into this Agreement, and to carry out the provisions hereof.

10.1.2 It is duly authorized to execute and deliver this Agreement, and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

10.1.3 This Agreement is legally binding upon it and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound, or with its charter or by-laws.

10.1.4 It has not granted, and will not grant, during the Term, any right to any Third Party that would conflict with the rights granted to the other Party hereunder.

10.1.5 Neither Party nor any of its Affiliates has been debarred or is subject to debarment and neither Party nor any of its Affiliates will use in any capacity, in connection with the Collaboration or the performance of its obligations under this Agreement, any person or entity that has been debarred pursuant to Section 306 of the United States Federal Food, Drug, and Cosmetic Act, as amended, or that is the subject of a conviction described in such section. Each Party agrees to inform the other Party in writing immediately if it or any person or entity that is performing activities in the Collaboration or under this Agreement, is debarred or is subject to debarment or is the subject of a conviction described in Section 306, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of the notifying Party’s knowledge, is threatened, relating to the debarment or conviction of the notifying Party or any person or entity used in any capacity by such Party or any of its Affiliates in connection with the Collaboration or the performance of its other obligations under this Agreement.

10.2 Representations and Warranties of Alnylam. Except as provided in Schedule 10.2, Alnylam represents and warrants to Genzyme that as of the Effective Date:

10.2.1 Alnylam is the sole and exclusive owner of, or otherwise Controls pursuant to an Alnylam In-License (or will Control pursuant to an Additional Alnylam In-License at such time that such Additional Alnylam In-License is included as an Alnylam In-License pursuant to Section 7.4.2), the Alnylam Technology, and all of the Alnylam Technology licensed to Genzyme hereunder in the Genzyme Territory that is solely and exclusively owned by Alnylam is free and clear of liens, charges or encumbrances other than licenses granted to Third Parties that are not inconsistent with the rights and licenses granted to Genzyme under this Agreement.

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10.2.2 Alnylam has sufficient legal and/or beneficial title and ownership of, or sufficient license rights under, the Alnylam Technology to grant the licenses to such Alnylam Technology granted to Genzyme pursuant to this Agreement.

10.2.3 (a) Schedule 1.9 and Schedule 1.16 collectively set forth a complete and accurate list of the Alnylam Patents owned, either solely or jointly, by Alnylam, and to Alnylam’s knowledge, Schedule 1.9 and Schedule 1.16 collectively set forth a complete and accurate list of the Alnylam Patents licensed, either exclusively or nonexclusively, to Alnylam, (b) to Alnylam’s knowledge, each issued Alnylam Patent remains in full force and effect and (c) Alnylam or its Affiliates have timely paid all filing and renewal fees payable with respect to such Alnylam Patents for which Alnylam controls prosecution and maintenance. Schedule 1.9 and Schedule 1.16 indicate whether each Alnylam Patent is owned exclusively by Alnylam, is owned jointly by Alnylam and one or more Third Parties, or is licensed to Alnylam. For each Alnylam Patent Right that is owned, but not owned exclusively, by Alnylam, or that is licensed to Alnylam, Schedule 1.9 and Schedule 1.16 identify the Third Party owner(s) and, if applicable, the Alnylam In-License pursuant to which Alnylam Controls such Alnylam Patent. For each Alnylam Product-Specific Patent that is licensed, but not exclusively licensed, to Alnylam, Schedule 1.16 indicates the non-exclusive nature of the license. For each Alnylam Core Technology Patent family (other than Patent Rights licensed from Isis Pharmaceuticals, Inc.) that is licensed, but not exclusively licensed, to Alnylam, Schedule 1.9 indicates the non-exclusive nature of the license. Alnylam is the sole and exclusive owner of all Patent Rights identified in Schedule 1.9 and Schedule 1.16 as being owned exclusively by Alnylam and Controls all other Patent Rights identified on such schedules.

10.2.4 To Alnylam’s knowledge, the Alnylam Product-Specific Patents, are, or, upon issuance, will be, valid and enforceable patents and no Third Party has challenged or threatened to challenge the scope, validity or enforceability of any Alnylam Product-Specific Patent (including, by way of example, through opposition or the institution or written threat of institution of interference, nullity or similar invalidity proceedings before the United States Patent and Trademark Office or any analogous foreign Governmental Authority).

10.2.5 Alnylam has complied with all applicable Laws, including any duties of candor to applicable patent offices, in connection with the filing, prosecution and maintenance of the Alnylam Patent Rights.

10.2.6 Alnylam owns or Controls all Know-How that is or has been used by Alnylam in the Development and Manufacture of the Licensed Products, and has sufficient legal or beneficial title and ownership of, or sufficient license rights under such Know-How to transfer Know-How to Genzyme as provided in Section 6.2.

10.2.7 Schedule 1.47 sets forth a complete and accurate list of the Existing Alnylam In-Licenses. Alnylam Controls all Know-How and Patent Rights licensed to Alnylam under the Existing Alnylam In-Licenses that is necessary or useful for Genzyme to Develop, Manufacture and/or Commercialize Licensed Products in the Field in the Genzyme Territory. Without limiting the generality of the foregoing, Alnylam has obtained all necessary consents and fulfilled all necessary conditions, if any, to sublicense to Genzyme under this Agreement such Know-How

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and Patent Rights licensed to Alnylam under Existing Alnylam In-Licenses. At such time that an Additional Alnylam In-License is included as an Alnylam In-License pursuant to Section 7.4.2, Alnylam will Control all Know-How, if any, and Patent Rights licensed to Alnylam under such Additional Alnylam In-License that is necessary or useful for Genzyme to Develop, Manufacture and/or Commercialize Licensed Products in the Field in the Genzyme Territory.

10.2.8 To Alnylam’s knowledge, neither Alnylam nor its Affiliates are in breach or default under any Existing Alnylam In-License or Additional Alnylam In-License, and neither Alnylam nor its Affiliates have received any written notice of breach or default with respect to any Existing Alnylam In-License or Additional Alnylam In-License.

10.2.9 Alnylam has obtained from all inventors of Alnylam Technology owned by Alnylam valid and enforceable agreements assigning to Alnylam each such inventor’s entire right, title and interest in and to all such Alnylam Technology.

10.2.10 No Alnylam Technology existing as of the Effective Date is subject to any funding agreement with any government or Governmental Authority.

10.2.11 To Alnylam’s knowledge, the use, Development, Manufacture or Commercialization by Alnylam or Genzyme (or their respective Related Parties) of any Licensed Product as formulated and manufactured as of the Effective Date, or as intended to be formulated and manufactured as of the Effective Date (a) does not and will not infringe any issued patent of any Third Party or (b) will not infringe the claims of any published Third Party patent application when and if such claims were to issue in their current form.

10.2.12 There is no (a) claim, demand, suit, proceeding, arbitration, inquiry, investigation or other legal action of any nature, civil, criminal, regulatory or otherwise, pending or, to Alnylam’s knowledge, threatened against Alnylam or any of its Affiliates or (b) judgment or settlement against or owed by Alnylam or any of its Affiliates, in each case in connection with the Alnylam Technology or any Licensed Product.

10.3 Representations and Warranties of Genzyme. Genzyme represents and warrants to Alnylam as of the Effective Date that is not a party to any agreement with a Third Party under which it Controls Know-How or Patent Rights that are sublicensed to Alnylam under this Agreement.

10.4 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY, LICENSED PRODUCT, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF THE LICENSED PRODUCT PURSUANT TO THIS AGREEMENT WILL BE SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO THE LICENSED PRODUCT WILL BE ACHIEVED.

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10.5 Certain Covenants.

10.5.1 Exclusivity.

(a) During the Exclusivity Period in a country in the Genzyme Territory, Genzyme will not, alone or with an Affiliate or Third Party, Develop or Commercialize in such country any product, including any Improvement Product, for the treatment of ATTR, other than a Licensed Product or an Exempted Complementary TTR Product, without the prior written agreement of Alnylam.

(b) During the Exclusivity Period in a country in the Genzyme Territory, Alnylam will not, alone or with an Affiliate or Third Party, Develop or Commercialize in such country any product, including any Improvement Product, for the treatment of ATTR, other than a Licensed Product or an Exempted Complementary TTR Product, without the prior written agreement of Genzyme.

(c) Alnylam shall not grant any license or other right under the Alnylam Technology that is inconsistent with the exclusivity granted to Genzyme with respect thereto under Section 7.1.1 and 7.1.2. Without limiting the generality of the foregoing, during the Exclusivity Period in a country in the Genzyme Territory, Alnylam shall also not, alone or with an Affiliate or Third Party, Develop (except as permitted herein for or on behalf of Genzyme) or Commercialize any Licensed Product in such country without the prior written agreement of Genzyme.

10.5.2 Compliance. Each Party and its Related Parties shall conduct the Collaboration and the Development, Manufacture and Commercialization of the Licensed Product in accordance with all Laws, including current governmental regulations concerning good laboratory practices, good clinical practices and good manufacturing practices.

10.5.3 Conflicting Transactions. During the Term, Alnylam shall not (a) transfer or assign any of its rights, title or interests in the Alnylam Technology other than as part of a transaction pursuant to which this Agreement is also assigned and assumed in accordance with Section 14.1, or (b) enter into any agreement granting a license or other right under the Alnylam Technology that is inconsistent with the terms of this Agreement.

11. INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

11.1 General Indemnification by Genzyme. Genzyme shall indemnify, hold harmless, and defend Alnylam, its Related Parties, and their respective directors, officers, employees and agents (“Alnylam Indemnitees”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees and litigation expenses) (collectively, “Losses”) arising out of or resulting from, directly or indirectly, (a) any breach of, or inaccuracy in, any representation or warranty made by Genzyme in this Agreement, or any breach or violation of any covenant or agreement of Genzyme in or in the performance of this Agreement, or (b) the negligence or willful misconduct by or of Genzyme and its Related Parties, and their respective directors, officers, employees and

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agents in the performance of Genzyme’s obligations under this Agreement. Genzyme shall have no obligation to indemnify the Alnylam Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Alnylam in this Agreement, or any breach or violation of any covenant or agreement of Alnylam in or in the performance of this Agreement, or the negligence or willful misconduct by or of any of the Alnylam Indemnitiees, or matters for which Alnylam is obligated to indemnify Genzyme under Section 11.2 or 11.3 or 11.4.

11.2 General Indemnification by Alnylam. Alnylam shall indemnify, hold harmless, and defend Genzyme, its Related Parties and their respective directors, officers, employees and agents (“Genzyme Indemnitees”) from and against any and all Losses arising out of or resulting from, directly or indirectly, (a) any breach of, or inaccuracy in, any representation or warranty made by Alnylam in this Agreement, or any breach or violation of any covenant or agreement of Alnylam in or in the performance of this Agreement, or (b) the negligence or willful misconduct by or of Alnylam and its Related Parties, and their respective directors, officers, employees and agents in the performance of Alnylam’s obligations under this Agreement. Alnylam shall have no obligation to indemnify the Genzyme Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Genzyme in this Agreement, or any breach or violation of any covenant or agreement of Genzyme in or in the performance of this Agreement, or the negligence or willful misconduct by or of any of the Genzyme Indemnitees, or matters for which Genzyme is obligated to indemnify Alnylam under Section 11.1 or 11.3.

11.3 Product Liability. Any Losses arising out of Third Party product liability claims arising from the Development or Commercialization of Licensed Products shall be (a) borne by Genzyme, to the extent such Losses were incurred with respect to the Development or Commercialization of the Licensed Product in or for the Genzyme Territory by or on behalf of Genzyme and its Related Parties, and (b) be borne by Alnylam, to the extent such Losses were incurred with respect to Development or Commercialization of the Licensed Product in or for the Alnylam Territory by or on behalf of Alnylam and its Related Parties. The Party bearing such Losses in accordance with the immediately preceding sentence shall indemnify, hold harmless and defend the other Party and its Related Parties and their respective directors, officers, employees and agents from and against such Losses.

11.4 Ongoing Litigation. Without limiting Alnylam’s obligations in Section 11.2 or 11.3:

11.4.1 Alnylam shall indemnify, hold harmless and defend the Genzyme Indemnitees from and against any and all Losses and, subject to Section 11.6, any other amounts paid by Genzyme (such as through settlement) arising out of or resulting from any claim asserted (whether in the Ongoing Litigation or otherwise, but solely to the extent substantially related to the subject matter of the Ongoing Litigation) by the plaintiffs in the Ongoing Litigation.

11.4.2 In the event that Alnylam agrees (whether as part of any settlement or otherwise), or is required as part of any judgment or order, to pay to one or more plaintiffs in the Ongoing Litigation amounts that result in the aggregate amount of Third Party License Payments

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under an Existing Alnylam In-License exceeding, in duration or amount, the amount that Alnylam would be required to pay under such Existing Alnylam In-License based on Alnylam’s assertions in the Ongoing Litigation (any such excess, “Incremental Amounts”), Alnylam shall be fully responsible for such Incremental Amounts. Without limitation, Genzyme shall not be responsible for any Incremental Amounts pursuant to Section 7.4.3 and Incremental Amounts shall not be taken into account when calculating the royalty floor pursuant to Section 8.3.5.

11.5 [**].

11.5.1 [**].

11.5.2 [**].

11.6 Indemnification Procedure. In the event of any such claim against any Genzyme Indemnitee or Alnylam Indemnitee (individually, an “Indemnitee”), the indemnified Party shall promptly notify the other Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement. The Indemnitee shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding. The indemnifying Party shall not be liable for any settlements, litigation costs or expenses incurred by any Indemnitee without the indemnifying Party’s written authorization. Notwithstanding the foregoing, if the indemnifying Party believes that any of the exceptions to its obligation of indemnification of the Indemnitees set forth in Sections 11.1, 11.2, 11.3 or 11.4 may apply, the indemnifying Party shall promptly notify the Indemnitees, which shall then have the right to be represented in any such action or proceeding by separate counsel at their expense; provided that the indemnifying Party shall be responsible for payment of such expenses if the Indemnitees are ultimately determined to be entitled to indemnification from the indemnifying Party for the matters to which the indemnifying Party notified the Indemnitees that such exception(s) may apply.

11.7 Limitation of Liability. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES, EXCEPT AS A RESULT OF A PARTY’S WILLFUL MISCONDUCT OR A BREACH OF SECTION 7.6 (ALNYLAM TERRITORY RIGHT OF FIRST NEGOTIATION), SECTION 9 (CONFIDENTIALITY AND PUBLICATION), OR SECTION 10.5.1 (EXCLUSIVITY). NOTHING IN THIS SECTION 11.7 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY. NOTWITHSTANDING THE FOREGOING, ALNYLAM SHALL NOT BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF ANY BREACH OF SECTION 7.6 (ALNYLAM TERRITORY RIGHT OF FIRST NEGOTIATION) UNLESS GENZYME BRINGS AN ACTION SEEKING SUCH DAMAGES WITHIN SIX (6) MONTHS AFTER THE EARLIER OF THE DATE ON WHICH THE TRANSACTION BETWEEN ALNYLAM AND A THIRD PARTY ENTERED INTO IN BREACH OF SECTION 7.6 FIRST BECOMES PUBLICLY KNOWN OR THE DATE ON WHICH ALNYLAM NOTIFIES GENZYME OF SUCH TRANSACTION.

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11.8 Insurance. Each Party shall maintain insurance during the Term and for a period of at least [**] years after the last commercial sale of any Licensed Product under this Agreement, with a reputable, solvent insurer in an amount appropriate for its business and products of the type that are the subject of this Agreement, and for its obligations under this Agreement. Specifically, each Party shall maintain product liability insurance and clinical trial liability insurance with limits of at least [**] U.S. Dollars ($[**]) per occurrence and in annual aggregate. Upon request, each Party shall provide the other Party with evidence of the existence and maintenance of such insurance coverage.

12. INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

12.1 Inventorship. Inventorship for inventions and discoveries first made during the course of the performance of activities pursuant to this Agreement shall be determined in accordance with United States patent Laws for determining inventorship.

12.2 Ownership. Alnylam shall own the entire right, title and interest in and to all inventions and discoveries (and Patent Rights claiming patentable inventions therein) first made or discovered solely by employees or consultants of Alnylam or acquired solely by Alnylam in the course of conducting the Collaboration. Genzyme shall own the entire right, title and interest in and to all inventions and discoveries (and Patent Rights claiming patentable inventions therein) first made or discovered solely by employees or consultants of Genzyme or acquired solely by Genzyme in the course of conducting the Collaboration. The Parties shall jointly own any inventions and discoveries (and Patent Rights claiming patentable inventions therein) first made or discovered jointly in the course of conducting the Collaboration.

12.3 Prosecution and Maintenance of Patent Rights.

12.3.1 Genzyme Technology.

(a) Subject to Section 12.3.1(b) Genzyme has the sole responsibility to, at Genzyme’s discretion, file, prosecute, and maintain (including the defense of any interference or opposition proceedings), all Patent Rights comprising Genzyme Technology (other than Joint Collaboration IP), in Genzyme’s name.

(b) In the event that Genzyme elects not to seek or continue to seek or maintain patent protection on any Genzyme Collaboration IP in the Alnylam Territory, subject to the terms and conditions of any applicable Genzyme In-License, Alnylam shall have the right (but not the obligation), at its expense, to seek, prosecute and maintain in any country patent protection on such Genzyme Collaboration IP in the name of Genzyme. Genzyme shall use Commercially Reasonable Efforts to make available to Alnylam its authorized attorneys, agents or representatives, such of its employees as are reasonably necessary to assist Alnylam in obtaining and maintaining the patent protection described under this Section 12.3.1(b). Genzyme shall sign or use Commercially Reasonable Efforts to have signed all legal documents necessary to file and prosecute such patent applications or to obtain or maintain such patents.

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12.3.2 Alnylam Technology.

(a) Subject to Section 12.3.2(c), Alnylam has the sole responsibility to, at Alnylam’s discretion, file, conduct prosecution, and maintain (including the defense of any interference or opposition proceedings), all Patent Rights comprising Alnylam Technology (other than Joint Collaboration IP), in Alnylam’s name. Alnylam agrees to use Commercially Reasonable Efforts to prosecute and maintain the Alnylam Patents in the Genzyme Territory.

(b) Notwithstanding the foregoing Section 12.3.2(a), Alnylam shall consult with Genzyme on the preparation, filing, prosecution, and maintenance of all Alnylam Product-Specific Patents in the Genzyme Territory and the Alnylam Territory. Alnylam shall furnish Genzyme with copies of proposed filings and documents received from or filed with the relevant patent offices with respect to Alnylam Product-Specific Patents and such other documents directly related to the prosecution and maintenance of Alnylam Product-Specific Patents reasonably necessary for Genzyme to exercise its rights under this Section 12.3.112.3.1(b), and as applicable in sufficient time prior to filing such document or making any payment due thereunder to allow for review and comment by Genzyme and shall consider in good faith timely comments from Genzyme thereon. Furthermore, Alnylam shall provide Genzyme with copies of documents received from or filed with the relevant national patent offices with respect to the filing, prosecution, and maintenance of Alnylam Core Technology Patents in the Genzyme Territory within a reasonable time after the filing of such documents.

(c) In the event that Alnylam elects not to seek or continue to seek or maintain patent protection on any Alnylam Product-Specific Patent in the Genzyme Territory or the Alnylam Territory, subject to the terms and conditions of any applicable Alnylam In-License, Genzyme shall have the right (but not the obligation), at its expense, to seek, prosecute and maintain in any country patent protection on such Alnylam Product-Specific Patent in the Genzyme Territory. If Genzyme exercises such right, Alnylam shall thereafter and hereby does assign all right, title and interest in and to such Patent Rights to Genzyme. Alnylam shall use Commercially Reasonable Efforts to make available to Genzyme its authorized attorneys, agents or representatives, such of its employees as are reasonably necessary to assist Genzyme in obtaining and maintaining the patent protection described under this Section 12.3.2(b). Alnylam shall sign or use Commercially Reasonable Efforts to have signed all legal documents necessary to file and prosecute such patent applications or to obtain or maintain such patents.

(d) Alnylam shall, as provided in Section 12.3.2(b), consult with Genzyme prior to its filing of any patent application which would, if patented, be included in the definition of Alnylam Product-Specific Patents. Furthermore, (a) promptly after filing, any provisional or non-provisional patent application that is included in Alnylam Product Specific Patents and (b) promptly after publication, any non-provisional patent application that is included in the Alnylam Core Technology Patents that Cover a Licensed Product or an siRNA Product that Alnylam has identified to Genzyme as a potential Improvement Product, Alnylam shall promptly provide a copy of such patent application to Genzyme. All information provided by the Alnylam under this Section 12.3.3 will be deemed to be Confidential Information of Alnylam and maintained in accordance with Section 9.

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12.3.3 Joint Collaboration IP.

(a) Alnylam shall have the first right to, at Alnylam’s discretion, file, prosecute and maintain (including the defense of any interference or opposition proceedings), all Patent Rights comprising Joint Collaboration IP, in the names of both Alnylam and Genzyme. Alnylam shall provide Genzyme an opportunity to review and comment on material documents related to such filing, prosecution and maintenance in accordance with Section 12.3.4, which comments Alnylam will consider in good faith. Each Party shall sign, or use Commercially Reasonable Efforts to have signed, all legal documents necessary to file and prosecute patent applications or to obtain or maintain patents in respect of such Joint Collaboration IP, at its own cost.

(b) Notwithstanding the foregoing Section 12.3.3(a), Alnylam shall consult with Genzyme on the preparation, filing, prosecution, and maintenance of all Patent Rights included within the Joint Collaboration IP to be filed or pending in the Genzyme Territory. Alnylam shall furnish Genzyme with copies of documents relevant to such preparation, filing, prosecution, and maintenance in sufficient time prior to filing such document or making any payment due thereunder to allow for review and comment by Genzyme and shall consider in good faith timely comments from Genzyme thereon.

(c) In the event that Alnylam elects not to file or continue to prosecute or maintain patent protection on any Joint Collaboration IP, Genzyme shall have the right (but not the obligation) to file, prosecute and maintain Patent Rights comprising Joint Collaboration IP in the names of both Alnylam and Genzyme. If Genzyme exercises such right, Alnylam shall use Commercially Reasonable Efforts to make available to Genzyme its authorized attorneys, agents or representatives, such of its employees as are reasonably necessary to assist Genzyme in obtaining and maintaining the patent protection described under this Section 12.3.3(c). Alnylam shall sign or use Commercially Reasonable Efforts to have signed all legal documents necessary to file and prosecute such patent applications or to obtain or maintain such patents.

(d) The Parties shall share equally the out-of-pocket patent filing, prosecution and maintenance expenses incurred with respect to Patent Rights comprising Joint Collaboration IP.

12.3.4 Cooperation. Each Party hereby agrees: (a) to make its employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent prosecution; (b) to provide the other Party with copies of all material correspondence pertaining to prosecution with the patent offices; (c) to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to Patent Rights licensed under this Agreement; and (d) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the prosecution and maintenance of the other Party’s patent applications.

12.4 Third Party Infringement.

12.4.1 Notices. Each Party shall promptly report in writing to the other Party any (a) known or suspected infringement of any Alnylam Technology, Genzyme Technology or Joint Collaboration IP or (b) unauthorized use or misappropriation of any Confidential Information or

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Know-How of a Party by a Third Party of which it becomes aware, in each case to the extent such infringing, unauthorized or misappropriating activities involve, as to a Licensed Product, a competing product in the Field (“Competitive Infringement”), and shall provide the other Party with all available evidence of such infringement, unauthorized use or misappropriation.

12.4.2 Rights to Enforce.

(a) Genzyme Technology. Subject to the provisions of any In-License, Genzyme shall have the sole and exclusive right to initiate an infringement or other appropriate suit anywhere in the world against any Third Party as to any infringement, or suspected infringement of, any Patent Rights, or of any use or suspected use without proper authorization of any Know-How, comprising Genzyme Patent Rights, Genzyme Know-How, or Genzyme Collaboration IP. Genzyme will consider in good faith any request from Alnylam to initiate an infringement or other appropriate suit against any Third Party with respect to Competitive Infringement in the Alnylam Territory of Genzyme Patent Rights, Genzyme Know-How or Genzyme Collaboration IP licensed to Alnylam under Section 7, however Genzyme shall not be required to initiate any such suit or permit Alnylam to initiate any such suit.

(b) Alnylam Technology. Subject to the provisions of any In-License, Genzyme shall have the first right to initiate an infringement or other appropriate suit anywhere in the world against any Third Party with respect to any Competitive Infringement in the Genzyme Territory of any Alnylam Product-Specific Patent or Joint Collaboration IP, or, with Alnylam’s prior written consent, Alnylam Core Technology Patent or Alnylam Know-How. Alnylam will consider in good faith any request from Genzyme to initiate an infringement or other appropriate suit against any Third Party with respect to a Competitive Infringement in the Genzyme Territory of any Alnylam Core Technology Patent; provided, however, that Alnylam shall not be required to initiate any such suit or permit Genzyme to initiate any such suit.

(c) Step-In Right.

(i) If within [**] days (or such shorter period of time as required by applicable Law to avoid loss of material enforcement rights) after Genzyme’s receipt of a notice of a Competitive Infringement with respect to any Alnylam Product-Specific Patent or Joint Collaboration IP, Genzyme does not take any action as described in Section 12.4.2(b) and permitted hereunder against such Competitive Infringement in the Genzyme Territory, Alnylam may in its sole discretion, bring and control any legal action in connection therewith at its sole expense.

(ii) If (A) there are no Alnylam Product-Specific Patents or Patent Rights included in Joint Collaboration IP that can be asserted against a Competitive Infringement in the Genzyme Territory, (B) there are Alnylam Core Technology Patent(s) that can reasonably be asserted, but Alnylam refuses to either permit Genzyme to assert or itself assert at least one of such Alnylam Core Technology Patent(s) that can reasonably be asserted against a Competitive Infringement in the Genzyme Territory and (C) Genzyme and Alnylam are unable to stop the

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Competitive Infringement through enforcement of any other Patent Rights or Know-How Controlled by either Party, then the royalties to be paid by Genzyme to Alnylam pursuant to Section 8.3 with respect to the applicable Licensed Product shall be reduced throughout the Genzyme Territory as specified in Section 8.3.3 (regardless of whether any Alnylam Patent or Patent Right included in the Joint Collaboration IP Covers the Licensed Product) during the period after the conditions in the foregoing clauses (A), (B) and (C) exist when such Competitive Infringement continues.

12.4.3 Procedures; Expenses and Recoveries. The Party having the right to initiate any infringement suit under Section 12.4.2 above shall have the sole and exclusive right to select counsel for any such suit and shall pay all expenses of the suit, including attorneys’ fees and court costs and reimbursement of the other Party’s reasonable Out-of-Pocket expense in rendering assistance requested by the initiating Party. If required under applicable Law in order for the initiating Party to initiate and/or maintain such suit, or if either Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case, the other Party shall join as a party to the suit and will execute and cause its Affiliates to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action. In addition, at the initiating Party’s request, the other Party shall provide reasonable assistance to the initiating Party in connection with an infringement suit at no charge to the initiating Party except for reimbursement by the initiating Party of reasonable Out-of-Pocket expenses incurred in rendering such assistance. The non-initiating Party shall have the right to participate and be represented in any such suit by its own counsel at its own expense. If the Parties obtain from a Third Party, in connection with such suit, any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation), such amounts shall be allocated in all cases as follows:

(i) first, to reimburse each Party for all expenses of the suit incurred by the Parties, including attorneys’ fees and disbursements, court costs and other litigation expenses;

(ii) second, [**] percent ([**]%) of the balance to be paid to the Party initiating the suit; and

(iii) third, the remainder to the other Party.

Notwithstanding the foregoing, in the event that Alnylam elects to itself assert an Alnylam Core Technology Patent against a Competitive Infringement in the Genzyme Territory, the Parties shall each be entitled to [**] percent ([**]%) of the balance of any recovery therefrom after reimbursement of expenses as described in clause (i) above.

12.5 Patent Term Extensions. Subject to the provisions of any Alnylam In-License, Alnylam shall use Commercially Reasonable Efforts to obtain all available supplementary protection certificates (“SPC”) and other extensions of Alnylam Product-Specific Patents in the Genzyme Territory. If more than one Alnylam Product-Specific Patent is eligible for extension or patent term restoration in the Genzyme Territory, Genzyme will determine, in its sole discretion, a strategy that will be designed to maximize patent protection and commercial value for the Licensed Product, and the Parties, subject to the provisions of any In-License, will seek

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patent term extensions, restorations and SPCs for Alnylam Product-Specific Patents in the Genzyme Territory in accordance with that strategy. If Genzyme determines not to so file for any SPC for any Alnylam Product-Specific Patent in the Genzyme Territory, it will give notice of such determination to Alnylam at least [**] days prior to the date on which such a filing must be made or the right to do so is lost, and Alnylam will have the right to make such filing. Where required under national law, Alnylam will make the filings for such extensions, restorations and SPCs for Alnylam Product-Specific Patents in the Genzyme Territory as directed by Genzyme. Each Party will execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain any such extensions, restorations and SPCs for Alnylam Product-Specific Patents in the Genzyme Territory.

12.6 Common Interest. All information exchanged between the Parties representatives regarding the preparation, filing, prosecution, maintenance, or enforcement of the Patents Rights under this Section 12 will be deemed Confidential Information. In addition, the Parties acknowledge and agree that, with regard to such preparation, filing, prosecution, maintenance, and enforcement of the Patents Rights under this Section 12, the interests of the Parties as collaborators and licensor and licensee are to obtain the strongest patent protection possible, and as such, are aligned and are legal in nature. The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning the Patents Rights under this Section 12, including privilege under the common interest doctrine and similar or related doctrines.

12.7 Trademarks.

(a) Each Party has the right to use any trademark it owns or controls for Licensed Products in its Territory at its sole discretion, and each Party and its Affiliates shall retain all right, title and interest in and to its and their respective corporate names and logos.

(b) Genzyme will develop and propose, and the JSC shall review and comment on, one or more Product Trademark(s) for use by Genzyme and its Related Parties throughout the Genzyme Territory. Such Product Trademark(s) considered by the JSC may include, in Genzyme’s sole discretion, the Product Trademark(s) developed and/or used by Alnylam with respect to the Commercialization of Licensed Products in the Alnylam Territory (the “Alnylam Trademarks”), but may not include other trademarks owned or controlled by Alnylam. Any Product Trademark(s) (other than the Alnylam Trademarks) that are used by Genzyme to promote and sell Licensed Products in the Genzyme Territory are hereinafter referred to as the “Genzyme Trademarks.” Alnylam (or its Related Parties, as appropriate) shall own all rights to Alnylam Trademarks, and all goodwill associated therewith, throughout the Alnylam Territory and the Genzyme Territory. Genzyme (or its Related Parties, as appropriate) shall own all rights to Genzyme Trademarks and all goodwill associated therewith, throughout the Genzyme Territory. Alnylam shall also own rights to any Internet domain names incorporating the applicable Alnylam Trademarks or any variation or part of such Alnylam Trademarks used as its URL address or any part of such address; and Genzyme shall also own rights to any Internet domain names incorporating the applicable Genzyme Trademarks or any variation or part of such Genzyme Trademarks used as its URL address or any part of such address.

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(c) If Genzyme determines to use Alnylam Trademarks to promote and sell any Licensed Product in the Genzyme Territory, then Alnylam and Genzyme shall enter into a separate trademark license agreement containing commercially reasonable and customary terms pursuant to which Alnylam will grant Genzyme an exclusive, royalty-free license to use the applicable Alnylam Trademark(s) to Commercialize Licensed Products in the Genzyme Territory.

(d) In the event either Party becomes aware of any infringement of any Product Trademark by a Third Party, such Party shall promptly notify the other Party and the Parties shall consult with each other and jointly determine the best way to prevent such infringement, including by the institution of legal proceedings against such Third Party.

(e) For the avoidance of doubt, neither Party shall have any right to use the other Party’s or the other Party’s Affiliates’ corporate names or logos in connection with Commercialization of Licensed Products.

12.8 Cooperative Research and Technology (CREATE) Act Acknowledgment. It is the intention of the Parties that this Agreement is a “joint research agreement” as that phrase is defined in Section 35 U.S.C. 103(c).

13. TERM AND TERMINATION

13.1 Term. This Agreement shall be effective as of the Effective Date and, unless terminated earlier pursuant to Section 13.2, this Agreement shall continue in effect on a Licensed Product-by-Licensed Product and country-by-country basis until expiration of the last Royalty Term to expire under this Agreement (“Term”). Upon expiration of the Term, all licenses of the Parties under Section 7 then in effect shall become fully paid-up, perpetual, exclusive licenses.

13.2 Termination Rights.

13.2.1 Termination for Convenience. Genzyme shall have the right to terminate this Agreement in its entirety at any time after the Effective Date on six (6) months prior written notice to Alnylam.

13.2.2 Termination for Cause. This Agreement may be terminated at any time during the Term upon written notice by either Party if the other Party is in material breach of its obligations hereunder and has not cured such breach within [**] days in the case of a payment breach, or within [**] days in the case of all other breaches, after notice requesting cure of the breach; provided, however, that if any breach other than a payment breach is not reasonably curable within [**] days and if a Party is making a bona fide effort to cure such breach, such termination shall be delayed for a time period to be agreed by both Parties, not to exceed an additional [**] days, in order to permit such Party a reasonable period of time to cure such breach; provided, further, that in the event that the breach relates to a dispute between the Parties regarding Genzyme’s obligations to use Commercially Reasonable Efforts in Developing or Commercializing the Licensed Products and Genzyme disputes whether it has breached such obligation or whether such breach gives Alnylam the right to terminate this agreement and initiates a legal action against Alnylam to resolve such dispute within the foregoing [**] day cure

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period, then this Agreement shall not terminate during the pendency of such legal action; provided that if Genzyme is found in an unappealable decision by a court of competent jurisdiction or an appealable decision of a court of competent jurisdiction that has not been appealed in the time allowed for an appeal in such legal action to have materially breached this Agreement or if Genzyme admits in such legal action or settlement thereof that it has materially breached this Agreement then this Agreement shall terminate immediately following the Parties’ receipt of such decision or immediately following such admission, as applicable.

13.2.3 No First Phase II Success. Genzyme may also terminate this Agreement in accordance with Section 8.2(a)(i).

13.2.4 Challenges of Patent Rights. If during the Term Genzyme or any of its Affiliates (a) commences or participates in any action or proceeding (including any patent opposition or re-examination proceeding), or otherwise asserts any claim, challenging or denying the validity or enforceability of any Alnylam Patent or any claim thereof or (b) actively assists any other person or entity in bringing or prosecuting any action or proceeding (including any patent opposition or re-examination proceeding) challenging or denying the validity or enforceability of any of such Patent Rights or any claim thereof (each of (a) and (b), a “Patent Challenge”), then, to the extent permitted by the applicable Laws, Alnylam shall have the right, exercisable within [**] days following receipt of notice regarding such Patent Challenge, in its sole discretion, to give notice to Genzyme that Alnylam may terminate this Agreement ninety (90) days following such notice (or such longer period as Alnylam may designate in such notice), and, unless Genzyme or such Affiliate withdraws or causes to be withdrawn all such challenge(s) (or in the case of ex-parte proceedings, multi-party proceedings, or other Patent Challenges that Genzyme or Genzyme’s Affiliates do not have the power to unilaterally withdraw or cause to be withdrawn, Genzyme and Genzyme’s Affiliates cease actively assisting any other party to such Patent Challenge and, to the extent Genzyme or a Genzyme Affiliate is a party to such Patent Challenge, it withdraws from such Patent Challenge) within such ninety (90)-day period, Alnylam will have the right to terminate this Agreement by providing written notice thereof to Genzyme. The foregoing sentence shall not apply (i) with respect to any Alnylam Patent that Alnylam first asserts against Genzyme or any of its Affiliates where the Patent Challenge is made in defense of such assertion, (ii) with respect to any Patent Challenge commenced by a Third Party that after the Effective Date acquires or is acquired by Genzyme or its Affiliates or its or their business or assets, whether by stock purchase, merger, asset purchase or otherwise, but only with respect to Patent Challenges commenced prior to the closing of such acquisition.

13.2.5 Abandonment of Development. At any time on or after the tenth (10^th) anniversary of the Effective Date, either Party may terminate this Agreement in its entirety if (a) no Licensed Product has received Regulatory Approval anywhere in the Genzyme Territory, (b) no Licensed Product is being Developed in the Genzyme Territory, (c) no Genzyme Territory Development Plan is in effect for any Licensed Product, provided that, if Genzyme provides Alnylam with a good faith Genzyme Territory Development Plan pursuant to Section 2.2.3 during the termination notice period set forth below in this Section 13.2.5, then the condition set forth in this clause (c) shall be deemed not satisfied at such time and the applicable termination notice shall be deemed not to have effect, and (d) the absence of Development in the Genzyme Territory or a good faith Genzyme Development Plan is not the result of a breach by the Party

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seeking to terminate this Agreement of its obligations under Section 2.4. In order to terminate this Agreement pursuant to this Section 13.2.5, the terminating Party must provide at least six (6) months’ prior written notice to the other Party referencing this Section 13.2.5 and specifying a termination date on or after the tenth (10^th) anniversary of the Effective Date; provided that. for a termination by Alnylam, such notice must also include an update regarding the current status of Alnylam’s development activities with respect to Licensed Products, Backup Compounds and Improvement Products.

13.3 Effect of Termination.

13.3.1 Termination by Genzyme for Alnylam Breach. Without limiting any other legal or equitable remedies that either Party may have, if this Agreement is terminated by Genzyme pursuant to Section 13.2.2, then:

(a) all license grants in this Agreement from either Party to the other shall immediately terminate; and

(b) Genzyme shall as promptly as practicable transfer to Alnylam or Alnylam’s designee (i) possession and ownership of all Regulatory Approvals and pricing and reimbursement approvals relating to the Development, Manufacture or Commercialization of the Licensed Product, and (ii) copies of all non-clinical and clinical data and material regulatory correspondence relating to the Licensed Products.

13.3.2 Termination by Alnylam for Genzyme Breach or by Genzyme for Convenience. Without limiting any other legal or equitable remedies that either Party may have, if this Agreement is terminated by Genzyme pursuant to Section 13.2.1 or 13.2.3 or by Alnylam under Section 13.2.2 or 13.2.4, then:

(a) the license grants to Alnylam in Section 7.2 shall survive and shall be expanded to include the Genzyme Territory,

(b) Genzyme shall as promptly as practicable transfer to Alnylam or Alnylam’s designee (i) possession and ownership of all governmental or regulatory correspondence, conversation logs, filings and approvals (including all Regulatory Approvals and pricing and reimbursement approvals) relating to the Development, Manufacture or Commercialization of the Licensed Product and all Genzyme Trademarks, (ii) copies of all data, reports, records and materials, and other sales and marketing related information in Genzyme’s possession or Control to the extent that such data, reports, records, materials or other information relate to the Development, Manufacture or Commercialization of the Licensed Product, including all non-clinical and clinical data relating to the Licensed Product, and customer lists and customer contact information and all adverse event data in Genzyme’s possession or Control; provided that Genzyme shall use Commercially Reasonable Efforts to obtain for Alnylam the right to access all such data, reports, records, materials, and other sales and marketing related information, and (iii) all records and materials in Genzyme’s possession or Control containing Confidential Information of Alnylam. Genzyme shall further appoint Alnylam as Genzyme’s and/or Genzyme’s Related Parties’ agent for all Licensed Product-related matters involving Regulatory Authorities in the Genzyme Territory until all Regulatory Approvals and other regulatory filings have been transferred to Alnylam or its designee,

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(c) if the effective date of termination is after First Commercial Sale, then Genzyme shall appoint Alnylam as its exclusive distributor of the Licensed Product in the Genzyme Territory and grant Alnylam the right to appoint sub-distributors, until such time as all Regulatory Approvals in the Genzyme Territory have been transferred to Alnylam or its designee,

(d) if Genzyme or its Related Parties are Manufacturing Finished Product, at Alnylam’s option, supply the Finished Product to Alnylam in the Genzyme Territory on terms no less favorable than those on which Genzyme supplied the Finished Product prior to such termination to its most favored distributor in the Genzyme Territory, until the earlier of (i) such time as all Regulatory Approvals in the Genzyme Territory have been transferred to Alnylam or its designee, Alnylam has obtained all necessary manufacturing approvals and Alnylam has procured or developed its own source of Finished Product supply or (ii) [**] months following the effective date of such termination,

(e) if Alnylam so requests, and to the extent permitted under Genzyme’s obligations to Third Parties at the time of termination, Genzyme shall transfer to Alnylam any Third Party agreements relating solely and exclusively to the Development, Manufacture or Commercialization of the Licensed Product to which Genzyme is a party, subject to any required consents of such Third Party, which Genzyme shall use Commercially Reasonable Efforts to obtain promptly,

(f) Genzyme shall promptly transfer and assign to Alnylam all of Genzyme’s and its Affiliates’ rights, title and interests in and to the Genzyme Trademark(s) (but not any Genzyme house marks or any trademark containing the word “Genzyme” owned by Genzyme and used for the Licensed Products in the Field in the Genzyme Territory) owned by Genzyme and used for the Licensed Products in the Field in the Genzyme Territory

(g) Genzyme shall transfer to Alnylam any inventory of Licensed Products Controlled by Genzyme or its Affiliates as of the termination date at the actual price paid by Genzyme for such supply,

(h) Genzyme shall provide any other assistance reasonably requested by Alnylam for the purpose of allowing Alnylam or its designee to proceed expeditiously with the Development, Manufacture and Commercialization of Licensed Products in the Genzyme Territory, and

(i) Genzyme shall execute all documents and take all such further actions as may be reasonably requested by Alnylam in order to give effect to the foregoing clauses.

13.3.3 Termination for Abandonment of Development. If this Agreement is terminated by either Party pursuant to Section 13.2.5, then the license granted to Alnylam under Section 7.2.2 shall survive and all other licenses granted in this Agreement from either Party to the other shall immediately terminate.

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13.4 Fundamental Breach of Alnylam’s Development Obligations. Without limiting Genzyme’s rights under Section 13.2.2 with respect to other material breaches, in the event that Alnylam commits a Fundamental Breach of its Development obligations under Section 2.4.2 and Genzyme does not terminate this Agreement for cause pursuant to Section 13.2.2, then Genzyme may elect to receive the following remedies for such Fundamental Breach:

13.4.1 Genzyme’s obligation to pay development milestone fees under Section 8.2 shall automatically terminate;

13.4.2 Genzyme will receive a credit, which Genzyme may offset against royalties due to Alnylam pursuant to Section 8.3, in an amount equal to [**] percent ([**]%) of all costs (i) incurred by Genzyme to Develop the Licensed Products for the Genzyme Territory that are in excess of the costs budgeted by Genzyme in connection with the Genzyme Territory Development Plan in effect at the time of Alnylam’s Fundamental Breach of Section 2.4.2 and (ii) are incurred by Genzyme as a direct consequence of Alnylam’s Fundamental Breach of Section 2.4.2;

13.4.3 Genzyme may, in its discretion, terminate any or all of the following provisions of this Agreement (or any subsection thereof): Section 2.3.3, Section 3.1.3, Section 4.1.3, Section 4.2, Section 4.3, Section 4.4, Section 4.5, and Section 5; and

13.4.4 Without limiting Genzyme’s remedies under this Agreement or otherwise with respect to breaches of Alnylam’s Development obligations under Section 2.4.2(a) other than Fundamental Breaches, if Genzyme elects to receive the remedies set forth in this Section 13.4, such remedies shall be Genzyme’s sole and exclusive remedies with respect to such Fundamental Breach and Genzyme shall have no right to seek any further remedies or damages against Alnylam and its Affiliates with respect to such Fundamental Breach by Alnylam of Section 2.4.2(a).

13.5 Effect of Expiration or Termination; Survival. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement prior to expiration or termination, including the obligation to pay royalties for the Licensed Product sold prior to such expiration or termination. The provisions of Sections 1, 9, 11 and 14 and Sections 10.4, 12.1, 12.2, 13.3, and 13.5 shall survive any expiration or termination of this Agreement. Sections 8.3.5 shall survive any expiration of this Agreement or any termination with respect to royalties accruing prior to such termination. Section 8.3.7 (Reports; Payment of Royalty) and Section 8.4 (Audits) will survive for so long as any royalties are due under this Agreement plus three (3) years. Except as otherwise set forth in this Section 13, upon termination or expiration of this Agreement all rights and obligations of the Parties under this Agreement cease.

14. MISCELLANEOUS

14.1 Assignment. Except as provided in this Section 14.1, this Agreement may not be assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the written consent of the other Party. However, either Party

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may, without the other Party’s written consent, assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate or to a party that acquires, by or otherwise in connection with, merger, sale of assets or otherwise, all or substantially all of the business of the assigning Party to which the subject matter of this Agreement relates. The assigning Party shall remain responsible for the performance by its assignee of this Agreement or any obligations hereunder so assigned. An assignment to an Affiliate shall terminate, and all rights so assigned shall revert to the assigning Party, if and when such Affiliate ceases to be an Affiliate of the assigning Party. Any purported assignment in violation of this Section 14.1 shall be void.

14.2 Governing Law. This Agreement shall be construed and the respective rights of the Parties determined in accordance with the substantive Laws of the Commonwealth of Massachusetts, notwithstanding any provisions of Massachusetts Law or any other Law governing conflicts of laws to the contrary, and the patent Laws of the relevant jurisdiction without reference to any rules of conflict of laws.

14.3 Jurisdiction. Each Party by its execution hereof, (a) hereby irrevocably submits to the jurisdiction of the United States District Court and state courts located in Boston, Massachusetts for the purpose of any dispute arising between the Parties in connection with this Agreement (each, an “Action”) and (b) hereby waives to the extent not prohibited by applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named court, that its property is exempt or immune from attachment or execution, that any such Action brought in the above-named court should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than the above-named court, or should be stayed by reason of the pendency of some other proceeding in any other court other than the above-named court, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such Action other than before the above-named court. Notwithstanding the previous sentence a Party may commence any Action in a court other than the above-named court solely for the purpose of enforcing an order or judgment issued by the above-named court.

14.4 Venue. Each Party agrees that for any Action between the Parties arising in whole or in part under or in connection with this Agreement, such Party bring Actions only in the state and federal courts of the United States of America located in Boston, Massachusetts and any appellate court having jurisdiction over appeals from such courts. Each Party further waives any claim and will not assert that venue should properly lie in any other location within the selected jurisdiction.

14.5 Entire Agreement; Amendments. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof, and supersedes all previous arrangements with respect to the subject matter hereof, whether written or oral. This Agreement (including the Schedules hereto) may be amended, or any term hereof modified, only by a written instrument duly-executed by authorized representatives of both Parties hereto.

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14.6 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalid, illegal or unenforceable of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.

14.7 Headings. The captions to the Sections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Sections hereof.

14.8 Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

14.9 Interpretation. Except where the context expressly requires otherwise, (a) the use of any gender herein shall be deemed to encompass references to either or both genders, and the use of the singular shall be deemed to include the plural (and vice versa), (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation” and shall not be interpreted to limit the provision to which it relates, (c) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (d) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (e) any reference herein to any Person shall be construed to include the Person’s successors and assigns, (f) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Sections, Exhibits or Schedules shall be construed to refer to Sections, Exhibits or Schedules of this Agreement, and references to this Agreement include all Exhibits and Schedules hereto, (h) the word “notice” means notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (i) provisions that require that a Party, the Parties or any committee hereunder “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, and (k) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or.”

14.10 No Implied Waivers; Rights Cumulative. No failure on the part of Alnylam or Genzyme to exercise, and no delay in exercising, any right, power, remedy or privilege under

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this Agreement, or provided by statute or at Law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

14.11 Notices. All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Alnylam, to:	Alnylam Pharmaceuticals, Inc. 300 Third Street Cambridge, MA 02142 Attention: Vice President - Legal Facsimile No.: (617) 551-8101
With a copy to:	WilmerHale LLP 60 State Street Boston, MA 02109 Attention: Steven D. Barrett, Esq. Facsimile No.: (617) 526-5000
If to Genzyme, to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: President of Rare Disease Facsimile No.: (617) 374-2424
With a copy to:	Genzyme Corporation 500 Kendall Street Cambridge, Massachusetts 02142 Attention: General Counsel Facsimile: (617) 252-7553
And to:	Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, MA 02199-3600 Attention: David M. McIntosh, Esq. Facsimile No.: (617) 235-0507

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice shall be deemed to have been

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given: (a) when delivered if personally delivered or sent by facsimile on a business day (or if delivered or sent on a non-business day, then on the next business day); (b) on receipt if sent by overnight courier; and/or (c) on receipt if sent by mail.

14.12 Compliance with Export Regulations. Neither Party shall export any technology licensed to it by the other Party under this Agreement except in compliance with U.S. export Laws and regulations.

14.13 Force Majeure. Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement to the extent that such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, potentially including embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, or other acts of God. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.

14.14 Independent Contractors. It is expressly agreed that Alnylam and Genzyme shall be independent contractors and that the relationship between Alnylam and Genzyme shall not constitute a partnership, joint venture or agency. Alnylam shall not have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on Genzyme, without the prior written consent of Genzyme, and Genzyme shall not have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on Alnylam without the prior written consent of Alnylam.

14.15 Counterparts. The Agreement may be executed in two or more counterparts, including by facsimile or PDF signature pages, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

14.16 Performance by Affiliates.

14.16.1 Each Party acknowledges and accepts that the other Party may exercise its rights and perform its obligations under this Agreement either directly or through one or more of its Affiliates. A Party’s Affiliates will have the benefit of all rights (including all licenses) of such Party under this Agreement. Accordingly, in this Agreement “Genzyme” will be interpreted to mean “Genzyme and/or its Affiliates” and “Alnylam” will be interpreted to mean “Alnylam and/or its Affiliates” where necessary to give each Party’s Affiliates the benefit of the rights provided to such Party in this Agreement; provided, however, that in any event each Party will remain responsible for the acts and omissions, including financial liabilities, of its Affiliates.

14.16.2 Notwithstanding Section 14.16.1 or anything to the contrary in this Agreement, in the event of (a) an acquisition of a Party or its business or assets by a Third Party (an “Acquirer”) or (b) an acquisition by a Party of the business or assets of a Third Party that includes any program(s) of the acquired Third Party that, but for this Section 14.16.2, would violate Section 10.5.1, which program(s) represent less than [**] percent ([**]%) of the value of

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the acquired business or assets (an “Acquired Business”), in each case of (a) and (b) whether by merger, asset purchase or otherwise, then (i) as to any such Acquirer, the non-acquired Party shall not obtain rights, licenses, options or access to any Patent Rights, Know-How or products that are held by the Acquirer or any Affiliate of the Acquirer that becomes an Affiliate of the acquired Party as a result of such acquisition and that were not generated through any use or access to the Know-How or Patent Rights of the acquired Party and are not used by the acquired Party in connection with a Licensed Product; and (ii) as to any such Acquirer or Acquired Business, the Acquirer or Acquired Business and any Affiliate of the Acquirer or Acquired Business that becomes an Affiliate of the acquired or acquiring Party as a result of such acquisition shall not be subject to the restrictions in Section 10.5.1 as to programs for products of that such Acquirer, Acquired Business or Affiliate of such Acquirer or Acquired Business in existence prior to the closing date of such acquisition, or for the subsequent development and commercialization of such products following the closing date of such acquisition.

14.17 Binding Effect; No Third Party Beneficiaries. As of the Effective Date, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and permitted assigns. Except as expressly set forth in this Agreement, no person or entity other than the Parties and their respective Affiliates and permitted assignees hereunder shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

GENZYME CORPORATION		ALNYLAM PHARMACEUTICALS, INC.
BY:	/s/ David Meeker	BY:	/s/ John M. Maraganore
NAME:	David Meeker, M.D.	NAME:	John M. Maraganore, Ph.D
TITLE:	President and Chief Executive Officer	TITLE:	Chief Executive Officer

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Signature page to License and Collaboration Agreement

by and between Alnylam Pharmaceuticals, Inc. and Genzyme Corporation,

dated as of October 18, 2012

SCHEDULE 1.4

ADDITIONAL ALNYLAM IN-LICENSES

• The License Agreement between Cancer Research Technology Ltd. and Alnylam, dated July 18, 2003.

• The agreement between the Board of Trustees of the Leland Stanford Junior University and Alnylam, dated September 17, 2003.

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SCHEDULE 1.7

ALN-TTR02

ALN-TTR02 is an investigational ribonucleic acid interference (RNAi) therapeutic agent that is comprised of active pharmaceutical ingredient ALN-[**] (see sequence & diagram below), a synthetic small interfering RNA (siRNA) that is targeted to the TTR messenger RNA (mRNA) formulated in the AF-011 lipid nanoparticle (see description below).

[**]

AF-011 lipid nanoparticle Description:

AF-011 is a multi-component particle comprised of:

MC3/DSPC/Cholesterol/PEG-DMG (descriptions & diagrams below) in the following ratio:

50%/10%/38.5%/1.5%

MC3

(6Z,9Z,28Z,31Z)-heptatriaconta-6,9,28,31-tetraen-19-yl 4-(dimethylamino)butanoate

CAS Name: (10Z,13Z)-1-(9Z,12Z)-9,12-octadecadien-1-yl-10,13-nonadecadien-1-yl-4 (dimethylamino)-butanoic acid ester

CAS Registry Number: 1224606-06-7

DSPC

1,2-Distearoyl-sn-glycero-3-phosphatidylcholine

CAS Name: 1,2-Dioctadecanoyl-sn-glycero-3-phosphocholine

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CAS Registry Number: 816-94-4

Cholesterol

CAS Name: (3b)-Cholest-5-en-3-ol

CAS Registry Number: 57-88-5

PEG-DMG (mPEG2000-DMG; mPEG-DOMG)

(R)-2,3-bis(tetradecyloxy)propyl 1-(methoxy poly(ethylene glycol)2000)propylcarbamate

a-[3-[[[(2R)-2,3-Bis(tetradecyloxy)propoxy]carbonyl]amino]propyl]-w-(2-methoxyethoxy)- poly(oxy-1,2-ethanediyl) polymer

CAS Formula: (C₂ H₄ O)_n C₃₈ H₇₇ N O₆

CAS Registry Number: 1301751-57-4

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SCHEDULE 1.8

ALN-TTRsc

ALN-TTRsc is an investigational ribonucleic acid interference (RNAi) therapeutic agent that is comprised of active pharmaceutical ingredient ALN-[**] (see sequence & diagram below), a synthetic small interfering RNA (siRNA) that is targeted to the TTR messenger RNA (mRNA) and covalently linked on the 3’ end of the sense strand to a triantennary N-acetylgalactosamine (GalNAc₃) ligand (see diagram below).

[**]

[**]

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SCHEDULE 1.9

ALNYLAM CORE TECHNOLOGY PATENTS

See attached.

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1.9 Linker-Conjugate

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1.9 Manufacturing

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SCHEDULE 1.16

ALNYLAM PRODUCT-SPECIFIC PATENTS

See attached.

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SCHEDULE 1.47

EXISTING ALNYLAM IN-LICENSES

A. As of the Effective Date, Existing Alnylam In-Licenses includes the following Third Party agreements:

1. Amended and Restated Strategic Collaboration and License Agreement between Isis Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc., dated April 28, 2009, as amended by letter agreement dated August     , 2012.

2. Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Pharmaceuticals, Inc., dated December 20, 2002, as amended by Amendment dated July 2, 2003, the Requirements Amendment effective June 15, 2005, the Waiver Amendment effective August 9, 2007 and the Amendment to the Alnylam Co-Exclusive License Agreement dated as of March 14, 2011, by and between Alnylam Pharmaceuticals, Inc., on the one hand, and Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology and Max-Planck-Innovation GmbH, on the other hand; and Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Europe AG (formerly Ribopharma AG), dated June 30, 2003.

3. Amended and Restated Cross-License Agreement between Alnylam Pharmaceuticals, Inc. and Protiva Biotherapeutics Inc., effective May 30, 2008, as amended by Amendment No. 1 effective October 25, 2010.

4. Amended and Restated License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation and Alnylam Pharmaceuticals, Inc., effective May 30, 2008.

5. Sponsored Research Agreement among Alnylam Pharmaceuticals, Inc., The University of British Columbia, and AlCana Technologies, Inc., dated July 27, 2009, as amended by Amendment No. 1 dated July 27, 2011, and as supplemented by the Supplemental Agreement among Alnylam Pharmaceuticals, Inc., Tekmira Pharmaceuticals Corporation, Protiva Biotherapeutics Inc., The University of British Columbia, and AlCana Technologies, Inc., effective July 27, 2009.

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SCHEDULE 1.52

FIRST PHASE II SUCCESS OBJECTIVES

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SCHEDULE 2.2.1

GLOBAL DEVELOPMENT STRATEGY

See attached.

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SCHEDULE 2.2.2

ALNYLAM TERRITORY DEVELOPMENT PLAN

See attached.

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SCHEDULE 2.2.3

GENZYME TERRITORY DEVELOPMENT PLAN

(To be attached when developed pursuant to Section 2.2.3.)

SCHEDULE 6.1

SUPPLY AGREEMENT TERMS

1. Overview. Both the Clinical Supply Agreement and the Commercial Supply Agreement will provide for the manufacture and supply of Bulk Drug Substance, Bulk Drug Product, and/or Finished Product forms of Licensed Products (each a “Product” and collectively “Products”) on commercially reasonable terms customary to Third Party contract manufacturing organization supply agreements for pharmaceuticals that are consistent with the principles set forth below. Genzyme may elect, on the terms to be set forth in one or more Clinical Supply Agreements and one or more Commercial Supply Agreements to be negotiated by the Parties, which shall be consistent with the principles set forth in the Agreement and in this Schedule 6.1, for Alnylam to supply, either itself or through an Affiliate or Third Party manufacturer (including, in cases where a Third Party manufacturer is being used, facilitating arrangements where Genzyme may order directly from the Third Party manufacturer in lieu of ordering through Alnylam, if appropriate), any Product that Alnylam is manufacturing or having manufactured for the Alnylam Territory. Genzyme may also elect for Alnylam to provide technology transfer on the terms set forth in Section 6.2 of the Agreement.

a. “Bulk Drug Substance” means an siRNA Product in bulk form manufactured for use as an active pharmaceutical ingredient in a Licensed Product. For the avoidance of doubt, (a) as to ALN-TTR02, Bulk Drug Substance is siRNA duplex AD [**], which may be separately manufactured and therefore may be separately supplied to Genzyme by Alnylam under a Supply Agreement, and (b) as to ALN-TTRsc, Bulk Drug Substance is siRNA duplex AD [**] conjugated to a GalNAc Conjugate.

b. “Bulk Drug Product” means a formulated Bulk Drug Substance, in bulk form prior to filling and finishing. For the avoidance of doubt, (a) as to ALN-TTR02, Bulk Drug Product is siRNA duplex AD [**] formulated in an AF11 Lipid Nanoparticle Formulation, and (b) as to ALN-TTRsc, Bulk Drug Product is siRNA Duplex AD [**] conjugated to a Ga1NAc Conjugate, in water for injection.

c. “Finished Product” means a Licensed Product in Bulk Drug Product form, filled into unit packages including final labeling and packaging.

2. Assumptions. This Schedule 6.1 is based on the assumption that Alnylam will be performing or managing the manufacture and supply of Product for use and sale throughout the Alnylam Territory. If Alnylam is not sourcing a Product for the Alnylam Territory, Alnylam shall not be obligated 2to establish a supply chain solely for Genzyme’s benefit, but in such case Alnylam will cooperate with Genzyme’s efforts to establish its own supply chain as set forth in Section 6.2 of the Agreement. The Parties also assume that Alnylam’s Cost of Goods for Bulk Drug Product will not be greater than

$[**] per gram from [**] and not greater than $[**] per gram from [**] and thereafter. If these assumptions are not correct, the Parties will re-evaluate the applicable terms set forth herein. Notwithstanding the foregoing, Alnylam makes no guarantee as to Alnylam’s Cost of Goods and, unless otherwise agreed by the Parties in an applicable Clinical Supply Agreement or Commercial Supply Agreement, the Supply Price shall be determined as described below. For the avoidance of doubt, the intent of the Parties is that any Clinical Supply Agreement or Commercial Supply Agreement that the Parties enter into in which Alnylam may be obligated to supply Genzyme will be structured so that Alnylam does not bear any liability to Genzyme for a Third Party manufacturer’s failure to meet its obligations beyond the actual amounts (net of Alnylam’s enforcement costs), if any, recovered by Alnylam from such Third Party for such failure.

3. Supply of Licensed Product.

a. Supply Obligation. At Genzyme’s election, Alnylam will supply Bulk Drug Substance, Bulk Drug Product, and/or Finished Product to Genzyme in accordance with the Supply Agreement(s) to be negotiated by the Parties consistent with the principles set forth in this Schedule 6.1.

b. Supply Price.

i. Genzyme shall pay to Alnylam a per unit “Supply Price” with respect to supply of Product, which Supply Price will be equivalent to the following:

1. Product that Alnylam Does Not Manufacture Itself. Any Product manufactured by Alnylam’s Third Party manufacturers and supplied by Alnylam to Genzyme will be supplied at a price equal to the Product’s Cost of Goods plus [**]%.

2. Product that Alnylam Does Manufacture Itself. Any Product manufactured by Alnylam or its Affiliates and supplied to Genzyme will be supplied at a price equal to the Product’s Cost of Goods plus [**]%.

Agreement Mechanics. The Supply Agreement will contain a mechanism by which the Parties determine and agree upon a per unit Supply Price for each Product for the upcoming Calendar Year (“Estimated Supply Price”). At the end of each Calendar Year, the Parties will compare the Estimated Supply Prices with the Supply Prices as determined by Alnylam’s actual Cost of Goods for the Products during such Calendar Year (the “Actual Supply Price”). Genzyme or Alnylam, as applicable, will thereafter make a payment to the other in order to reconcile the Estimated Supply Price paid with the Actual Supply Price during that Calendar Year. The Supply Agreement will also contain appropriate audit provisions, including to verify the amounts and calculations described in this Section.

ii. “Cost of Goods” means, with respect to the supply of Product, the reasonable internal and external costs Alnylam and its Affiliates incurred

in Manufacturing or having Manufactured such Product, including: (a) to the extent that such Product is Manufactured by Alnylam or its Affiliates, the fully allocated cost of Manufacture of such Product, consisting of direct material and direct labor costs, plus Manufacturing overhead attributable to such Product (including facilities start-up costs, all directly incurred Manufacturing variances and a reasonable allocation of related Manufacturing administrative and facilities costs and depreciation for such Product, but excluding corporate administrative overhead and/or costs associated with excess capacity), all calculated strictly in accordance with GAAP, and (b) to the extent that such Product is Manufactured by a Third Party manufacturer, the actual fees paid by Alnylam and its Affiliates to the Third Party for the Manufacture, supply and packaging of such Product.

c. Genzyme Territory Process Development Costs. If Genzyme requests any change to the specifications or Manufacturing process for the supply of Product for the Genzyme Territory, Alnylam will use Commercially Reasonable Efforts to make such changes, and if the changes are not also required for the Alnylam Territory, Genzyme will bear one hundred percent (100%) of such costs.

d. Forecasts. On a Calendar Quarterly basis Genzyme will provide rolling [**] Calendar Quarter forecasts for its orders of supply of Product. The first [**] Calendar Quarters of any forecast will constitute a firm obligation for Genzyme to issue purchase orders for the forecasted amount of Product. Notwithstanding the foregoing, to the extent that Alnylam is supplying through a Third Party manufacturer, Genzyme shall be required to comply with the forecasting and ordering provisions of Alnylam’s agreement with the Third Party manufacturer.

e. Specifications. The Supply Agreements will contain mutually agreed written specifications for the Bulk Drug Substance, Bulk Drug Product and Finished Product, as applicable.

4. Third Party Manufacturing Agreements. The Clinical Supply Agreement(s) and Commercial Supply Agreement(s) shall include provisions (a) requiring Alnylam to reasonably consult with Genzyme through the JSC regarding proposed supply agreements to be entered into between Alnylam and Third Party Manufacturers to the extent Products to be supplied to Genzyme will be manufactured under such Third Party supply agreements; and (b) requiring Alnylam to use commercially reasonable efforts to include in applicable supply agreements with Third Party manufacturers rights for Genzyme to enforce such agreements against such Third Parties as such agreements relate to the supply of Product(s) for the Genzyme Territory, including by identifying Genzyme as a third party beneficiary under such agreements, and if Alnylam is not able to negotiate such third party beneficiary rights for Genzyme’s benefit, provisions requiring Alnylam to enforce such Third Party supply agreements at Genzyme’s direction and expense as such agreements relate to the supply of the applicable Product(s) for the Genzyme Territory.

5. Term and Termination. The Clinical Supply Agreement will continue in effect through the completion of Clinical Studies in the Genzyme Territory. The Commercial Supply Agreement will have a term of at least three (3) years with yearly renewals at Genzyme’s option term for two (2) additional years, each such renewal option to be exercised by providing Alnylam at least twelve (12) months written notice prior to the expiration of the then-current term. The Supply Agreements will contain customary termination provisions. Genzyme will have the right to terminate each Supply Agreement for convenience on at least twelve (12) months advanced written notice. Alnylam will have the right to terminate each Supply Agreement on at least twelve (12) months advanced written notice (or such longer period of time as reasonably necessary to avoid a supply disruption) if Alnylam determines to cease sourcing the applicable Product for the Alnylam Territory, but in such case Alnylam will cooperate with Genzyme to enable Genzyme to establish its own source for the Product (including, to the extent requested by Genzyme and within Alnylam’s ability to do so, by transferring Alnylam’s applicable Third Party manufacturing relationships to Genzyme). The Supply Agreements will terminate immediately upon termination of the Agreement. Notwithstanding the foregoing, to the extent that Alnylam is supplying through a Third Party manufacturer, Genzyme’s termination rights may be subject to limitations on termination set forth in Alnylam’s agreement with the Third Party manufacturer. Unless otherwise agreed by the Parties, following termination Genzyme shall remain obligated to purchase any orders of Product that have become firm orders prior to termination.

6. Compliance, Warranties, Acceptance, Recalls, Indemnification and Limitations of Liability. The Supply Agreements will contain terms and conditions regarding compliance with Laws (including cGMPs and the Regulatory Approvals for the Licensed Products) and specifications for the Licensed Products, delivery, acceptance, recalls, indemnification and limitations of liability that are customary in Third Party contract manufacturing agreements. In any event, Alnylam shall not be required to provide warranties or indemnification that are more extensive than Third Party contract manufacturers typically provide and, with respect to Products not manufactured by Alnylam, Alnylam shall not have obligations to Genzyme under any Supply Agreement for such Product that are greater than the obligations that Alnylam’s supplier of such Product has to Alnylam.

7. Shortages, Inventory, Backup Suppliers. The Supply Agreements will provide that in the event Alnylam is unable to supply Product to meet the demand in the combined Alnylam Territory and Genzyme Territory, then it will allocate Product between the two Territories on a pro rata basis based on forecasts of demand in the two Territories existing at the time of the shortfall. The Supply Agreements may also contain provisions requiring Alnylam to maintain backup suppliers and appropriate levels of Product inventory as agreed by the Parties; provided that, Alnylam may require that Genzyme purchase safety stock of Product in exchange for Alnylam’s agreement to maintain such safety stock in inventory.

8. Miscellaneous. The Supply Agreements will contain other customary terms and provisions for agreements of their type as mutually agreed by the Parties.

SCHEDULE 7.4.3.2

BASEBALL ARBITRATION PROCEDURE REGARDING JPAC/LP MILESTONE

ALLOCATION

Selection of Expert and Submission of Positions. The Parties shall select and agree upon a mutually acceptable independent Third Party expert who is neutral, disinterested and impartial, and has experience relevant to the valuation of pharmaceutical and biotechnology industry license agreements (the “Expert”). If the Parties are unable to mutually agree upon an Expert within [**] days following the delivery of the Expert Resolution Notice, then upon request by either Party, the Expert shall be an arbitrator appointed by Judicial and Mediation Services (“JAMS”), which arbitrator need not have the above-described experience. Once the Expert has been selected, each Party shall within [**] days following selection of the Expert provide the Expert and the other Party with a written report setting forth its position with respect to the substance of the dispute and may submit a revised or updated report and position to the Expert within [**] days of receiving the other Party’s report. If so requested by the Expert, each Party shall make oral submissions to the Expert based on such Party’s written report, and each Party shall have the right to be present during any such oral submissions.

JAMS Supervision. In the event the Expert is a JAMS arbitrator selected by JAMS as provided in this Schedule 7.4.3.2 above, the matter shall be conducted as a binding arbitration in accordance with JAMS procedures, as modified by this Schedule 7.4.3.2 (including that the arbitrator shall adopt as his or her decision the position of one Party or the other, as described below). In such event, the arbitrator may retain a Third Party expert with experience relevant to the valuation of pharmaceutical and biotechnology industry license agreements to assist in rendering such decision, and the expenses of any such expert shall be shared by the Parties as costs of the arbitration as provided in this Schedule 7.4.3.2 below.

Determination by the Expert. The Expert shall, no later than [**] days after the last submission of the written reports and, if any, oral submissions, select one of the Party’s positions as his or her final decision, and shall not have the authority to modify either Party’s position or render any substantive decision other than to so select the position of either Genzyme or Alnylam as set forth in their respective written report (as initially submitted, or as revised in accordance with this Schedule 7.4.3.2 above, as applicable). The Parties agree that the decision of the Expert shall be the sole, exclusive and binding remedy between them regarding any the allocation of JPAC/LP Milestone payments, and the Expert’s decision shall become the decision of the JSC on the matter.

Location; Costs. Unless otherwise mutually agreed upon by the Parties, the in-person portion (if any) of such proceedings shall be conducted in Boston, Massachusetts. The Parties agree that they shall share equally the costs and fees of the Expert in connection with any proceeding under this Schedule 7.4.3.2, including the cost of the arbitration filing and hearing fees, the cost of any independent expert retained by the arbitrator and the cost of the arbitrator and administrative fees of JAMS if applicable. Each Party shall bear its own costs and attorneys’ and witnesses’ fees and associated costs and expenses incurred in connection with any proceeding under this Schedule 7.4.3.2.

Timetable for Completion in [**] Days. The Parties shall use, and shall direct the Expert to use, commercially reasonable efforts to resolve a dispute within [**] days after the selection of the Expert, or if resolution within [**] days is not reasonably achievable, as determined by the Expert, then as soon thereafter as is reasonably practicable.

SCHEDULE 9.2.2(A)

JOINT PRESS RELEASE

Contacts:
Alnylam Pharmaceuticals, Inc. Cynthia Clayton Vice President, Investor Relations and Corporate Communications 617-551-8207	Genzyme Lori Gorski Director Corporate Communications 617-768-9344
Amanda Sellers (Media) Spectrum 202-955-6222 x2597

Alnylam and Genzyme Form Alliance to Develop and Commercialize

RNAi Therapeutics in Asia

- Genzyme to Advance ALN-TTR02 and ALN-TTRsc Programs as Breakthrough Therapies for

Patients with ATTR in Japan and in the Broader Asian Market -

- Alnylam to Receive $22.5 Million in Upfront Payment in Addition to Milestone Payments

and Royalties on Product Sales;

Alnylam Maintains All Rights in U.S., Europe, and Rest of World -

Cambridge, Mass., October 22, 2012, 2012 - Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) and Genzyme, a Sanofi company (EURONEXT: SAN and NYSE: SNY), announced today that they have formed an exclusive alliance to develop and commercialize RNAi therapeutics targeting transthyretin (TTR) for the treatment of transthyretin-mediated amyloidosis (ATTR) in Japan and other Asia-Pacific countries. ATTR is a rare, debilitating, hereditary disease that damages the nervous system and heart, resulting in a life expectancy of 5 to 15 years.

“Our ALN-TTR program holds promise as a breakthrough therapy for the treatment of ATTR, a debilitating orphan disease. As the lead program in our ‘Alnylam 5x15’ product strategy, we also view this program as a key part of building Alnylam for the future,” said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. “In this important collaboration, Genzyme will advance our ALN-TTR program with their proven capabilities in the Japanese and broader Asian market, while we maintain our plans to develop and commercialize this potential breakthrough medicine in the U.S., Europe, and rest of world. In addition, a key part of the value proposition in this alliance for Alnylam is the potential for significant royalty payments on sales of products.”

Confidential

ATTR is an endemic disease in Japan, with a significant number of patients carrying the V30M TTR mutation which leads to onset of a severe form of ATTR known as familial amyloidotic polyneuropathy (FAP). Together, Alnylam and Genzyme intend to maximize the value of ALN-TTR worldwide by developing the program in FAP and other ATTR indications, such as familial amyloidotic cardiomyopathy (FAC) and senile systemic amyloidosis (SSA). Alnylam’s ALN-TTR program currently includes ALN-TTR02, which is in a Phase II clinical trial, and ALN-TTRsc, a subcutaneously administered RNAi therapeutic in late stage pre-clinical development.

Under the terms of the agreement, Genzyme will make an upfront cash payment of $22.5 million to Alnylam. The agreement also includes development milestone payments and tiered royalties expected to yield an effective rate in the mid-teens to mid-twenties on Genzyme’s sales of ALN-TTR products in their territory. In addition, each party will be responsible for the development and commercialization activities in their respective territories.

“We are encouraged by Alnylam’s progress with their ALN-TTR program and are excited by the potential for this innovative drug candidate to make a difference in the lives of patients with ATTR. The results to date demonstrate impressive clinical activity and support advancement of this promising therapeutic into pivotal studies and toward the market,” said David Meeker, M.D., President and Chief Executive Officer of Genzyme. “As we work to build our pipeline through both internal research and development, and through external collaborations, we look forward to working with Alnylam on this important program.”

Recently, Alnylam presented positive clinical results from its ALN-TTR02 Phase I trial demonstrating robust and unprecedented knockdown of serum TTR protein levels of up to 94%; the overall results were highly significant (p<0.00001 by ANOVA). Suppression of TTR, the disease-causing protein in ATTR, was found to be rapid, dose dependent, durable, and specific after just a single dose. The drug was generally safe and well tolerated in this Phase I study. Alnylam is currently enrolling patients in a Phase II multi-dose study of ALN-TTR02 in ATTR patients and aims to initiate a Phase III pivotal study of ALN-TTR02 by the end of 2013.

About ATTR

Transthyretin (TTR)-mediated amyloidosis (ATTR) is a hereditary, systemic disease caused by mutations in the TTR gene. TTR protein is produced primarily in the liver and is normally a carrier for thyroid hormones and retinol binding proteins. Mutations in TTR cause abnormal amyloid proteins to accumulate and damage body organs and tissue, such as the peripheral nerves and heart, resulting in intractable peripheral sensory neuropathy, autonomic neuropathy, and/or cardiomyopathy. ATTR represents a major unmet medical need with significant morbidity and mortality; FAP affects approximately 10,000 people worldwide and FAC affects at least 40,000 people worldwide. FAP patients have a mean life expectancy of five to 15 years from symptom onset, and the only treatment options for early stage disease are liver transplantation and tafamidis (approved in Europe). As a result, there is a significant need for novel therapeutics to treat patients who have inherited mutations in the TTR gene.

About RNA Interference (RNAi)

RNAi (RNA interference) is a revolution in biology, representing a breakthrough in understanding how genes are turned on and off in cells, and a completely new approach to drug discovery and development. Its discovery has been heralded as “a major scientific breakthrough that happens once every decade or so,” and represents one of the most promising and rapidly advancing frontiers in biology and drug discovery today which was awarded the 2006 Nobel Prize for Physiology or Medicine. RNAi is a natural process of gene silencing that occurs in organisms ranging from plants to mammals. By harnessing the natural biological process of RNAi occurring in our cells, the creation of a major new class of medicines, known as RNAi therapeutics, is on the horizon. Small interfering RNA (siRNA), the molecules that mediate RNAi and comprise Alnylam’s RNAi therapeutic platform, target the cause of diseases by potently silencing specific mRNAs, thereby preventing disease-causing proteins from being made. RNAi therapeutics have the potential to treat disease and help patients in a fundamentally new way.

About Alnylam Pharmaceuticals

Alnylam is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. The company is leading the translation of RNAi as a new class of innovative medicines with a core focus on RNAi therapeutics for the treatment of genetically defined diseases, including ALN-TTR for the treatment of transthyretin-mediated amyloidosis (ATTR), ALN-AT3 for the treatment of hemophilia, ALN-PCS for the treatment of severe hypercholesterolemia, ALN-HPN for the treatment of refractory anemia, and ALN-TMP for the treatment of hemoglobinopathies. As part of its “Alnylam 5x15TM” strategy, the company expects to have five RNAi therapeutic products for genetically defined diseases in clinical development, including programs in advanced stages, on its own or with a partner by the end of 2015. Alnylam has additional partnered programs in clinical or development stages, including ALN-RSV01 for the treatment of respiratory syncytial virus (RSV) infection, ALN-VSP for the treatment of liver cancers, and ALN-HTT for the treatment of Huntington’s disease. The company’s leadership position on RNAi therapeutics and intellectual property have enabled it to form major alliances with leading companies including Merck, Medtronic, Novartis, Biogen Idec, Roche, Takeda, Kyowa Hakko Kirin, Cubist, Ascletis, Monsanto and Genzyme. In addition, Alnylam and Isis co-founded Regulus Therapeutics Inc., a company focused on discovery, development, and commercialization of microRNA therapeutics; Regulus has formed partnerships with GlaxoSmithKline, Sanofi, AstraZeneca and Biogen Idec. Alnylam has also formed Alnylam Biotherapeutics, a division of the company focused on the development of RNAi technologies for applications in biologics manufacturing, including recombinant proteins and monoclonal antibodies. Alnylam’s VaxiRNA™ platform applies RNAi technology to improve the manufacturing processes for vaccines; GlaxoSmithKline is a collaborator in this effort. Alnylam scientists and collaborators have published their research on RNAi therapeutics in over 100 peer-reviewed papers, including many in the world’s top scientific journals such as Nature, Nature Medicine, Nature Biotechnology, and Cell. Founded in 2002, Alnylam maintains headquarters in Cambridge, Massachusetts. For more information, please visit www.alnylam.com.

Alnylam Forward-Looking Statements

Various statements in this release concerning Alnylam’s future expectations, plans and prospects, including without limitation, statements regarding Alnylam’s views with respect to the

potential for RNAi therapeutics, including the potential for ALN-TTR02 and ALN-TTRsc, its expectations regarding the receipt upfront, and potential development milestone and royalty payments under the Genzyme agreement, its expectations regarding the market opportunity for ALN-TTR, including in Japan, its expectations with respect to the timing and success of its clinical trials for ALN-TTR02, including the possible initiation of a Phase III pivotal trial, and the expected timing of an IND filing for ALN-TTRsc, and Alnylam’s expectations regarding its “Alnylam 5x15” product strategy, constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, Genzyme’s ability to successfully advance ALN-TTR02 and/or ALN-TTRsc in Japan and other Asian countries including China, Australia, and India, as well as Alnylam’s ability to develop ALN-TTR02 and/or ALN-TTRsc in the rest of the world, resulting in the potential payment of development milestones and royalties to Alnylam, Alnylam’s ability to successfully demonstrate the efficacy and safety of its drug candidates, the pre-clinical and clinical results for these product candidates, which may not support further development of such product candidates, actions of regulatory agencies, which may affect the initiation, timing and progress of clinical trials for such product candidates, obtaining, maintaining and protecting intellectual property, obtaining regulatory approval for products, competition from others using technology similar to Alnylam’s and others developing products for similar uses, and Alnylam’s ability to establish and maintain strategic business alliances, including its collaboration with Genzyme, and new business initiatives, as well as those risks more fully discussed in the “Risk Factors” section of its most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission. In addition, any forward-looking statements represent Alnylam’s views only as of today and should not be relied upon as representing its views as of any subsequent date. Alnylam does not assume any obligation to update any forward-looking statements.

About Genzyme, a Sanofi Company

Genzyme has pioneered the development and delivery of transformative therapies for patients affected by rare and debilitating diseases for over 30 years. We accomplish our goals through world-class research and with the compassion and commitment of our employees. With a focus on rare diseases and multiple sclerosis, we are dedicated to making a positive impact on the lives of the patients and families we serve. That goal guides and inspires us every day. Genzyme’s portfolio of transformative therapies, which are marketed in countries around the world, represents groundbreaking and life-saving advances in medicine. As a Sanofi company, Genzyme benefits from the reach and resources of one of the world’s largest pharmaceutical companies, with a shared commitment to improving the lives of patients. Learn more at www.genzyme.com.

Sanofi Forward Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans” and similar

expressions. Although Sanofi’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group’s ability to benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in Sanofi’s annual report on Form 20-F for the year ended December 31, 2011. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.

SCHEDULE 10.2

DISCLOSURE SCHEDULE

Section 10.2.1:

- Reference is made to certain claims alleged by the plaintiffs in the action entitled:

[**]

- Reference is made to certain claims alleged by the plaintiff in the action entitled:

[**]

Section 10.2.2:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

- Reference is made to certain claims alleged by the plaintiff in the [**] Litigation.

Section 10.2.4:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

Section 10.2.6:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

- Reference is made to certain claims alleged by the plaintiff in the [**] Litigation.

Section 10.2.7:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

- Reference is made to certain claims alleged by the plaintiff in the [**] Litigation.

Section 10.2.8:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

Section 10.2.11:

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

Confidential

Section 10.2.12(a):

- Reference is made to certain claims alleged by the plaintiffs in the [**] Litigation.

- Reference is made to certain claims alleged by the plaintiff in the [**] Litigation.

Section 10.2.12(b):

- Reference is made to the [**].

Confidential

AMENDMENT TO LICENSE AND COLLABORATION AGREEMENT

THIS AMENDMENT TO LICENSE AND COLLABORATION AGREEMENT (this “Amendment”) is entered into as of February 19, 2013 (the “Amendment Effective Date”), by and between ALNYLAM PHARMACEUTICALS, INC., a Delaware corporation (“Alnylam”) and GENZYME CORPORATION, a Massachusetts corporation (“Genzyme”).

BACKGROUND

A. Alnylam and Genzyme are parties to a License and Collaboration Agreement dated as of October 18, 2012 (the “Collaboration Agreement”).

B. Following the Effective Date, Alnylam resolved certain disputes regarding intellectual property and technology that relate to the subject matter of the Collaboration Agreement.

C. As part of that resolution, Alnylam terminated the Amended and Restated Cross-License Agreement between Alnylam and Protiva Biotherapeutics Inc., (“Protiva”) effective May 30, 2008, as amended by Amendment No. 1 effective October 25, 2010 (the “Protiva License”) and the Amended and Restated License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation (“Tekmira”) and Alnylam effective May 30, 2008 (the “Tekmira Collaboration Agreement”), and Alnylam, Protiva and Tekmira terminated, solely as among and between each other, the Sponsored Research Agreement among Alnylam, The University of British Columbia (“UBC”), and AlCana Technologies, Inc. (“AlCana”), dated July 27, 2009, as amended by Amendment No. 1 dated July 27, 2011, and as supplemented by the Supplemental Agreement among Alnylam, Tekmira, Protiva, UBC, and AlCana, effective July 27, 2009 (collectively with the Protiva License and the Tekmira Collaboration Agreement, the “Terminated In-Licenses”).

D. In replacement of the Terminated In-Licenses, Alnylam, Tekmira and Protiva entered into a Cross-License Agreement dated as of November 12, 2012 (the “New Cross License”).

E. Alnylam and Genzyme now wish to amend the Collaboration Agreement as set forth in this Amendment.

AMENDMENT

Alnylam and Genzyme hereby agree, and the Collaboration Agreement is hereby amended, as of the Amendment Effective Date, as follows:

1. Definitions from the Collaboration Agreement. Initially capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Collaboration Agreement.

2. Deletion of Section 1.41 of the Collaboration Agreement. Section 1.41 of the Collaboration Agreement is hereby amended and restated in its entirety to read as follows: “1.41             Reserved.”

3. Deletion of Section 11.5 of the Collaboration Agreement. Section 11.5 of the Collaboration Agreement is hereby amended and restated in its entirety to read as follows: “11.5             Reserved.”

4. Amendment to Schedule 1.47 (Existing Alnylam In-Licenses). Schedule 1.47 of the Agreement is hereby amended to read in its entirety as set forth in the Schedule 1.47 attached to this Amendment.

5. Amendment to Schedule 1.9 (Alnylam Core Technology Patents). Schedule 1.9 is hereby amended to reflect that the Patent Rights identified on Schedule 1.9 as the “Semple/Wheeler” Patent Rights are licensed to Alnylam pursuant to the Sublicense Agreement dated January 8, 2007 between Alnylam Pharmaceuticals, Inc. and Tekmira Pharmaceuticals Corporation (as successor in interest to Inex Pharmaceuticals Corporation), rather than pursuant to the Tekmira Amended and Restated Cross-License, as originally indicated.

6. No Loss of Rights; Incremental Amounts. Alnylam hereby represents and warrants that the termination of the Terminated In-Licenses and the entry into the New Cross License in replacement thereof has not resulted in any Loss of Rights and Alnylam continues to Control all Know-How and Patent Rights licensed to Alnylam under the Terminated In-Licenses that are necessary or useful for Genzyme to Develop, Manufacture and/or Commercialize Licensed Products in the Genzyme Territory. In addition, Alnylam hereby represents and warrants that the aggregate amount of Third Party License Payments required to be paid under the New Cross License does not exceed, in duration or amount, the amount that Alnylam would have been required to pay under the Terminated In-Licenses (had they not been terminated) based on Alnylam’s assertions in the Ongoing Litigation, or, alternatively, Alnylam agrees that to the extent it does exceed such amount, such excess shall be Incremental Amounts for all purposes of the Collaboration Agreement. Alnylam represents and warrants that it has provided Genzyme with an accurate and complete and unredacted copy of the New Cross License.

7. Future Termination of In-Licenses. Following the Amendment Effective Date, neither Party will voluntarily amend or terminate an In-License to which it is a party in a manner that terminates any rights sublicensed to the other Party that are necessary or useful for the other Party to Develop, Manufacture and/or Commercialize Licensed Products under the Collaboration Agreement with respect to the other Party’s Territory, without the prior written consent of the other Party.

8. Miscellaneous. As amended hereby, the Collaboration Agreement remains in full force and effect.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have by duly authorized persons executed this Amendment as of the Amendment Effective Date.

ALNYLAM PHARMACEUTICALS, INC.:		GENZYME CORPORATION:
By:	/s/ John M. Maraganore	By:	/s/ David Meeker
	Title: Chief Executive Officer Date: February 19, 2013		Title: President & Chief Executive Officer Date: February 19, 2013

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SCHEDULE 1.47

EXISTING ALNYLAM IN-LICENSES

Existing Alnylam In-Licenses includes the following Third Party agreements:

1. Amended and Restated Strategic Collaboration and License Agreement between Isis Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc., dated April 28, 2009, as amended by letter agreement dated August 27, 2012.

2. Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Pharmaceuticals, Inc., dated December 20, 2002, as amended by Amendment dated July 2, 2003, the Requirements Amendment effective June 15, 2005, the Waiver Amendment effective August 9, 2007 and the Amendment to the Alnylam Co-Exclusive License Agreement dated as of March 14, 2011, by and between Alnylam Pharmaceuticals, Inc., on the one hand, and Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology and Max-Planck-Innovation GmbH, on the other hand; and Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Europe AG (formerly Ribopharma AG), dated June 30, 2003.

3. Sponsored Research Agreement among Alnylam Pharmaceuticals, Inc., The University of British Columbia, and AlCana Technologies, Inc., dated July 27, 2009, as amended by Amendment No. 1 dated July 27, 2011, and as supplemented by the Supplemental Agreement among Alnylam Pharmaceuticals, Inc., Tekmira Pharmaceuticals Corporation, Protiva Biotherapeutics Inc., The University of British Columbia, and AlCana Technologies, Inc., effective July 27, 2009.

4. Sublicense Agreement dated January 8, 2007 between Alnylam Pharmaceuticals, Inc. and Tekmira Pharmaceuticals Corporation (as successor in interest to Inex Pharmaceuticals Corporation).

5. Cross-License Agreement dated November 12, 2012 among Alnylam Pharmaceuticals, Inc., Tekmira Pharmaceuticals Corporation, and Protiva Biotherapeutics Inc.

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EX-10.50

EXECUTION COPY

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions. Exhibit 10.50

CROSS-LICENSE AGREEMENT

By and Among

ALNYLAM PHARMACEUTICALS, INC.

TEKMIRA PHARMACEUTICALS CORPORATION

And

PROTIVA BIOTHERAPEUTICS INC.

Dated: November 12, 2012

TABLE OF CONTENTS

ARTICLE I - DEFINITIONS		2
ARTICLE II - LICENSE GRANTS AND RELATED RIGHTS		12
2.1	License Grants to Tekmira	12
2.2	License Grants to Alnylam	12
2.3	Sublicensing	13
2.4	Coordination with Supplemental Agreement	14
2.5	Covenants Not to Sue	15
2.6	Retained Rights	15
2.7	Rights in Bankruptcy	15
ARTICLE III - SELECTION OF ADDITIONAL TARGETS		16
3.1	Tekmira Additional Targets	16
3.2	Alnylam Additional Exclusive Targets	16
3.3	Selection Process	16
ARTICLE IV - FINANCIAL PROVISIONS		17
4.1	Manufacturing Opt-Out Payment	17
4.2	Restructuring Payment	17
4.3	Milestones with Respect to Tekmira Milestone Products	17
4.4	Milestones with Respect to Biodefense Targets	18
4.5	Milestones with Respect to Alnylam Products	19
4.6	Milestones for Certain Alnylam Existing Exclusive Targets	20
4.7	Royalty Term	21
4.8	Royalties Payable by Tekmira	21
4.9	Royalties on Alnylam Products	21
4.10	Royalty Reduction	23
4.11	Third Party License Payments	23
4.12	Reports	23
4.13	Tax Withholding	24
4.14	Payments	24
4.15	Audits	24
ARTICLE V - INTELLECTUAL PROPERTY		25
5.1	Category 1, 2 and 3 Patents	25

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5.2	Prosecution and Maintenance of Other Patents	25
5.3	Third Party Infringement of Alnylam’s Patents	25
5.4	Competitive Infringement of Category 1 Patents	26
5.5	Third Party Infringement of Tekmira’s Patents	26
5.6	Patent Certification	27
ARTICLE VI - CONFIDENTIAL INFORMATION AND PUBLICITY		27
6.1	Non-Disclosure of Confidential Information	27
6.2	Limitation on Disclosures	29
6.3	Publicity	29
ARTICLE VII - INDEMNIFICATION AND INSURANCE		30
7.1	Tekmira Indemnification	30
7.2	Alnylam Indemnification	30
7.3	Tender of Defense; Counsel	30
7.4	Tekmira Insurance	31
7.5	Alnylam Insurance	31
ARTICLE VIII - EXPORT		32
8.1	General	32
8.2	Delays	32
8.3	Assistance	32
ARTICLE IX - TERM AND TERMINATION		32
9.1	Term; Expiration	32
9.2	Material Breach	33
9.3	Challenges of Alnylam’s Patents	33
9.4	Challenges of Tekmira Patents	33
9.5	Consequences of Termination; Survival	34
9.6	Licenses upon Termination	34
ARTICLE X - MISCELLANEOUS		35
10.1	Representations and Warranties	35
10.2	Dispute Resolution; Arbitration Procedures	37
10.3	Force Majeure	37
10.4	Consequential Damages	37
10.5	Assignment	37

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10.6	Notices	38
10.7	Independent Contractors	39
10.8	Governing Law; Jurisdiction	39
10.9	Severability	39
10.10	No Implied Waivers	39
10.11	Headings	39
10.12	Entire Agreement	39
10.13	Waiver of Rule of Construction	40
10.14	No Third Party Beneficiaries	40
10.15	Further Assurances	40
10.16	Performance by Affiliates	40
10.17	Counterparts	40

EXHIBIT A - IP MANAGEMENT TERMS	42
SCHEDULE 1.9 - ALNYLAM EXISTING IN-LICENSES	47
SCHEDULE 1.10 - ALNYLAM EXISTING SUBLICENSES	48
SCHEDULE 1.15 - CERTAIN ALNYLAM PATENTS	49
SCHEDULE 1.19 - CERTAIN BIODEFENSE TARGETS	50
SCHEDULE 1.22 - CATEGORY 1 PATENTS	51
SCHEDULE 1.23 - CATEGORY 2 PATENTS	52
SCHEDULE 1.24 - CATEGORY 3 PATENTS	53
SCHEDULE 1.70 - TEKMIRA MANUFACTURING DOCUMENTS	54

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CROSS-LICENSE AGREEMENT

This Cross-License Agreement (this “Agreement”) is entered into as of November 12, 2012 (the “Effective Date”), by and among ALNYLAM PHARMACEUTICALS, INC., a corporation organized under the laws of the State of Delaware having a principal office at 300 Third Street, Cambridge, MA 02142, U.S.A. (“Alnylam”), TEKMIRA PHARMACEUTICALS CORPORATION, a Canadian corporation having a principal office at 100-8900 Glenlyon Parkway, Burnaby, B.C., Canada V5J 5J8 (“Tekmira”), and, solely with respect to Section 10.12, PROTIVA BIOTHERAPEUTICS INC., a wholly-owned subsidiary of Tekmira and a British Columbia corporation with a principal place of business at 100-8900 Glenlyon Parkway, Burnaby, B.C., Canada V5J 5J8 (“Protiva”).

RECITALS

WHEREAS, Tekmira owns or controls certain intellectual property covering certain nucleic acid delivery technology known as Lipid Nanoparticle or SNALP (“LNP”) technology (the “LNP/SNALP Technology”) that is useful for the delivery of a variety of therapeutic products, including those that function through RNA interference (“RNAi”) or the modulation of microRNAs (“miRNAs”), and is also engaged in the business of discovering, developing, manufacturing and commercializing human therapeutic products;

WHEREAS, Alnylam owns or controls certain intellectual property covering fundamental aspects of the structure and uses of therapeutic products that function through RNAi or the modulation of miRNA and certain intellectual property covering LNP/SNALP Technology; and Alnylam is developing capabilities to develop and commercialize such therapeutic products;

WHEREAS, Alnylam and Tekmira are parties to several existing agreements relating to RNAi, miRNA and SNALP/LNP Technology, including an Amended and Restated License and Collaboration Agreement dated May 30, 2008 (the “Alnylam-Tekmira LCA”); an Amended and Restated Cross-License Agreement dated May 30, 2008, between Alnylam and Protiva, now a wholly owned subsidiary of Tekmira (as amended, the “Alnylam-Protiva CLA” and collectively with the Alnylam-Tekmira LCA, the “Prior Cross-License Agreements”); a Development, Manufacturing and Supply Agreement dated January 2, 2009, as amended, and a Quality Assurance Agreement dated January 29, 2009 (collectively, the “Manufacturing Agreements”); a Supplemental Agreement dated July 27, 2009, among Tekmira, Protiva, Alnylam, AlCana Technologies, Inc. (“AlCana”) and the University of British Columbia (“UBC”) (the “Supplemental Agreement”) and a related Sponsored Research Agreement dated July 26, 2009, among Alnylam, UBC and AlCana (the “Sponsored Research Agreement”); and a Sublicense Agreement dated January 8, 2007, between Alnylam and Inex Pharmaceuticals Corporation (to which Tekmira is the successor in interest) (the “UBC Sublicense”);

WHEREAS, the Parties have entered into a Settlement Agreement concurrently with the execution of this Agreement (the “Settlement Agreement”) pursuant to which they have agreed to settle certain disputes between them;

WHEREAS, in connection with the Settlement Agreement, the Parties have agreed to replace the Prior Cross-License Agreements with this Agreement, supersede rights and obligations under the Supplemental Agreement as between themselves with the rights and obligations set forth in this Agreement, and terminate the Manufacturing Agreements; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, Alnylam and Tekmira enter into this Agreement effective as of the Effective Date:

ARTICLE I - DEFINITIONS

General. When used in this Agreement, each of the following terms, whether used in the singular or plural, will have the meanings set forth in this Article I.

1.1 Act means the United States Federal Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. §§321 et seq., as such may be amended from time to time, and its implementing regulations.

1.2 Active Internal Development Program means, with respect to a particular siRNA Product or miRNA Product, that, as of the time of Target selection under Section 3.3(a), there is an active program of Research, Development or Commercialization with respect to such siRNA Product or miRNA Product at such Party or any of its Affiliates.

1.3 Affiliate means, with respect to a Person, any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with such Person. For purposes of the foregoing sentence, “control” means (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, or (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.

1.4 Aggregate Annual Net Sales means, for each calendar year starting with the calendar year in which the First Commercial Sale occurs for a Product, the total Net Sales of such Product during such calendar year.

1.5 ALN-TTR means Alnylam’s siRNA Product in an LNP Formulation that is designed to target the human TTR gene product.

1.6 ALN-VSP means Alnylam’s siRNA Product in an LNP Formulation that is designed to target the human VEGF and KSP gene products.

1.7 Alnylam Exclusive Target means any of the Alnylam Existing Exclusive Targets or any of the Alnylam Additional Exclusive Targets.

1.8 Alnylam Existing Exclusive Target means any of the following Targets: VSP (VEGF and KSP used in combination), TTR and PCSK9.

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1.9 Alnylam Existing In-License means any of the agreements set forth on Schedule 1.9, pursuant to which Alnylam has a license from any Third Party under any Alnylam Licensed Technology.

1.10 Alnylam Existing Sublicense means any of the agreements set forth on Schedule 1.10, pursuant to which Alnylam has granted a sublicense to any Third Party under any Tekmira Combined Licensed Technology and/or Category 1 Patent.

1.11 Alnylam Field means the use of siRNA Products or miRNA Products directed to an Alnylam Target for the prevention, treatment or palliation of human disease, and related Research, Development and Commercialization activities.

1.12 Alnylam Know-How means all Know-How Controlled by Alnylam as of the Effective Date and that, prior to the Effective Date, was (a) disclosed by Alnylam to Tekmira or (b) otherwise learned by Tekmira; provided, that Alnylam Know-How shall not include Know-How learned by Tekmira solely as a result of the litigation settled pursuant to the Settlement Agreement.

1.13 Alnylam Licensed Technology means, collectively, the Alnylam Patents and the Alnylam Know-How.

1.14 Alnylam Non-Exclusive Target means any Target that is not an Alnylam Exclusive Target or a Tekmira Exclusive Target.

1.15 Alnylam Patent means any Patent Controlled by Alnylam as of the Effective Date that was filed, or claims priority to a Patent that was filed, before April 15, 2010, or any foreign counterpart of any of the foregoing Patents, and that either:

(a) is listed on Schedule 1.15; or

(b) is related to general siRNA structures or modifications (excluding conjugated siRNAs); or

(c) has claims relating to a lipid or an LNP Formulation or its manufacture; or

(d) has claims relating to non-conjugated siRNAs directed to a Tekmira Target.

Alnylam Patents shall not include any Patent that (i) is a UBC Patent; or (ii) is Controlled by Alnylam pursuant to an in-license that is not an Alnylam Existing In-License.

Notwithstanding the foregoing, the licenses granted to Tekmira under Section 2.1 with respect to the Patents in Section 1.15(c) above will only include Researching, Developing and Commercializing Tekmira Products in an LNP Formulation.

1.16 Alnylam Product means an siRNA Product or miRNA Product Researched, Developed or Commercialized by Alnylam, its Affiliates or Sublicensees that is directed to an Alnylam Target.

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1.17 Alnylam Sublicensable Product means an Alnylam Product that has been developed by Alnylam or its Affiliates [**]. Any such Alnylam Product described in clause (a) may also include existing or future back up or improvement oligonucleotide products directed to the same Target as such Product in LNP Formulations or other lipid-based formulations.

1.18 Alnylam Target means any of the Alnylam Exclusive Targets or Alnylam Non-Exclusive Targets.

1.19 Biodefense Target means (a) a Target within the genome of one or more Category A, B and C pathogens, as defined by the National Institute of Allergy and Infectious Diseases, including without limitation, pathogens set forth on Schedule 1.19, but specifically excluding influenza virus, or (b) an endogenous cellular Target against which Alnylam Develops and/or Commercializes an Alnylam Product for commercial supply to one or more Funding Authorities.

1.20 Bona Fide Collaboration means a collaboration between Alnylam and one or more Third Parties involving Research, Development, Manufacture and/or Commercialization of one or more Alnylam Products and established under a written agreement in which (a) the scope of the licenses granted, and financial or other commitments of value, are of material value to Alnylam, and (b) Alnylam undertakes and performs substantial, mutual research, development and/or commercialization activity with the Third Party. For purposes of clarity, it is understood and agreed that no collaboration in which all or substantially all of Alnylam’s contributions or anticipated contributions are or will be in the form of the grant by Alnylam of licenses or sublicenses to one or more intellectual property rights will be considered a Bona Fide Collaboration.

1.21 Business Day means a day on which banking institutions in Boston, Massachusetts and Vancouver, British Columbia, Canada, are open for business.

1.22 Category 1 Patent means any Patent set forth on Schedule 1.22, any Patent Controlled by Tekmira after the Effective Date that claims priority to any of the Patents set forth on Schedule 1.22, or any foreign counterpart of any of the foregoing Patents.

1.23 Category 2 Patent means any Patent set forth on Schedule 1.23, any Patent Controlled by Alnylam after the Effective Date that claims priority to any of the Patents set forth on Schedule 1.23, or any foreign counterpart of any of the foregoing Patents.

1.24 Category 3 Patent means any Patent set forth on Schedule 1.24, any Patent Controlled by Alnylam after the Effective Date that claims priority to any of the Patents set forth on Schedule 1.24, or any foreign counterpart of any of the foregoing Patents.

1.25 Combination Product means a product that incorporates in a combination one or more pharmacologically active ingredients in addition to the active pharmaceutical ingredient in the Alnylam Product or Tekmira Product, as applicable.

1.26 Commercialize or Commercialization means any and all activities directed to Manufacturing (including, without limitation, by means of contract manufacturers), marketing, promoting, distributing, importing, exporting and selling a Product, in each case for commercial purposes, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

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1.27 Confidential Information means all proprietary or confidential information and materials, patentable or otherwise, of a Party disclosed by or on behalf of such Party to the other Party before, on or after the Effective Date, including, without limitation, chemical substances, formulations, techniques, methodology, equipment, data, reports, Know-How, sources of supply, patent positioning, business plans, and also including without limitation proprietary and confidential information of Third Parties in possession of such Party under an obligation of confidentiality, whether or not related to making, using or selling Products.

1.28 Control, Controls or Controlled by means, with respect to any Know-How or Patent, the possession of (whether by ownership or license, other than pursuant to this Agreement), or the ability of a Party or any of its Existing Affiliates to grant access to, or a license or sublicense of, such Know-How or Patent as provided for herein without violating the terms of any agreement or other arrangement with any Third Party existing at the time such Party would be required hereunder to grant the other Party such access or license or sublicense.

1.29 Cover, Covers or Covered by means, with respect to a product and a Patent, that, but for ownership of or a license or sublicense under such Patent, the making, using, selling, offering for sale or importing of, or other stated action with respect to, such product would infringe such Patent (or, if such Patent is a patent application, would infringe a patent issued from such patent application).

1.30 Develop, Developing or Development means with respect to a Product, preclinical and clinical drug development activities, including without limitation: test method development and stability testing, toxicology, formulations, manufacturing scale-up, preclinical and clinical Manufacture, quality assurance/quality control development, statistical analysis and report writing; clinical studies and regulatory affairs; Regulatory Approval and registration.

1.31 Existing Affiliate means, with respect to a Party, an Affiliate of such Party as of the Effective Date.

1.32 FDA means the United States Food and Drug Administration or any successor agency thereto.

1.33 First Commercial Sale means, with respect to each Product, the first commercial sale in a country as part of a nationwide introduction after receipt by a Product Seller of Regulatory Approval in such country, excluding de minimis named patient and compassionate use sales.

1.34 Follow-On Product means a Product directed towards a Target that is the same Target that is targeted by a Successful Tekmira Milestone Product, a Successful Alnylam Product or a Successful Biodefense Product, as applicable, but that contains a different chemical structure for the siRNA and/or a different cationic lipid component for the LNP Formulation.

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1.35 Funding Authority means the United States Department of Health and Human Services or other United States or foreign government or international agencies responsible for requesting, approving and/or funding the development and manufacture of products for biodefense purposes.

1.36 GAAP means United States generally accepted accounting principles applied on a consistent basis.

1.37 IND means a United States investigational new drug application or its equivalent or any corresponding foreign application.

1.38 Institutional Collaborator means any academic or non-profit institution or Person employed by or otherwise affiliated with such an institution that does not meet the definition of Permitted Contractor.

1.39 Know-How means biological materials and other tangible materials, information, data, inventions, practices, methods, protocols, formulas, formulations, knowledge, know-how, trade secrets, processes, assays, skills, experience, techniques and results of experimentation and testing, including without limitation pharmacological, toxicological and preclinical and clinical test data and analytical and quality control data, patentable or otherwise.

1.40 LNP Formulation means an LNP formulation, characterized by its components and its unique ratios among components.

1.41 Major Market means, individually and collectively, the United States, the European Union, Canada, the United Kingdom, France, Germany, Italy, Spain, China and Japan.

1.42 Manufacturing or Manufacture means, with respect to a Product, all activities associated with the production, manufacture and processing of such Product, and the filling, finishing, packaging, labeling, shipping, and storage of such Product, including without limitation formulation process scale-up for toxicology and clinical study use, aseptic fill and finish, stability testing, analytical development, quality assurance and quality control, and the production of the bulk finished dosage form of such Product from the siRNA and miRNA.

1.43 miRNA Product means a product containing, comprised of or based on native or chemically modified RNA oligomers designed to either (a) modulate, inhibit or interfere with a particular miRNA transcript; or (b) provide the function and/or mimic the activity of an miRNA.

1.44 Necessary Third Party IP means, with respect to any country in the Territory, on a country-by-country basis, any Patent in such country owned or controlled by a Third Party that Covers Alnylam Products and/or Tekmira Products.

1.45 Net Sales means the gross amount invoiced by Alnylam, its Affiliates or Sublicensees for Alnylam Products, or by Tekmira, its Affiliates or Sublicensees for Tekmira Products (in each case, such invoicing entity, a “Product Seller”), on sales or other dispositions in the Territory of such Products during the applicable Royalty Term to Third Parties which are not Affiliates or Sublicensees of the Product Seller, less (a) to the extent allowed and taken, sales

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returns and allowances, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including those granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargebacks, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions; (b) adjustments arising from consumer discount programs or similar programs; (c) customs or excise duties, sales tax, consumption tax, value added tax, and other similar taxes (except income taxes) measured by the production, sale, or delivery of goods; (d) duties relating to sales and any payments in respect of sales to the United States government, any State government or any foreign government, or to any governmental authority, or with respect to any government subsidized program or managed care organization; and (e) charges for freight and insurance related to the return of Products and not otherwise paid by the customer.

In the event that a Product is sold in any country in the form of a Combination Product in any year, Net Sales of such Combination Product will be adjusted by multiplying actual Net Sales of such Combination Product in such country by the fraction A/(A+B), where A is the average Net Sales price per daily dose during such year of the Product in such country, if sold separately in such country, and B is the average Net Sales price per daily dose of any product containing the other pharmacologically active ingredients in the Combination Product in such country, if sold separately in such country. If, in a specific country, the product containing the other pharmacologically active ingredients in the Combination Product are not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/C, where A is the average Net Sales price per daily dose of the Product in such country and C is the average Net Sales price per daily dose of the Combination Product in such country. If, in a specific country, the Product is not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such Combination Product by the fraction (C-B)/C, where B is the average Net Sales price per daily dose of the product containing the other pharmacologically active ingredients in the Combination Product in such country and C is the average Net Sales price per daily dose of the Combination Product in such country. If, in a specific country, both the Product and the product containing the other pharmacologically active ingredients in the Combination Product are not sold separately in such country, the Net Sales price for the Product and the product containing the other pharmacologically active ingredients in the Combination Product will be negotiated by the Parties in good faith based upon the costs, overhead and profit as are then incurred for the Product and all similar substances then being made and marketed by the selling Party and having an ascertainable market price.

Net Sales shall be determined from books and records maintained in accordance with GAAP, consistently applied throughout the organization and across all products of the entity whose sales of Product are giving rise to Net Sales.

1.46 Party means either Alnylam or Tekmira or, solely with respect to Section 10.12, Protiva; Parties means Alnylam and Tekmira and, solely with respect to Section 10.12, Protiva.

1.47 Patent means any patent (including any reissue, extension, substitution, confirmation, re-registrations, re-examination, invalidation, supplementary protection certificate or patents of addition) or patent application (including any provisional application, continuation, continuation-in-part or divisional).

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1.48 Permitted Contractor means a Third Party that performs activities (e.g., as a contractor or consultant) under a bona fide contract services arrangement on behalf of a Party or its Affiliates.

1.49 Person means any person or entity.

1.50 Phase I Clinical Trial means the first study of a Product in humans the primary purpose of which is the determination of safety and which may include the determination of pharmacokinetic and/or pharmacodynamic profiles in healthy individuals or patients.

1.51 Phase II Clinical Trial means (a) a study of dose exploration, dose response, duration of effect, kinetics or preliminary efficacy and safety study of a Product in the target patient population, (b) a controlled dose-ranging clinical trial to evaluate further the efficacy and safety of such Product in the target population and to define the optimal dosing regimen or (c) a clinical trial that the sponsoring Party or its Affiliate refers to in a press release as a Phase II Clinical Trial or Study.

1.52 Phase III Clinical Trial or Pivotal Trial means (a) a controlled study of a Product in patients of the efficacy and safety of such Product which is prospectively designed to demonstrate statistically whether such Product is effective and safe for use in a particular indication in a manner sufficient to obtain Regulatory Approval to market such Product or (b) a clinical trial that the sponsoring Party or its Affiliate refers to in a press release as a Phase III Clinical Trial or Study.

1.53 Product means a Tekmira Product or an Alnylam Product.

1.54 Protiva Patent means any Patent Controlled by Protiva on or after the Effective Date that was filed, or that claims priority to a Patent that was filed before April 15, 2010, but excluding Patent claims that Cover Tekmira Products, which excluded Patent claims are solely directed to PLK1, APOB, Ebola, WEE1, ALDH2 or CSN5.

1.55 Protiva Know-How means all Know-How Controlled by Protiva as of the Effective Date and that, prior to the Effective Date, was (a) disclosed to Alnylam by Protiva or (b) otherwise learned by Alnylam; provided, that Protiva Know-How shall not include Know-How learned by Alnylam solely as a result of the litigation settled pursuant to the Settlement Agreement.

1.56 Qualifying Patent means an Alnylam Patent or, if there is no Valid Claim of an Alnylam Patent remaining in the applicable sublicensed territory, any Patent Controlled by Alnylam that claims the composition of matter or method of use of a product.

1.57 Regulatory Approval means, with respect to each Product Developed and Commercialized, the receipt of sufficient authorization from the appropriate regulatory authority on a country-by-country basis to market and sell such Product in a country, including (where necessary in a particular country prior to marketing a Product) all separate pricing and/or reimbursement approvals that may be required for marketing.

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1.58 Research or Researching means identifying, evaluating, validating and optimizing Products prior to pre-IND GLP toxicology studies.

1.59 Royalty Quarter means each of the four (4) calendar quarters that begin January 1, April 1, July 1 and October 1 of each year.

1.60 siRNA means a double-stranded ribonucleic acid (RNA) composition designed to act primarily through an RNA interference mechanism that consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridized to one another along a substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing along a substantial portion of its length to form a hairpin.

1.61 siRNA Product means a product containing, comprised of or based on siRNAs or other double-stranded moieties effective in gene function modulation and designed to modulate the function of particular genes or gene products by causing degradation through RNA interference of a Target mRNA to which such siRNAs or other double-stranded moieties are complementary.

1.62 Sublicensee means (a) a Third Party to whom Alnylam has granted (or to whom another permitted sublicensee under an Alnylam Existing Sublicense grants) a sublicense pursuant to any of the Alnylam Existing Sublicenses, or (b) a Third Party to whom a Party (or another permitted sublicensee of such Party under this Agreement) grants a sublicense of all or a portion of the rights licensed to it hereunder as permitted herein.

1.63 Sublicensable Product means an Alnylam Sublicensable Product or a Tekmira Sublicensable Product.

1.64 Target means (a) a nucleic acid that encodes or is required for expression of a polypeptide (including without limitation messenger RNA and miRNA), together with all variants of such polypeptide; (b) the set of nucleic acids that encode a defined non-peptide entity, including a microorganism, virus, bacterium or single cell parasite; provided that the entire genome of a microorganism, virus, bacterium, or single cell parasite shall be regarded as a single Target; or (c) a naturally occurring interfering RNA or miRNA or precursor thereof.

1.65 Tekmira Additional Target means a Tekmira Additional Exclusive Target or a Tekmira Additional Non-Exclusive Target.

1.66 Tekmira Combined Licensed Technology means, collectively, the Protiva Patents, the Protiva Know-How, the Tekmira Patents and the Tekmira Know-How.

1.67 Tekmira Exclusive Target means ALDH2 or any of the Tekmira Additional Exclusive Targets.

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1.68 Tekmira Field means the use of siRNA Products directed to a Tekmira Target for the prevention, treatment or palliation of human disease, and related Research, Development and Commercialization activities.

1.69 Tekmira Know-How means all Know-How, other than Protiva Know-How, Controlled by Tekmira as of the Effective Date and that, prior to the Effective Date, was (a) disclosed by Tekmira to Alnylam or (b) otherwise learned by Alnylam; provided, that Tekmira Know-How shall not include Know-How learned by Alnylam solely as a result of the litigation settled pursuant to the Settlement Agreement.

1.70 Tekmira Manufacturing Documents means the documents identified in Schedule 1.70.

1.71 Tekmira Milestone Product means any Tekmira Product Covered by a Valid Claim within the Alnylam Patents and that is directed to a Tekmira Non-Exclusive Target other than Ebola.

1.72 Tekmira Non-Exclusive Target means any of the following Targets: PLK1, APOB, Ebola, WEE1, CSN5, or any of the Tekmira Additional Non-Exclusive Targets.

1.73 Tekmira Patent means any Patent, other than a Protiva Patent, UBC Patent or Category 1 Patent, that is Controlled by Tekmira on or after the Effective Date and that was filed, or that claims priority to a Patent that was filed, before April 15, 2010.

1.74 Tekmira Product means an siRNA Product Researched, Developed or Commercialized by Tekmira, its Affiliates or Sublicensees that is directed to a Tekmira Target.

1.75 Tekmira Royalty-Bearing Patent means any Patent within the Tekmira Combined Licensed Technology, any Category 1 Patent, any Category 2 Patent as to which a Tekmira employee is listed as an inventor, any Category 3 Patent as to which a Tekmira employee is listed as an inventor, and any UBC Patent.

1.76 Tekmira Sublicensable Product means a Product that has been developed by Tekmira or its Affiliates for which (a) a Target has been identified, and a potential therapeutic intervention described, and (b) one (1) or more oligonucleotide(s) have been screened in in vitro studies and (c) non-GLP rodent pharmacology data has been generated.

1.77 Tekmira Target means a Tekmira Exclusive Target or a Tekmira Non-Exclusive Target.

1.78 Tekmira-UBC License Agreement means that certain license agreement between Tekmira and UBC, dated effective July 1, 1998, as amended by Amendment Agreement between Tekmira and UBC dated effective July 11, 2006, and Second Amendment Agreement dated effective August 14, 2007.

1.79 Territory means worldwide.

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1.80 Third Party means any Person other than Tekmira, Alnylam or any of their respective Affiliates.

1.81 UBC Patent means a Patent sublicensed to Alnylam pursuant to the UBC Sublicense and that was filed, or that claims priority to a Patent that was filed, before April 15, 2010.

1.82 Valid Claim means (a) any claim in an issued and unexpired patent within the Alnylam Patents or the Tekmira Royalty-Bearing Patents, as applicable, that has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal, and which has not been admitted by the holder of the patent to be invalid or unenforceable through reissue, re-examination, or disclaimer or otherwise and (b) a patent application within the Alnylam Patents or the Tekmira Royalty-Bearing Patents, as applicable, a claim of which has been pending less than [**] years and which claim has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.

Additional Defined Terms	Section Reference
AAA	10.2
Agreement	PREAMBLE
AlCana	RECITALS
Alnylam	PREAMBLE
Alnylam Additional Exclusive Target	3.2
Alnylam Indemnitee	7.1
Alnylam-Protiva CLA	RECITALS
Alnylam-Tekmira LCA	RECITALS
Ascletis	4.6
Code	2.7
Competitive Infringement	5.4(a)
Effective Date	PREAMBLE
IP Management Terms	5.1
Lead Development Candidate	1.17
LNP	RECITALS
LNP Improvements	2.2(d)
LNP/SNALP Technology	RECITALS
Losses	7.1
miRNA	RECITALS
Manufacturing Agreements	RECITALS
Prior Cross-License Agreements	RECITALS
Product Seller	1.45
Protiva	PREAMBLE
RNAi	RECITALS
Royalty Term	4.7
Settlement Agreement	RECITALS

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Additional Defined Terms	Section Reference
Sponsored Research Agreement	RECITALS
Successful Alnylam Product	4.5
Successful Biodefense Product	4.4
Successful Tekmira Milestone Product	4.1
Supplemental Agreement	RECITALS
Tekmira	PREAMBLE
Tekmira Additional Exclusive Target	3.1
Tekmira Additional Non-Exclusive Target	3.1
Tekmira Indemnitee	7.2
UBC	RECITALS
UBC Sublicense	RECITALS

ARTICLE II - LICENSE GRANTS AND RELATED RIGHTS

2.1 License Grants to Tekmira.

(a) Subject to the terms and conditions of this Agreement and the Alnylam Existing In-Licenses, Alnylam hereby grants to Tekmira and its Affiliates an exclusive right and license under the Alnylam Licensed Technology to Research, Develop and Commercialize Tekmira Products directed to any Tekmira Exclusive Target in the Tekmira Field in the Territory.

(b) Subject to the terms and conditions of this Agreement and the Alnylam Existing In-Licenses, Alnylam hereby grants to Tekmira and its Affiliates a non-exclusive right and license under the Alnylam Licensed Technology to Research, Develop and Commercialize Tekmira Products directed to any Tekmira Non-Exclusive Target in the Tekmira Field in the Territory.

(c) The licenses set forth in this Section 2.1 include the right to grant sublicenses as provided in, and subject to, Section 2.3 below.

2.2 License Grants to Alnylam.

(a) Subject to the terms and conditions of this Agreement, Tekmira hereby grants to Alnylam and its Affiliates an exclusive right and license under the Tekmira Combined Licensed Technology and the Category 1 Patents to Research, Develop and Commercialize Alnylam Products directed to any Alnylam Exclusive Target in the Alnylam Field in the Territory.

(b) Subject to the terms and conditions of this Agreement, Tekmira grants to Alnylam and its Affiliates a non-exclusive right and license under the Tekmira Combined Licensed Technology and the Category 1 Patents to Research, Develop and Commercialize Alnylam Products directed to any Alnylam Non-Exclusive Target in the Alnylam Field in the Territory.

(c) Subject to the terms and conditions of this Agreement, Tekmira grants to Alnylam and its Affiliates a non-exclusive right and license (without the right to grant sublicenses outside

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of the Alnylam Field) under the Category 1 Patents for any and all purposes, both in the Alnylam Field and outside of the Alnylam Field, in the Territory. The license granted pursuant to this Section 2.2(c) shall be fully paid-up and royalty-free outside the Alnylam Field.

(d) Subject to the terms and conditions of this Agreement, Tekmira grants to Alnylam and its Affiliates a non-exclusive, non-sublicensable, fully paid-up, royalty-free right and license under the Tekmira Combined Licensed Technology and the Category 1 Patents to research, develop, make, have made and use improvements to such technology and inventions claimed or covered by such Patents (“LNP Improvements”) and to research, develop, make, have made, use and commercialize LNP Improvements. As between the Parties, Alnylam shall own all LNP Improvements made by Alnylam and its Affiliates pursuant to the license granted under this Section 2.2(d); provided, however, that such ownership of LNP Improvements shall not extinguish or alter any of Alnylam’s obligations to Tekmira for any products that are Alnylam Products.

(e) The licenses set forth in subsections (a), (b) and (c) of this Section 2.2 include the right to grant sublicenses as provided in, and subject to, Section 2.3 below.

2.3 Sublicensing.

(a) The licenses granted to Tekmira in Section 2.1 include the right for Tekmira to grant sublicenses, but only on a Tekmira Sublicensable Product-by-Tekmira Sublicensable Product basis, to Third Parties to Research, Develop and/or Commercialize Tekmira Products that are Tekmira Sublicensable Products. Tekmira shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of this Agreement and of the Alnylam Existing In-Licenses governing Alnylam’s rights under the Alnylam Licensed Technology.

(b) The licenses granted to Alnylam in Section 2.2(a), Section 2.2(b) and Section 2.2(c) include the right for Alnylam to grant sublicenses in the Alnylam Field, but only on a Alnylam Sublicensable Product-by-Alnylam Sublicensable Product basis, to Third Parties to Research, Develop and/or Commercialize Alnylam Products that are Alnylam Sublicensable Products. Alnylam shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of this Agreement.

(c) Any sublicense granted by a Party hereunder shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement. The sublicensing Party shall assume full responsibility for the performance of all obligations and observance of all terms herein under the licenses granted to it and will itself pay and account to the other Party for all payments due under such licenses by reason of any such sublicense. If a sublicensing Party becomes aware of a material breach of any sublicense by a Sublicensee, the sublicensing Party shall promptly notify the other Party of the particulars of same and take all reasonable efforts to enforce the terms of such sublicense.

(d) Unless otherwise provided in this Agreement, the sublicensing Party will notify the other Party within [**] days after execution of a sublicense entered into hereunder and

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provide a copy of the fully executed sublicense agreement to the other Party within the same time frame (with such reasonable redactions as the sublicensing Party may make, provided that such redactions do not include provisions necessary to demonstrate compliance with the requirements of this Agreement), which shall be treated as Confidential Information of the sublicensing Party under Article VI; and provided further that the other Party may disclose such agreement(s) to Third Parties under confidence if and to the extent required in order to comply with such other Party’s contractual obligations under both this Agreement and Third Party agreements.

(e) Tekmira hereby waives the foregoing sublicensing restrictions and requirements of Section 2.2(c), Section 2.2(d) and this Section 2.3 with respect to the Alnylam Existing Sublicenses. In addition, to the extent that Alnylam as of the Effective Date has licensed or sublicensed any Patent or Know-How Controlled by Tekmira as of the Effective Date to any Third Party pursuant to any Alnylam Existing Sublicense, or granted any Third Party pursuant to any Alnylam Existing Sublicense any option to obtain a license or sublicense under any Patent or Know-How Controlled by Tekmira, the rights of the applicable Third Party shall not be affected by this Agreement, and if such Third Party Develops or Commercializes Alnylam Products, then Tekmira will be entitled to milestone payments and royalties with respect thereto as set forth in this Agreement. Alnylam agrees that it will not grant any additional options, licenses or sublicenses under Alnylam Patents, Tekmira Combined Licensed Technology, UBC Patents or Category 1 Patents to AlCana to Research, Develop or Commercialize siRNA Products without the prior written consent of Tekmira or enter into any additional contractual obligations to indemnify AlCana as to AlCana’s practice of the Alnylam Patents, Tekmira Combined Licensed Technology, UBC Patents or Category 1 Patents to Research, Develop or Commercialize siRNA Products.

(f) Notwithstanding Sections 2.3(a) and 2.3(b), either Party may utilize Permitted Contractors and Institutional Collaborators to Research and/or Develop their respective Products, whether or not such Products have become Sublicensable Products; provided that (i) such Party does not grant any such Permitted Contractor or Institutional Collaborator any license to Commercialize Products that are not Sublicensable Products and (ii) no Party shall share any of the other Party’s Confidential Information with such Permitted Contractor or Institutional Collaborator unless such Third Party shall have executed a binding confidentiality agreement containing reasonably customary terms and conditions.

2.4 Coordination with Supplemental Agreement. Tekmira and Alnylam hereby agree that the terms of this Agreement and the Settlement Agreement (and the Binding Term Sheet attached thereto) extinguish, supersede, and replace the rights and obligations of Tekmira, Alnylam, and AlCana under the Supplemental Agreement solely as between and among Tekmira, Alnylam, and AlCana; provided, however, Alnylam’s payment obligations to UBC and AlCana under the Supplemental Agreement and Sponsored Research Agreement shall survive the execution of this Agreement and the Settlement Agreement (and the Binding Term Sheet attached thereto), and shall also survive any termination of the Supplemental Agreement or Sponsored Research Agreement, in each case for the duration of the applicable Royalty Term (as defined in the Sponsored Research Agreement). Subject to the terms and conditions of the Settlement Agreement and any subsequent agreement(s) among Alnylam, Tekmira, UBC and

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AlCana, the rights and obligations of UBC under the Supplemental Agreement and Sponsored Research Agreement shall be maintained. Notwithstanding any of the foregoing, nothing in this section 2.4 shall operate to relieve Alnylam of its obligation to comply with its payment or royalty obligations to UBC or AlCana, either directly or indirectly, under the Supplemental Agreement or Sponsored Research Agreement.

2.5 Covenants Not to Sue. Alnylam hereby covenants that it and its Existing Affiliates will not initiate any legal suit against Tekmira or any of its Existing Affiliates asserting that:

(a) any internal Research performed solely by Tekmira or its Existing Affiliates (and not with any Third Party) and solely for the purpose of identifying a Target for selection as a Tekmira Additional Target hereunder during the period starting on the Effective Date and continuing until the earlier of (i) the [**] anniversary of the Effective Date and (ii) such date that Tekmira completes its selection of the Tekmira Additional Targets pursuant to Article III; or

(b) the formulating in LNP Formulations by Tekmira or any of its Existing Affiliates of oligonucleotides controlled by any bona fide Third Party pharmaceutical collaborator on behalf of such Third Party and solely for Research (but not Development or Commercialization);

constitutes infringement and/or misappropriation of the Alnylam Licensed Technology. For clarity, the Parties agree that the covenants set forth in this Section 2.5 do not extend to any Third Party.

2.6 Retained Rights. Each Party expressly retains any rights not expressly granted to the other Party under this Article II (or otherwise under this Agreement).

2.7 Rights in Bankruptcy. All licenses and rights to licenses granted under or pursuant to this Agreement by a Party to other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Code”), licenses of rights to “intellectual property” as defined under Section 101(35A) of the Code. The Parties agree that each Party, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Code, and that upon commencement of a bankruptcy proceeding by or against the other Party under the Code, such Party shall be entitled to a complete duplicate of, or complete access to (as such Party deems appropriate), any such intellectual property and all embodiments of such intellectual property. Such intellectual property and all embodiments thereof shall be promptly delivered to such Party (a) upon any such commencement of a bankruptcy proceeding upon written request therefor by such Party, unless such other Party elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of such other Party upon written request therefor by such Party. The foregoing provisions are without prejudice to any rights such Party may have arising under the Code or other applicable law.

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ARTICLE III - SELECTION OF ADDITIONAL TARGETS

3.1 Tekmira Additional Targets. Subject to Section 3.3, during the period beginning on the Effective Date and ending on the [**] anniversary thereof, Tekmira may select (i) up to two (2) Targets (other than the Alnylam Exclusive Targets) that shall each become a “Tekmira Additional Exclusive Target” and (ii) up to five (5) Targets (other than the Alnylam Exclusive Targets) that shall each become a “Tekmira Additional Non-Exclusive Target”. For clarity, the Parties acknowledge that such seven (7) Tekmira Additional Targets shall be in addition to the one (1) Tekmira Exclusive Target and the five (5) Tekmira Non-Exclusive Targets selected as of the Effective Date.

3.2 Alnylam Additional Exclusive Targets. Subject to Section 3.3, during the period beginning on the Effective Date and ending on the [**] anniversary thereof, Alnylam may select up to five (5) Targets (other than the Tekmira Targets) that shall each become an “Alnylam Additional Exclusive Target”. For clarity, the Parties acknowledge that the five (5) Alnylam Exclusive Additional Targets shall be in addition to the Alnylam Existing Exclusive Targets.

3.3 Selection Process. The following process shall apply to the selection of Tekmira Additional Targets and Alnylam Additional Exclusive Targets.

(a) As to Targets that are peptide entities, the selecting Party shall initially notify the other Party in writing of the NCBI Gene ID number (or, if a NCBI Gene ID number is not available, the specific sequence of the proposed Target) of each Target nominated by the selecting Party for selection as an additional Target. As to Targets that are non-peptide entities, the selecting Party shall initially notify the other Party in writing of the non-peptide entity. Within [**] Business Days following the other Party’s receipt of a notice nominating a Target, such other Party shall notify the selecting Party in writing whether such Target is either: (i) subject to a binding contractual obligation to a Third Party that would be breached by the inclusion of such Target as an additional Target under these terms, or (ii) the subject of an Active Internal Development Program at such other Party and such Active Internal Development Program was in existence as such prior to the receipt of such notice from the selecting Party and such other Party determines in good faith that it intends to continue such Active Internal Development Program, and so notifies the selecting Party. If neither of these criteria applies, the Target shall be considered to have been successfully nominated as a Tekmira Additional Non-Exclusive Target, Tekmira Additional Exclusive Target, or Alnylam Additional Exclusive Target, as applicable.

(b) If a Target submitted to Alnylam is not available for license as a Tekmira Additional Target pursuant to subsection (a) above, then Tekmira may nominate an additional Target as a Tekmira Additional Target, until two (2) Tekmira Additional Exclusive Targets and five (5) Tekmira Additional Non-Exclusive Targets have been identified and successfully nominated pursuant to the foregoing procedure. Any Target successfully nominated pursuant to the foregoing procedure shall be a Tekmira Additional Target.

(c) If a Target submitted to Tekmira is not available for license as an Alnylam Additional Exclusive Target pursuant to subsection (a) above, then Alnylam may nominate an

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additional Target as an Alnylam Additional Exclusive Target, until five (5) Alnylam Additional Exclusive Targets have been identified and successfully nominated pursuant to the foregoing procedure. Any Target successfully nominated pursuant to the foregoing procedure shall be an Alnylam Exclusive Additional Target.

ARTICLE IV - FINANCIAL PROVISIONS

4.1 Manufacturing Opt-Out Payment. Within ten (10) Business Days after the Effective Date, Alnylam shall pay Tekmira a fee of thirty million U.S. dollars ($30,000,000), which amount shall constitute full consideration for the termination of and release of Alnylam from all of Alnylam’s obligations under the Manufacturing Agreements, including without limitation the obligations to obtain materials and/or services from Tekmira, and the rights to Manufacture and have Manufactured Alnylam Products included in the Development and Commercialization rights granted to Alnylam pursuant to Sections 2.2(a) and 2.2(b). Based on Tekmira’s provision to Alnylam of a completed Form W-8BEN, Alnylam agrees that it will not withhold taxes from the payment under this Section 4.1.

4.2 Restructuring Payment. Within ten (10) Business Days after the Effective Date, Alnylam shall pay Tekmira a fee of thirty-five million U.S. dollars ($35,000,000), which amount shall constitute payment for the termination of the Prior Cross-License Agreements and the Parties’ rights and obligations thereunder, as well as the restructuring of certain milestone payments and royalty rates for certain Alnylam Products as set forth in Sections 4.6 and 4.9(d). Based on Tekmira’s provision to Alnylam of a completed Form W-8BEN, Alnylam agrees that it will not withhold taxes from the payment under this Section 4.2.

4.3 Milestones with Respect to Tekmira Milestone Products. On a Tekmira Milestone Product-by-Tekmira Milestone Product basis, payments will be payable by Tekmira to Alnylam based upon the achievement of certain milestone events as set forth in the table below (all references are to U.S. dollars). Tekmira will provide written notice to Alnylam of the occurrence of a milestone event within [**] Business Days, and pay the indicated milestone fee to Alnylam within [**] days, after the occurrence of the relevant event.

Capitalized terms in the chart below shall be read in context to apply to Tekmira Milestone Products; provided, however, that each milestone payment will be payable no more than once in respect of any given Tekmira Milestone Product.

Milestone Event	Milestone Fee
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]

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Milestone Event	Milestone Fee
[**]		[**	]
[**]		[**	]

If one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone event(s) will be due at the same time as the payment for the next achieved milestone event. The milestone payments described above shall be payable only once in relation to each Tekmira Milestone Product that achieves Regulatory Approval in a Major Market (each, a “Successful Tekmira Milestone Product”). Therefore, unless and until there is a Successful Tekmira Milestone Product directed to a particular Target, any of the milestone payments made by Tekmira under this Section in connection with a Tekmira Milestone Product directed to such Target shall be fully creditable against the repeated achievement of such milestone event by any other Tekmira Milestone Product directed to such Target. However, in the event that there is a Successful Tekmira Milestone Product directed to a Target and Tekmira subsequently begins to Develop or continues to develop a Follow-On Product then, if and when any of the milestone events set out above is thereafter achieved for such Follow-On Product, in addition to the milestone payment for such milestone event, there will also be due and payable all of the milestone payment(s) for any such milestones that were achieved but not paid for such Follow-On Product prior to the achievement of Regulatory Approval in a Major Market of a Successful Tekmira Milestone Product with respect to such Target.

4.4 Milestones with Respect to Biodefense Targets. The milestone fees payable by Alnylam to Tekmira with respect to Alnylam Products directed to Biodefense Targets that are not intended for sale, directly or indirectly, to a Funding Authority shall be as set forth in Section 4.4. The milestone fees payable by Alnylam to Tekmira with respect to Alnylam Products Covered by a Valid Claim within the Tekmira Royalty-Bearing Patents that are directed to Biodefense Targets which are intended for sale, directly or indirectly, to a Funding Authority shall be payable on an Alnylam Product-by-Alnylam Product basis as follows, subject to Section 4.6:

Milestone Event	Milestone Fee
[**]		[**	]
[**]		[**	]
[**]		[**	]

In the event one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone event(s) will be due at the same time as the payment for the next achieved milestone event. The milestone payments described above shall be payable only once in relation to each Alnylam Royalty Product directed to a Biodefense Target that achieves First

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Commercial Sale in a Major Market (each, a “Successful Biodefense Product”). Therefore, unless and until there is a Successful Biodefense Product directed to a particular Biodefense Target, any of the milestone payments made by Alnylam under this Section in connection with an Alnylam Product directed to such Biodefense Target shall be fully creditable against the repeated achievement of such milestone event by any other Alnylam Product directed to such Biodefense Target. However, in the event that there is a Successful Biodefense Product directed to a Biodefense Target and Alnylam subsequently begins to Develop or continues to Develop a Follow-On Product, then, if and when any of the milestone events set out above is thereafter achieved for such Follow-On Product directed to such Biodefense Target, in addition to the milestone payment for such milestone event, there will also be due and payable all of the milestone payment(s) for any such milestones that were achieved but not paid for such Follow-On Product prior to the achievement of Approval in a Major Market of a Successful Biodefense Product with respect to such Biodefense Target.

4.5 Milestones with Respect to Alnylam Products. On an Alnylam Product-by-Alnylam Product basis, and except as otherwise set forth in Sections 4.4 and 4.6, payments will be payable by Alnylam to Tekmira based on the achievement of certain milestone events as set forth in the table below (all references are to U.S. dollars) with respect to any Alnylam Product that is Covered by a Valid Claim within the Tekmira Royalty-Bearing Patents. Alnylam will provide written notice to Tekmira of the occurrence of a milestone event within [**] Business Days, and pay the indicated milestone fee to Tekmira within [**] days, after the occurrence of the relevant event.

Capitalized terms in the chart below shall be read in context to apply to Alnylam Products; provided, however, that each milestone payment will be payable no more than once in respect of any given Alnylam Product.

Milestone Event	Milestone Fee
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]

If one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone event(s) will be due at the same time as the payment for the next achieved milestone event. The milestone payments described above shall be payable only once in relation to each Alnylam Product that achieves Regulatory Approval in a Major Market (each, a

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“Successful Alnylam Product”). Therefore, unless and until there is a Successful Alnylam Product directed to a particular Target, any of the milestone payments made by Alnylam under this Section in connection with an Alnylam Product directed to such Target shall be fully creditable against the repeated achievement of such milestone event by any other Alnylam Product directed to such Target. However, in the event that there is a Successful Alnylam Product directed to a Target and Alnylam subsequently begins to Develop or continues to Develop a Follow-On Product, if and when any of the milestone events set out above is thereafter achieved for such Follow-On Product directed to such Target, in addition to the milestone payment for such milestone event, there will also be due and payable all of the milestone payment(s) for any such milestones that were achieved but not paid for such Follow-On Product prior to the achievement of Regulatory Approval in a Major Market of a Successful Alnylam Product directed to such Target.

4.6 Milestones for Certain Alnylam Existing Exclusive Targets. In lieu of any milestone payments under Sections 4.4 and 4.5 with respect to all Alnylam Products that are directed to any of the Alnylam Existing Exclusive Targets, a milestone payment will be due by Alnylam to Tekmira solely for the first achievement of each of the corresponding milestone events set forth in the table below (all references are to U.S. dollars) by the applicable Alnylam Product identified below. Alnylam will provide written notice to Tekmira of the occurrence of a milestone event within [**] Business Days, and pay the indicated milestone fee to Tekmira within [**] days, after the occurrence of the relevant milestone event. For the avoidance of doubt, each milestone fee set forth below will be payable no more than once.

Milestone Event	Milestone Fee
Dosing of first patient in a Phase III Clinical Trial for ALN-TTR; provided that such ALN-TTR is Covered by a Valid Claim within the Tekmira Royalty-Bearing Patents	$	5,000,000
Tekmira has [**] for clinical development of ALN-VSP in China either by (i) provision of direct Manufacturing services, including but not limited to the clinical trial drug product material and associated manufacturing and regulatory information necessary and sufficient for the initiation of a clinical trial in China or Korea, or (ii) the transfer of necessary Manufacturing process technology used to produce batch [**] of ALN-VSP for Alnylam clinical trials and sufficient to produce at least one (1) batch of ALN-VSP suitable for clinical trials in China or Korea.	$	5,000,000

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In addition to the corresponding milestone fee, all expenses actually incurred by Tekmira for the activities set forth in clauses (i) and (ii) in the second milestone listed in the above table shall be paid by [**].

4.7 Royalty Term. Royalties shall be payable hereunder on a Product-by-Product and country-by-country basis commencing on the First Commercial Sale of a Product in a country and continuing during any period in which (a) in the case of Alnylam Products, a Valid Claim within the Tekmira Royalty-Bearing Patents Covers the applicable Alnylam Product in such country of sale, or (b) in the case of Tekmira Products, a Valid Claim within the Alnylam Patents Covers the applicable Tekmira Product in such country of sale (such period, as applicable, the “Royalty Term”). Upon the expiration of the Royalty Term applicable to a given Product and country, the license granted under Section 2.1(a), Section 2.1(b), Section 2.2(a) or Section 2.2(b), as applicable, shall become fully paid-up, royalty-free, non-exclusive, perpetual and irrevocable with respect to such Product in such country.

4.8 Royalties Payable by Tekmira. During the applicable Royalty Term, Tekmira shall pay running royalties on Net Sales of Tekmira Products Covered by one or more Valid Claims of any Alnylam Patent in the applicable country of sale in accordance with the applicable running royalty rates set out in the table below (all references are to U.S. dollars):

Aggregate Annual Net Sales	Royalty Rate
[**]		[**	]%
[**]		[**	]%
[**]		[**	]%
[**]		[**	]%

No royalties will be payable more than once by Tekmira with respect to any single unit of Tekmira Product.

4.9 Royalties on Alnylam Products. During the applicable Royalty Term, Alnylam shall pay running royalties on Net Sales of Alnylam Products Covered by one or more Valid Claims of the Tekmira Royalty-Bearing Patents in the applicable country of sale, as follows (all references are to U.S. dollars), whether or not such Alnylam Products are directed to Biodefense Targets, subject to Section 4.9(d):

(a) Where the Net Sales are those of, and are invoiced by, any one of the following:

(i) Alnylam or its Affiliate;

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(ii) Roche;

(iii) Regulus Therapeutics under a sub-license granted by Alnylam; or

(iv) another sub-licensee under a sub-license granted by Alnylam in connection with, and solely for the purpose of, a Bona Fide Collaboration;

the applicable running royalty rates shall be as set out in the table below:

Aggregate Annual Net Sales	Royalty Rate
[**]		[**	]%
[**]		[**	]%
[**]		[**	]%

(b) In all other cases, the applicable running royalty rates shall be set out in the table below:

Aggregate Annual Net Sales	Royalty Rate
[**]		[**	]%
[**]		[**	]%
[**]		[**	]%
[**]		[**	]%

(c) No royalties will be payable more than once by Alnylam with respect to any single unit of Alnylam Product.

(d) The royalty rate payable on Net Sales of Alnylam Products Covered by one or more Valid Claims of the Tekmira Royalty-Bearing Patents in the applicable country of sale that are directed to any of the Alnylam Existing Exclusive Targets shall be reduced by [**] percent ([**]%) of Aggregate Annual Net Sales at all tiers set forth in the tables in subsections (a) and (b) above (e.g., where such a table indicates a royalty rate of [**]%, the royalty rate that would apply instead with respect to Net Sales of Alnylam Products directed to any of the Alnylam Existing Exclusive Targets shall be [**]%).

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4.10 Royalty Reduction. The royalties due under Section 4.8 or 4.9 above, as applicable, may be reduced on a country-by-country basis in the Territory by the amount of royalties paid or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [**] of the royalties otherwise due (and will not in any case be reduced below [**] of the amount of royalties that would otherwise be due, e.g., for Net Sales of a Tekmira Product up to and including $[**], the minimum effective royalty rate would be [**]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are $[**] and royalties due to Third Parties in respect of the sale of such product total [**] percent ([**]%) of Net Sales (or $[**]), royalties due to Alnylam may be reduced only by $[**] which is determined as follows: maximum reduction is [**] of the royalty due on Net Sales of $[**], calculated by [**]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than $[**] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights in the absence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [**]% of such Aggregate Annual Net Sales greater than $[**] in respect of any such Alnylam Product.

4.11 Third Party License Payments. Tekmira shall pay 100% of all royalties, license fees, milestones and similar payments (if any) payable to any Third Party under its existing in-licenses, if any, for the rights to Tekmira Combined Licensed Technology licensed to Alnylam under this Agreement. In addition, notwithstanding the differences between the milestones and royalties payable by Alnylam under this Agreement and the milestones and royalties that were payable under the Alnylam-Tekmira LCA, Tekmira remains solely responsible for, and agrees to pay to UBC, any and all amounts payable to UBC pursuant to the Tekmira-UBC License Agreement, including, without limitation, any and all amounts payable to UBC in connection with Alnylam’s exercise of its rights under the UBC Sublicense and any and all amounts paid by Alnylam to Tekmira under this Agreement or the UBC Sublicense. Alnylam shall pay 100% of all royalties, license fees, milestones and similar payments (if any) payable to any Third Party under any Alnylam Existing In-License for the rights to Alnylam Licensed Technology licensed to Tekmira under this Agreement.

4.12 Reports. As to each Royalty Quarter commencing with the Royalty Quarter during which the First Commercial Sale occurs with respect to a Tekmira Product, in the case of Tekmira as the reporting Party, or with respect to an Alnylam Product, in the case of Alnylam as the reporting Party, within [**] days after the end of such Royalty Quarter (if the reporting Party has not entered into an agreement with a Sublicensee) and within [**] days after the receipt by the reporting Party from a Sublicensee of such Sublicensee’s report, as required by such Sublicensee’s sublicense for each Royalty Quarter (if the applicable Party has entered into an agreement with a Sublicensee), each reporting Party will deliver to the other Party to this

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Agreement a written report showing, on a country-by-country basis, the Net Sales of Products calculated under GAAP and its royalty obligation for such quarter with respect to such Net Sales under this Agreement together with wire transfer of an amount equal to such royalty obligation. All Net Sales will be segmented in each such report according to sales by the selling Party and each of its Affiliates and Sublicensees, as well as on a product-by-product basis, including the rates of exchange used to convert Net Sales to United States Dollars from the currency in which such sales were made. For the purposes of this Agreement, the rates of exchange to be used for converting Net Sales to United States Dollars will be the simple average of the selling and buying rates of U.S. dollars published in The Wall Street Journal East Coast Edition for the last Business Day of the Royalty Quarter covered by the report.

4.13 Tax Withholding. Each paying Party will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to the other Party under this Agreement. Notwithstanding such efforts, subject to Sections 4.1 and 4.2, if the paying Party concludes that tax withholdings under the laws of any country are required with respect to payments, the paying Party will make the full amount of the required payment to such other Party after any tax withholding. In any such case, the paying Party shall provide such other Party with a written explanation of such withholding and original receipts or other evidence reasonably desirable and sufficient to allow it to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.

4.14 Payments. Unless otherwise agreed by the Parties, all payments required to be made under this Agreement will be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.

4.15 Audits. At any given point in time, each Party will have on file and will require its Affiliates and Sublicensees to have on file complete and accurate records for the last [**] years of all Net Sales of Products for which it is the paying Party. The other Party to this Agreement will have the right, [**] during each twelve (12) month period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to such Party to review such records solely for accuracy and for no other purpose upon reasonable notice and under a written obligation of confidentiality, during regular business hours. If the audit demonstrates that the payments owed under this Agreement have been understated, the audited Party will pay the balance to such other Party together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to the then current [**]-day United States dollar LIBOR rate plus [**] percent per annum. If the underpayment is greater than five percent of the amount owed, then the audited Party will reimburse such other Party for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, such other Party to this Agreement will credit the balance against the next payment due from the audited Party (without interest).

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ARTICLE V - INTELLECTUAL PROPERTY

5.1 Category 1, 2 and 3 Patents. Subject to the terms and conditions set forth in the Exhibit A attached hereto (the “IP Management Terms”):

(a) Alnylam hereby assigns to Tekmira all of Alnylam’s right, title and interest in and to the Category 1 Patents, subject to any existing rights granted by Alnylam to Third Parties under the Category 1 Patents, including but not limited to such rights granted by Alnylam to UBC and AlCana under the Supplemental Agreement and rights granted under the Alnylam Existing Sublicenses; provided, however, that such assignment shall exclude any right to enforce the Category 1 Patents with respect to any alleged infringing activities by Alnylam and/or any of its licensees that occurred prior to the Effective Date.

(b) In the event that Tekmira obtains any ownership interest in any Category 2 Patent or Category 3 Patent pursuant to the inventorship determination made under Sections 5 and 6 of the IP Management Terms, Tekmira shall and hereby does assign to Alnylam all of Tekmira’s right, title and interest in and to such Category 2 Patent or Category 3 Patent, as applicable.

(c) Each Party agrees to execute such further documents and take such further actions as the other Party may reasonably request in order to give effect to the assignments contemplated under subsections (a) and (b) above.

(d) The filing, prosecution and maintenance of Category 1 Patents, Category 2 Patents and Category 3 Patents shall be governed by the applicable provisions of the IP Management Terms.

5.2 Prosecution and Maintenance of Other Patents. Subject to the IP Management Terms, Alnylam will have the sole right and responsibility, at Alnylam’s discretion and at its expense, to file, prosecute and maintain patent protection in the Territory for all Patents (other than Category 2 Patents, and Category 3 Patents) within the Alnylam Licensed Technology. Tekmira will have the sole right and responsibility, at Tekmira’s discretion and at its expense, to file, prosecute and maintain patent protection in the Territory for all Patents (other than Category 1 Patents) within the Tekmira Combined Licensed Technology.

5.3 Third Party Infringement of Alnylam’s Patents.

(a) Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a Third Party of any of the Alnylam Patents of which such Party becomes aware, as such infringement relates to Research, Development or Commercialization of Products directed at any Tekmira Target, or any Tekmira Product, and will provide the other Party with all available evidence supporting such infringement.

(b) Alnylam will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory with respect to infringements or suspected infringements of any of the Alnylam Patents and to any and all recoveries obtained in connection therewith.

(c) Alnylam will have the sole and exclusive right to select counsel for any suit referred to in subsection 5.3(b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

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5.4 Competitive Infringement of Category 1 Patents.

(a) Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a Third Party of any of the Category 1 Patents of which such Party becomes aware. If any such infringement relates to the development, making, using, selling, offering for sale or importing of a product that is directed against an Alnylam Exclusive Target (“Competitive Infringement”), then Alnylam will have the first right to initiate an infringement or other appropriate suit in the Territory with respect to such Competitive Infringement; provided, that if Alnylam fails to initiate a suit or take other appropriate action with respect to such Competitive Infringement within [**] days after becoming aware of the basis for such suit or action, then Tekmira may, in its discretion, provide Alnylam with written notice of Tekmira’s intent to initiate a suit or take other appropriate action with respect to such Competitive Infringement. If Tekmira provides such notice and Alnylam fails to initiate a suit or take such other appropriate action within [**] days after receipt of such notice from Tekmira, then Tekmira shall have the right to initiate a suit or take other appropriate action that it believes is reasonably required to protect its interests with respect to such Competitive Infringement.

(b) The Party bringing the enforcement action with respect to such Competitive Infringement shall have the right to defend against any claim arising during such action asserting that the Category 1 Patent that is subject of such Competitive Infringement is invalid or unenforceable.

(c) Regardless of which Party brings such the enforcement action with respect to such Competitive Infringement, the Party not bringing the enforcement action shall (i) provide all reasonable assistance to the Party bringing the action, at the expense of the Party bringing the action, and (ii) have the right to join and participate in such action at its own expense with its own counsel and to share equally all expenses of such suit if it so elects. If required under applicable law in order for the initiating Party to initiate and/or maintain such suit, or if the initiating Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case, the other Party shall, at the expense of the initiating Party, join as a party to the suit and will execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action.

(d) Any damages or other recovery, whether by settlement or otherwise, from an action under this Section 5.4 to enforce the Category 1 Patent against Competitive Infringement shall first be applied pro rata to reimburse the Parties for the costs and expenses of litigation in such action, and [**] percent ([**]%) of any remaining amount shall be paid to or retained by the Party conducting the litigation and [**] percent ([**]%) of such remaining amount shall be paid to or retained by the other Party.

5.5 Third Party Infringement of Tekmira’s Patents.

(a) Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a Third Party of any Patents within the Tekmira Combined Licensed Technology of which such Party becomes aware, as such infringement relates to the Research, Development or Commercialization of Products directed at any Alnylam Target, or any Alnylam Product, and will provide the other Party with all available evidence supporting such infringement.

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(b) Tekmira will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory with respect to infringements or suspected infringements of any of the Patents within the Tekmira Combined Licensed Technology, and of any of the Category 1 Patents that does not constitute Competitive Infringement and to any and all recoveries obtained in connection therewith.

(c) Tekmira will have the sole and exclusive right to select counsel for any suit referred to in subsection 5.5(b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

5.6 Patent Certification. To the extent required by law or permitted by law, the Parties shall use reasonable efforts to maintain with the applicable regulatory authorities during the Term correct and complete listings of applicable Patents for Alnylam Products or Tekmira Products, as the case may be, being Commercialized, including but not limited to all so-called “Orange Book” listings required under the Hatch-Waxman Act.

ARTICLE VI - CONFIDENTIAL INFORMATION AND PUBLICITY

6.1 Non-Disclosure of Confidential Information. Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other Party (a) will not be used by the receiving Party except in connection with the activities contemplated by this Agreement, (b) will be maintained in confidence by the receiving Party, and (c) will not be disclosed by the receiving Party to any Third Party without the prior written consent of the disclosing Party. Notwithstanding the foregoing, the receiving Party will be entitled to use and disclose Confidential Information of the disclosing Party that (i) was known by the receiving Party or its Affiliates prior to its date of disclosure by the disclosing Party to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party, (ii) either before or after the date of the disclosure such Confidential Information is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party, (iii) either before or after the date of the disclosure by the disclosing Party or its Affiliates to the receiving Party such Confidential Information becomes published or otherwise part of the public domain through no fault, act or omission on the part of the receiving Party or its Affiliates, (iv) is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the Confidential Information as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Products, or for the prosecution and maintenance of Patents, and such Patents shall include without limitation claims to the nucleic acid component of the Products, the Products as formulated with an LNP including excipients, as well as methods of use and manufacture of the foregoing, along with any other claims that are usual and customary to obtain maximum protection for a pharmaceutical, (vi) is reasonably required in order for a Party to obtain financing or conduct discussions with existing or potential Development and/or Commercialization partners so long as such Third Party recipients are bound by an obligation of confidentiality, or (vii) in the reasonable judgment of the receiving Party is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, including without limitation by the rules or regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States or

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of any stock exchange or NASDAQ, provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the extent of such disclosure, or (viii) solely with respect to Confidential Information comprising Alnylam Know-How, Tekmira Know-How or Protiva Know-How, is otherwise reasonably necessary to disclose in connection with the Research, Development or Commercialization of Products hereunder.

Alnylam and its Affiliates shall not provide the Tekmira Manufacturing Documents or copies thereof to any Third Party, and shall not reproduce such Tekmira Manufacturing Documents in any patent application, publication or other public disclosure; provided, however, that Alnylam and its Affiliates shall be permitted to provide such Tekmira Manufacturing Documents to (1) on a need-to-know basis, Third Party contract manufacturers and other Permitted Contractors that are engaged to manufacture Alnylam Products or to provide services in connection with Development, Manufacturing or regulatory matters for Alnylam Products and/or (2) Sublicensees (who shall also be permitted to provide such Tekmira Manufacturing Documents on a need-to-know basis to Third Party contract manufacturers and other Permitted Contractors that are engaged to manufacture Alnylam Products or to provide services in connection with Development, Manufacturing or regulatory matters for Alnylam Products), in each of the foregoing clauses (1) or (2), that are subject to binding confidentiality agreements containing reasonably customary terms and conditions and, in the case of Third Party contract manufacturers and other Permitted Contractors, restricting such Third Parties from providing the Tekmira Manufacturing Documents to further Third Parties other than in accordance with clause (3) below, and/or (3) regulatory authorities to the extent reasonably necessary to obtain Regulatory Approval for, or comply with regulatory requirements applicable to the Development or Commercialization of, any Alnylam Product.

Notwithstanding anything to the contrary in this Agreement, the confidentiality and non-use obligations under this Agreement and the restrictions set forth in the immediately preceding paragraph shall not apply to Confidential Information consisting of Alnylam Know-How, Tekmira Know-How or Protiva Know-How, including such Confidential Information comprised by the Tekmira Manufacturing Documents, that is mentally retained in the unaided memories of the receiving Party’s and its Affiliates’ employees, consultants and advisors.

For the avoidance of doubt, information received by a Party solely as a result of the litigation settled pursuant to the Settlement Agreement shall not be governed by this Agreement and therefore shall not be subject to the exceptions set forth in the immediately preceding paragraphs permitting the use and disclosure of Confidential Information hereunder (i.e., nothing in this Agreement shall lessen any restrictions on the use and disclosure of such information imposed in such litigation proceedings).

If a Party is required by judicial or administrative process to disclose Confidential Information that is subject to the non-disclosure provisions of this Section 6.1, such Party shall promptly inform the other Party of the disclosure that is being sought in order to provide the other Party an opportunity to challenge or limit the disclosure obligations. Confidential Information that is disclosed by judicial or administrative process shall remain otherwise subject to the confidentiality and non-use provisions of this Section 6.1, and the Party disclosing Confidential

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Information pursuant to law or court order shall take all steps reasonably practical, including without limitation seeking an order of confidentiality, to ensure the continued confidential treatment of such Confidential Information. In addition to the foregoing restrictions on public disclosure, if either Party concludes that a copy of this Agreement must be filed with the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States, such Party shall seek the maximum confidential treatment available under applicable law, provide the other Party with a copy of this Agreement showing any sections as to which the Party proposes to request confidential treatment, provide the other Party with an opportunity to comment on any such proposal and to suggest additional portions of this Agreement for confidential treatment, and take such Party’s reasonable comments into consideration before filing this Agreement.

6.2 Limitation on Disclosures. Each Party agrees that it will provide Confidential Information received from the other Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its or its Affiliates or existing or potential Sublicensees, as applicable, who have a legitimate business need to know and an obligation to maintain in confidence the Confidential Information of the disclosing Party. The receiving Party is liable for any breach of the non-disclosure obligation of, as applicable, (a) its and its Affiliates’ employees, consultants and advisors, (b) existing or potential Sublicensees and (c) the employees, consultants and advisors of any existing or potential Sublicensees.

6.3 Publicity.

(a) No disclosure of the existence of, or the terms of, this Agreement may be made by either Party or its Affiliates, and no Party or its Affiliates shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by law or as set forth in this Section 6.3. Either Party may issue press releases or otherwise make public statements or disclosures (such as in annual reports to stockholders or filings with the Securities and Exchange Commission) as it determines, based on advice of counsel, are reasonably necessary to comply with applicable laws and regulations. In addition, following any press release(s) announcing this Agreement or any other public disclosure by the Parties, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith.

Any reference made by Alnylam in a press release to LNP technology shall include the following statement:

“About LNP Technology

Alnylam has licenses to Tekmira LNP intellectual property for use in RNAi therapeutic products.”

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Any reference made by Tekmira in a press release to siRNA programs shall include the following statement:

“About Alnylam RNAi Technology

Tekmira has licenses to Alnylam RNAi intellectual property for certain RNAi programs.”

ARTICLE VII - INDEMNIFICATION AND INSURANCE

7.1 Tekmira Indemnification. Tekmira agrees to indemnify and hold harmless Alnylam and its Affiliates, and their respective agents, directors, officers and employees and their respective successors and permitted assigns (the “Alnylam Indemnitees”) from and against any and all losses, costs, damages, fees or expenses (“Losses”) incurred by an Alnylam Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a Third Party based on (a) any claim made against Alnylam by Third Parties regardless of the form or forum in which any such claim is made alleging (i) infringement or misappropriation of Third Party intellectual property, or (ii) personal injury, or death occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Tekmira Product Covered by an Alnylam Patent, whether claimed by reason of breach of warranty, negligence or product defect, and (b) any breach of any representation, warranty or covenant of Tekmira in this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a breach of any of Alnylam’s representations, warranties, covenants and/or obligations under this Agreement.

7.2 Alnylam Indemnification. Alnylam agrees to indemnify and hold harmless Tekmira, its Affiliates, and their respective agents, directors, officers and employees and their respective successors and permitted assigns (the “Tekmira Indemnitees”) from and against any and all Losses incurred by a Tekmira Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a Third Party based on (a) any claim made against Tekmira by Third Parties regardless of the form or forum in which any such claim is made alleging (i) infringement or misappropriation of Third Party intellectual property, or (ii) personal injury, or death occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Alnylam Product Covered by a Tekmira Patent, whether claimed by reason of breach of warranty, negligence or product defect, and (b) any breach of any representation, warranty or covenant of Alnylam in this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a breach of any of Tekmira’s representations, warranties, covenants and/or obligations under this Agreement.

7.3 Tender of Defense; Counsel. The obligation to indemnify pursuant to this Article shall be contingent upon timely notification by the indemnitee to the indemnitor of any claims, suits or service of process; the tender by the indemnitee to the indemnitor of full control over the conduct and disposition of any claim, demand or suit; and reasonable cooperation by the

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indemnitee in the defense of the claim, demand or suit. No indemnitor will be bound by or liable with respect to any settlement or admission entered or made by any indemnitee without the prior written consent of the indemnitor. The indemnitee will have the right to retain its own counsel to participate in its defense in any proceeding hereunder. The indemnitee shall pay for its own counsel except to the extent it is determined that (a) one or more legal defenses may be available to it which are different from or additional to those available to the indemnitor, or (b) representation of both Parties by the same counsel would be inappropriate due to actual or potential differing interests between them. In any such case and to such extent, the indemnitor shall be responsible to pay for the reasonable costs and expenses of one separate counsel retained to participate in the defense of the indemnitee, provided that such expenses are otherwise among those covered by the indemnitor’s indemnity obligations under this Article VII. Notwithstanding the foregoing, if the indemnitor reasonably believes that any of the exceptions to its obligation of indemnification of the indemnitee set forth in Sections 7.1 or 7.2 may apply, the indemnitor shall promptly notify the indemnitee, which shall then have the right to be represented in any such action or proceeding by separate counsel at the indemnitee’s expense; provided, that the indemnitor shall be responsible for payment of such expenses if the indemnitee is ultimately determined to be entitled to indemnification from the indemnitor.

7.4 Tekmira Insurance. With respect to its activities under this Agreement, Tekmira will secure and maintain in full force and effect throughout the term of the licenses set out in Section 2.1 (and for at least [**] years thereafter for claims-made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed [**] U.S. dollars ($[**]):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by Tekmira and coverage for Tekmira independent contractor(s), with limits of at least [**] U.S. dollars ($[**]) per occurrence and a general aggregate limit of t[**] U.S. dollars ($[**]).

Prior to, at, and following the dosing of the first patient in a Phase I Clinical Trial of any Tekmira Product by Tekmira, its Affiliates or Sublicensees, Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [**] U.S. dollars ($[**]).

Prior to, at, and following the First Commercial Sale of any Tekmira Product by Tekmira, its Affiliates or Sublicensees, Products/Clinical/Professional Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with limits of at least [**] U.S. dollars ($[**]) per occurrence and an aggregate limit of at least [**] dollars ($[**]), with Alnylam to be named as an additional insured party with respect to each Tekmira Product under such coverage.

7.5 Alnylam Insurance. With respect to its activities under this Agreement, Alnylam will secure and maintain in full force and effect throughout the term of the licenses set out in Sections 2.2(a) and 2.2(b) (and for at least [**] years thereafter for claims-made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed [**] U.S. dollars ($[**]):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by Alnylam and coverage for Alnylam independent contractor(s), with limits of at least [**] U.S. dollars ($[**]) per occurrence and a general aggregate limit of [**] U.S. dollars ($[**]).

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Prior to, at, and following the dosing of the first patient in a Phase I Clinical Trial of any Alnylam Product by Alnylam, its Affiliates or Sublicensees, Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [**] U.S. dollars ($[**]).

Prior to, at, and following the First Commercial Sale of any Alnylam Product by Alnylam, its Affiliates or Sublicensees, Products/Clinical Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with limits of at least [**] U.S. dollars ($[**]) per occurrence and an aggregate limit of at least [**] U.S. dollars ($[**]), with Tekmira to be named as an additional insured party with respect to each Alnylam Product under such coverage.

ARTICLE VIII - EXPORT

8.1 General. The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export laws, including without limitation the United States Bureau of Export Administration’s Export Administration Regulations, the Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data. The Parties agree, under this Agreement, to comply with all applicable exports laws and to commit no act that, directly or indirectly, would violate any United States law, regulation, or treaty, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

8.2 Delays. The Parties acknowledge that they cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party.

8.3 Assistance. The Parties agree to provide reasonable assistance to one another in connection with each Party’s efforts to fulfill its obligations under this Article VIII.

ARTICLE IX - TERM AND TERMINATION

9.1 Term; Expiration. The term of this Agreement shall begin on the Effective Date and, unless terminated earlier as provided herein, the licenses granted under Sections 2.1(a), 2.1(b), 2.2(a), 2.2(b) and 2.2(c) of this Agreement will become fully paid-up, perpetual, non-exclusive and irrevocable at the end of the period set forth in Section 4.7, as applicable to each of such licenses. The term of this Agreement shall expire upon the expiration of the last-to-expire Royalty Term.

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9.2 Material Breach.

(a) Alnylam, as the licensor under Section 2.1, will have the right to terminate the licenses granted thereunder, upon written notice to Tekmira, on a Tekmira Product-by-Tekmira Product basis in the event Tekmira materially breaches its obligations under this Agreement related to the licenses granted under Section 2.1 with respect to a particular Tekmira Product(s), or such licenses in their entirety if such breach is not specific to particular Tekmira Product(s), and Tekmira does not remedy such breach within ninety (90) days after receipt of written notice from Alnylam specifically identifying the breach and stating that Alnylam intends to terminate such licenses if Tekmira fails to remedy the breach within the ninety (90)-day time period; provided, however, that if Tekmira disputes in good faith that the claimed breach exists, such 90-day period will not start to run until such dispute has been resolved or can no longer be maintained in good faith.

(b) Tekmira, as the licensor under Section 2.2, will have the right to terminate the licenses granted thereunder, upon written notice to Alnylam, on an Alnylam Product-by-Alnylam Product or technology-by-technology basis in the event Alnylam materially breaches its obligations under this Agreement related to the licenses granted under Section 2.2 with respect to a particular Alnylam Product(s) or technology(-ies), or such licenses in their entirety if such breach is not specific to particular Alnylam Product(s) or technology(-ies), and does not remedy such breach within ninety (90) days after receipt of written notice from Tekmira specifically identifying the breach and stating that Tekmira intends to terminate such licenses if Alnylam fails to remedy the breach within the ninety (90)-day time period; provided, however, that if Alnylam disputes in good faith that the claimed breach exists, such 90-day period will not start to run until such dispute has been resolved or can no longer be maintained in good faith.

9.3 Challenges of Alnylam’s Patents. In the event that Tekmira or any of its Affiliates shall (a) commence or participate in any action or proceeding (including, without limitation, any patent opposition or re-examination proceeding), or otherwise assert in writing any claim, challenging or denying the validity of any of the Alnylam Patents or any claim thereof or (b) actively assist any other Person in bringing or prosecuting any action or proceeding (including, without limitation, any patent opposition or re-examination proceeding) challenging or denying the validity of the Alnylam Patents or any claim thereof, Alnylam will have the right to give notice to Tekmira (which notice must be given, if at all, within sixty (60) days after Alnylam first learns of the foregoing) that the licenses granted by Alnylam to such Patent will terminate in thirty (30) days following such notice, and, unless Tekmira withdraws or causes to be withdrawn all such challenge(s) within such thirty-day period, such licenses will so terminate.

9.4 Challenges of Tekmira Patents. In the event that Alnylam or any of its Affiliates shall (a) commence or participate in any action or proceeding (including, without limitation, any patent opposition or re-examination proceeding), or otherwise assert in writing any claim, challenging or denying the validity of any of the Category 1 Patents or Patents within the Tekmira Combined Licensed Technology, or any claim thereof or (b) actively assist any other Person in bringing or prosecuting any action or proceeding (including, without limitation, any patent opposition or re-examination proceeding) challenging or denying the validity of any of the Category 1 Patents or Patents within the Tekmira Combined Licensed Technology, or any claim thereof, Tekmira will have the right to give notice to Alnylam (which notice must be given, if at all, within sixty (60) days after Tekmira first learns of the foregoing) that Alnylam’s license

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under such Patent will terminate in thirty (30) days following such notice, and, unless Alnylam withdraws or causes to be withdrawn all such challenge(s) within such thirty-day period, such licenses will so terminate.

9.5 Consequences of Termination; Survival.

(a) In the event of termination by Alnylam under Section 9.2(a) above, all licenses and rights granted by Alnylam to Tekmira under Section 2.1 of this Agreement will terminate with respect to the particular Tekmira Product(s), or in their entirety, as provided in Section 9.2(a); provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are ongoing and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated; provided, further, that any license that has become fully paid-up and perpetual pursuant to Section 9.1 shall survive.

(b) In the event of termination by Tekmira under Section 9.2(b) above, all licenses and rights granted by Tekmira to Alnylam under Section 2.2 of this Agreement will terminate with respect to the particular Alnylam Product(s) and/or technology(-ies), or in their entirety, as provided in Section 9.2(b); provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are ongoing and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated; provided, further, that any license that has become fully paid-up and perpetual pursuant to Section 9.1 shall survive.

(c) Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement prior to expiration or termination, including without limitation the obligation to pay royalties for Products sold prior to such expiration or termination. The provisions of Sections 6.1, 6.2 and 6.3(a) shall survive the expiration or termination of this Agreement for a period of five (5) years. In addition, the provisions of Sections 2.2(c) (to the extent the license in such section extends outside of Alnylam Products in the Alnylam Field), 2.2(d), 2.4, 2.6, 2.7, 4.7, 4.11, 4.12, 4.13, 4.14, 4.15, 5.1(d), 5.4, Article VII, 9.1, 9.5, 9.6, 10.1(d), 10.2, 10.4, 10.6, 10.8 and 10.16, and any license that has become fully paid-up and perpetual pursuant to Section 9.1, shall survive any expiration or termination of this Agreement.

9.6 Licenses upon Termination.

(a) Upon any termination of this Agreement, Alnylam shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of Tekmira existing at the time of such termination, covering the Tekmira Products that had been licensed to such Sublicensee by Tekmira in compliance with this Agreement, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense agreement. Alnylam acknowledges that such Sublicensees of Tekmira that are then in full compliance with the terms and conditions of their respective sublicense agreement are third party beneficiaries of this Agreement, including this Section 9.6(a).

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(b) Upon any termination of this Agreement, Tekmira shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of Alnylam existing at the time of such termination, covering the Alnylam Products that had been licensed to such Sublicensee by Alnylam in compliance with this Agreement, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense agreement. Tekmira acknowledges that such Sublicensees of Alnylam that are then in full compliance with the terms and conditions of their respective sublicense agreement are third party beneficiaries of this Agreement, including this Section 9.6(b).

ARTICLE X - MISCELLANEOUS

10.1 Representations and Warranties.

(a) Mutual Representations and Warranties by Tekmira and Alnylam.

(i) Each Party hereby represents and warrants to the other Party as of the Effective Date:

(a) It is duly organized and validly existing under the laws of the jurisdiction of its incorporation or formation, and has all necessary power and authority to conduct its business in the manner in which it is currently being conducted, to own and use its assets in the manner in which its assets are currently owned and used, and to enter into and perform its obligations under this Agreement.

(b) The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Party and its Board of Directors and no consent, approval, order or authorization of, or registration, declaration or filing with any Third Party or governmental authority is necessary for the execution, delivery or performance of this Agreement.

(c) This Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to (A) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.

(d) It has never approved or commenced any proceeding, or made any election contemplating, the winding up or cessation of its business or affairs or the assignment of material assets for the benefit of creditors. To such Party’s knowledge, no such proceeding is pending or threatened.

(ii) Each Party acknowledges and agrees that the other Party has not made any representation or warranty that it has or can provide all the rights that are necessary or useful to Research, Develop or Commercialize a Product.

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(iii) Each Party represents and warrants to the other Party that as of the Effective Date it has the right to grant to such other Party, its Affiliates and Sublicensees the licenses granted hereunder and has not granted any conflicting rights to any other Person. Each Party shall maintain any applicable in-licenses in effect and shall not amend any such in-licenses in a manner that is detrimental to the rights of the other Party under this Agreement without the prior written consent of such other Party.

(b) Alnylam Representations and Warranties. Alnylam hereby represents and warrants to Tekmira that:

(i) to Alnylam’s knowledge, the conception, development and reduction to practice of the Alnylam Licensed Technology licensed to Tekmira under this Agreement did not constitute or involve the misappropriation of trade secrets or other rights or property of any Person;

(ii) it has not assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Alnylam Licensed Technology in a manner that conflicts with any rights granted to Tekmira hereunder.

(c) Tekmira Representations and Warranties. Tekmira hereby represents and warrants to Tekmira that:

(i) to Tekmira’s knowledge, the conception, development and reduction to practice of the Tekmira Combined Licensed Technology licensed to Alnylam under this Agreement did not constitute or involve the misappropriation of trade secrets or other rights or property of any Person; and

(ii) it has not assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Tekmira Combined Licensed Technology in a manner that conflicts with any rights granted to Alnylam hereunder.

(d) Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY INTELLECTUAL PROPERTY, PRODUCTS, GOODS, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED CONDITIONS, REPRESENTATIONS, AND WARRANTIES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OR VALIDITY OF PATENT RIGHTS WITH RESPECT TO ANY AND ALL OF THE FOREGOING. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY PRODUCT PURSUANT TO THIS AGREEMENT WILL BE SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO ANY SUCH PRODUCT WILL BE ACHIEVED.

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10.2 Dispute Resolution; Arbitration Procedures. The Parties agree that any disputes that arise under this Agreement between them during the period starting on the Effective Date and ending on the third anniversary of the Effective Date, including without limitation, claims relating to the enforcement of this Agreement, shall be resolved by binding arbitration conducted in accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the American Arbitration Association (“AAA”). The arbitration shall be conducted by a panel of three persons experienced in large commercial disputes who are independent of the arbitrating Parties and neutral with respect to the dispute presented for arbitration. Within [**] days after initiation of arbitration, each arbitrating Party shall select one person to act as an arbitrator and the Party-selected arbitrators shall select an additional arbitrator within [**] days of their appointment. If the arbitrators selected by the Parties are unable or fail to agree on the third arbitrator, the additional arbitrator shall be appointed by the AAA. The place of the arbitration shall be in Chicago, Illinois, USA, and all proceedings and communications shall be in English. Except to the extent necessary to confirm an award or as may be required by law, neither a Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties.

10.3 Force Majeure. No failure or omission by the Parties in the performance of any obligation of this Agreement will be deemed a breach of this Agreement or create any liability if the same will arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot; and invasion. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.

10.4 Consequential Damages. NEITHER PARTY (INCLUDING ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 10.4 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE VI.

10.5 Assignment.

(a) This Agreement, and any of its rights and obligations, may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that either Party may assign this entire Agreement, without the consent of the other Party, in connection with such Party’s merger, consolidation or transfer or sale of all or substantially all of the assets of such Party; and provided further that the successor, surviving entity, purchaser of assets, or transferee, as applicable, expressly assumes in writing such Party’s obligations under this Agreement, if any.

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(b) Any purported transfer or assignment in contravention of this Section 10.5 shall, at the option of the non-assigning Party, be null and void and of no effect.

(c) This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns.

10.6 Notices.

Notices to Alnylam will be addressed to:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, Massachusetts 02142

U.S.A.

Attention: Senior Vice President, Chief Business Officer

Facsimile No.: (617) 812-0353

With copy to:

WilmerHale LLP

60 State Street

Boston, Massachusetts 02109

Attention:	Steven D. Singer, Esq.
	Steven D. Barrett, Esq.

Facsimile No.: (617) 526-5000

Notices to Tekmira will be addressed to:

Tekmira Pharmaceuticals Corporation

100-8900 Glenlyon Parkway

Burnaby, B.C.

Canada V5J 5J8

Attention: President & CEO

Facsimile No.: (604) 630-5103

With copy to:

Orrick, Herrington & Sutcliffe LLP

1000 Marsh Road

Menlo Park, CA 94025-1015

Attention:	Elizabeth A. Howard
	R. King Milling

Facsimile No.: (650) 614-7401

Either Party may change its address by giving notice to the other Party in the manner provided in this Section 10.6. Any notice required or provided for by the terms of this Agreement will be in

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writing and will be (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent via a reputable international express courier service, or (c) sent by facsimile transmission, with a copy by regular mail. The effective date of the notice will be the actual date of receipt by the receiving Party.

10.7 Independent Contractors. It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement will be construed as authorization for either Party to act as the agent for the other Party.

10.8 Governing Law; Jurisdiction. This Agreement will be governed and interpreted in accordance with the substantive laws of the State of Delaware, U.S.A., notwithstanding the provisions governing conflict of laws under such law of the State of Delaware to the contrary, provided that (a) matters of intellectual property law, if any, will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question, and (b) the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods is expressly excluded from this Agreement.

10.9 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of the relevant jurisdiction, the validity of the remaining provisions will not be affected and the rights and obligations of the Parties will be construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable, provided that the Parties will negotiate in good faith a modification of this Agreement with a view to revising this Agreement in a manner which reflects, as closely as is reasonably practicable, the commercial terms of this Agreement as originally signed.

10.10 No Implied Waivers. The waiver by either Party of a breach or default of any provision of this Agreement by the other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

10.11 Headings. The headings of articles and sections contained this Agreement are intended solely for convenience and ease of reference and do not constitute any part of this Agreement, or have any effect on its interpretation or construction.

10.12 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all previous written or oral representations, agreements and understandings between the Parties including, without limitation, the Prior Cross-License Agreements and the Manufacturing Agreements, but excluding the Settlement Agreement, the Supplemental Agreement (subject to Section 2.4) and the UBC Sublicense. The Parties specifically agree that the corresponding provisions of this Agreement shall supersede in their entirety any surviving provisions of the Prior Cross-License Agreements. This Agreement (including the attachments hereto) may be amended only by a writing signed by both Parties.

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10.13 Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

10.14 No Third Party Beneficiaries. Except as expressly contemplated herein, no Third Party, including any employee of any Party to this Agreement, shall have or acquire any rights by reason of this Agreement.

10.15 Further Assurances. Each Party will provide such further documents or instruments required by the other Party as may be reasonably necessary or desirable to give effect to the purpose of this Agreement and carry out its provisions.

10.16 Performance by Affiliates. Either Party may use one or more of its Affiliates to perform its obligations and duties hereunder and Affiliates of a Party are expressly granted certain rights herein; provided that each such Affiliate shall be bound by the corresponding obligations of such Party and the relevant Party shall remain liable hereunder for the prompt payment and performance of all their respective obligations hereunder.

10.17 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, Alnylam, Tekmira and Protiva have set their hands to this Cross-License Agreement as of the date first written above.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ Barry Greene
Name:	Barry Greene
Title:	President and Chief Operating Officer
TEKMIRA PHARMACEUTICALS CORPORATION
By:	/s/ Mark J. Murray
Name:	Mark J. Murray
Title:	President & CEO
PROTIVA BIOTHERAPEUTICS INC.
solely with respect to Section 10.12
By:	/s/ Mark J. Murray
Name:	Mark J. Murray
Title:	President & CEO

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EXHIBIT A - IP MANAGEMENT TERMS

Management of Category 1, 2, and 3 Patents

1. The Category 1 Patents shall be assigned to Tekmira pursuant to Section 5.1(a) of this Agreement. Within [**] days of the Effective Date, representative(s) of each Party shall meet in the offices of Blank Rome in NY, NY to coordinate the transition of prosecution control from Alnylam to Tekmira. Within [**] business days of the Effective Date, Alnylam will determine which priority applications, in whole or in part, within the [**] family will be assigned to Tekmira and shall record such assignments with the U.S. Patent and Trademark Office. For clarity, all priority applications, in whole or in part, to which [**] family members that have been assigned to Tekmira are entitled, or are necessary to effect a valid priority claim shall be assigned to Tekmira according to the procedure set forth above.

2. The Category 2 Patents and the Category 3 Patents shall be owned by Alnylam. If Tekmira obtains any ownership interest in any Category 2 Patents or any Category 3 Patents as a result of any inventorship determination pursuant to this Agreement, Tekmira shall assign such interest to Alnylam as set forth in Section 5.1(b) of this Agreement.

3. If it is determined that a novel lipid, or novel lipid formulation is disclosed for the first time in a Category 2 Patent application or a Category 3 Patent application, then a divisional or continuation will be filed to isolate this subject matter. The division or continuation will be assigned to Tekmira, and for the purposes of this Agreement will be treated as Category 1 IP.

4. Prosecution and Maintenance of Category 1 Patents.

a. Within [**] days following the Effective Date, each Party shall provide to the other Party the name of the person responsible for prosecution and maintenance of Category 1 Patents within such Party’s company.

b. The Parties agree that current outside US counsel utilized by Alnylam prior to the Effective Date shall continue to handle US prosecution and coordinate rest of world prosecution of Category 1 Patents for a period of at least [**] month from the Effective Date. For [**].

c. If the outside counsel identified in 3.b above are not acceptable to Tekmira due to a bona fide conflict of interest, the Parties shall agree on mutually acceptable outside counsel and the cost of transferring such cases shall be divided equally between Alnylam and Tekmira. If after [**] months from the effective date Tekmira wishes to transfer any of the above cases to an outside firm of their choosing and is such firm is acceptable to Alnylam, Tekmira shall be free to do so but the cost of transferring such cases shall be borne by Tekmira 100%.

d. If the Parties cannot agree on choice of outside counsel, each Party shall provide the names of three (3) law firms they find acceptable, excluding those firms the other Party found unacceptable, to the third party arbitrator as provided below and agree to abide by the decision of the arbitrator.

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e. Starting on the Effective Date Tekmira shall control prosecution with input and agreement from Alnylam and shall diligently prosecute the Category 1 Patents claims in the broadest reasonable manner possible. Alnylam shall be copied on any correspondence with the respective patent offices related to the prosecution of the Category 1 Patents, and Tekmira shall consult Alnylam prior to any proposed filing, response or claim additions, deletions or amendments with sufficient time to allow for review, comment and agreement by Alnylam.

f. Alnylam shall be consulted and must agree on any inventorship determinations or any changes to inventorship prior to filing such changes with any patent office. In the event, however, that there is a disagreement between the Parties as to inventorship determinations, the Parties agree that they will be bound by the inventorship determinations made pursuant to the procedure outlined in paragraph 4.k below.

g. Except as otherwise set forth in 3.c above or 3.h below, prosecution and maintenance costs shall be divided equally between Alnylam and Tekmira for Category 1 Patents.

h. If for whatever reason Tekmira wishes to abandon an application for or cease to maintain any Category 1 Patents in a jurisdiction, Tekmira will provide Alnylam with [**] days advance notice and, if Alnylam wishes to maintain such application or patent, it will be at Alnylam’s expense and such application or patent shall be assigned back to Alnylam, and Tekmira shall have no further rights in such application or patent and such application or patent shall cease to constitute Category 1 Patents.

i. Tekmira shall not have the right to utilize, refer to, incorporate or any way use to support claims, any subject matter that is explicitly disclosed in a patent application to which any of the Category 1 Patents claims priority that is also not explicitly disclosed in the Category 1 IP application in question or that is also not explicitly disclosed in other Tekmira owned or controlled patents or patent applications having an earlier filing date than the Category 1 Patent priority application containing such subject matter. For clarity, subject matter that is incorporated by reference or incorporated by virtue of a priority claim in the Category 1 Patents in question shall not in any way be used by Tekmira unless that subject matter is also explicitly disclosed in the Category 1 Patent in question or was explicitly disclosed in other Tekmira owned or controlled patent or patent applications having an earlier filing date than the Category 1 Patent or Category 1 Patent priority application in question.

j. Alnylam shall not have the right in any patent or patent application that it owns or controls, to utilize, refer to, incorporate or any way use to support claims in such patent or patent application, any subject matter that was explicitly disclosed in any of the Category 1 Patents by virtue of having a common priority document with any of the Category 1 Patents, unless it was explicitly disclosed in such Alnylam owned or controlled patent or patent application .

k. In the event there is a disagreement between the Parties on any prosecution matter (including new patent application filings, claims, claim amendments, deletions or additions), or any inventorship determination or correction they agree to utilize the dispute resolution mechanism as set forth in paragraph 7 below.

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5. Prosecution and Maintenance of Category 2 Patents.

a. Prosecution and maintenance of Category 2 Patents shall be controlled by Alnylam and as to Category 2 Patents Alnylam shall have sole discretion in any decisions regarding patent prosecution and all prosecution and maintenance costs shall be borne by Alnylam.

b. Within [**] days of Tekmira providing the names of Tekmira inventors to be added to patent application [**] in Alnylam patent family [**], Alnylam shall add such inventors by filing with the US Patent and Trademark Office a corresponding correction, and the added inventors shall assign their rights in this application to Alnylam upon their addition to the application. Alnylam will similarly correct the inventorship in related US and foreign applications or patents where a claim or claims of similar scope exist.

c. Within [**] days of the Effective Date an inventorship determination shall be performed on all Category 2 Patents at Alnylam’s expense.

d. If it is determined that Tekmira inventors should be added any application(s) or patent(s), Alnylam shall add such inventors by filing with the respective patent office a corresponding correction, and the added inventors shall assign their rights in this application to Alnylam upon their addition to the application.

e. If Tekmira disagrees with the above inventorship determination the Parties agree to utilize the dispute resolution mechanism as set forth in paragraph 7 below.

f. Tekmira shall be provided [**] days advance notice on any material claim amendments, additions or deletions in any Category 2 Patents that utilize or relate to disputed subject matter or if it decides to abandon any patent or patent application.

g. Tekmira shall be copied on all correspondence with the respective patent offices related to the prosecution of Category 2 Patents for which an inventorship determination referenced above results in the addition of a Tekmira inventor.

6. Prosecution and Maintenance of Category 3 Patents.

a. Prosecution and maintenance of Category 3 Patents shall be controlled by Alnylam and as to Category 3 Patents Alnylam shall have sole discretion in any decisions regarding patent prosecution and all prosecution and maintenance costs shall be borne by Alnylam.

b. Upon claim allowance an independent inventorship determination shall be made by Alnylam at its cost and inventorship shall be corrected if warranted. If Tekmira inventors are added to any applications, such inventors shall assign their rights to such patent applications to Alnylam.

c. In the event that Tekmira wishes to determine inventorship for any claim prior to allowance it may do so at its expense. If as a result of such determination Tekmira inventors are added to any applications, such inventors shall assign their rights to such patent applications to Alnylam

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d. If Tekmira disagrees with the above inventorship determination, the Parties agree to utilize the dispute resolution mechanism as set forth in paragraph 7 below.

e. Tekmira shall be provided [**] days advance notice on any material claim amendments, additions or deletions in any Category 3 Patents that utilize or relate to disputed subject matter or if it decides to abandon any patent or patent application.

f. In addition to 6e above, Tekmira shall be copied on all correspondence with the respective patent offices related to the prosecution of such Tekmira Category 3 Patents for which an inventorship determination referenced above results in the addition of a Tekmira inventor.

7. Dispute Resolution Mechanism.

a. A third party gatekeeper/arbiter shall be identified along with a simple, speedy dispute resolution mechanism in the event of any disagreement among the Parties regarding the matters set forth in this Exhibit A.

b. The arbiter shall be mutually agreed to by the Parties. When a dispute arises among the Parties, the arbiter shall consider in good faith the position(s) of each Party in the dispute which the Parties shall have [**] business days to submit to such arbiter. The arbiter shall render his/her decision in an unbiased manner in accordance with the patent laws of the jurisdiction of the patent application as to which such disagreement pertains within [**] business days of receiving all relevant documentation from the Parties and, at the arbiter’s discretion, discussion with the Parties; provided, however, that the arbiter shall hold no ex parte meetings or substantive conversations with a Party without the consent of the other Party.

c. In the event that the arbiter is no longer willing or capable of serving in this function a replacement shall be selected or if the Parties cannot agree to a replacement arbiter, one will be selected as follows:

i. Each of the Parties shall nominate five (5) potential arbiters and any potential arbiter appearing on both Parties’ lists shall be the arbiter and the Parties shall attempt in good faith to secure such arbiter’s services. In the event that there is more than one (1) arbiter that appears on both such lists, the Parties shall agree in good faith which arbiter to approach first. In the event that there are no arbiters in common, the Parties shall repeat the process until an arbiter appears on both such lists or until the Parties can otherwise agree on an arbiter.

d. The costs of the arbiter shall be divided equally between the Parties.

8. Cooperation.

a. The Parties hereby agree as to Category 1 Patents, Category 2 Patents, Category 3 Patents:

i. to make its employees, agents and consultants reasonably available to the other Party (or the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent prosecution as contemplated by this Exhibit A;

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ii. to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to patent rights;

iii. to endeavor in good faith to coordinate its efforts wherever possible or reasonable with the other Party to minimize or avoid interference with the prosecution and maintenance of the other Party’s patent applications;

iv. in the event one Party receives an obviousness-type double patenting rejection in an application such Party controls over an application controlled by the other Party, the Parties will enter into good faith discussions to take steps necessary to allow both sets of claims to issue, such steps potentially including assigning an ownership interest in the patent application in question to the other party so that common ownership is established allowing for the filing of a terminal disclaimer. In the event that such common ownership is established the Party receiving the ownership interest will license all of its rights back in such application to the other Party; and

v. Unless otherwise explicitly provided in this Agreement the Parties shall have rights with respect to the enforcement of Category 1 Patents, Category 2 Patents, Category 3 Patents according to their respective ownership interests in such patent rights as provided under applicable law.

9. For the avoidance of doubt, the Parties agree that, despite Tekmira’s prior identification of the following patent families as being subject to an inventorship challenge by Tekmira, Tekmira does not challenge Alnylam’s inventorship or sole ownership of the following patent families: [**].

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SCHEDULE 1.9 - ALNYLAM EXISTING IN-LICENSES

1. Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Pharmaceuticals, Inc., dated December 20, 2002, as amended by Amendment dated July 2, 2003, the Requirements Amendment effective June 15, 2005, the Waiver Amendment effective August 9, 2007 and the Amendment to the Alnylam Co-Exclusive License Agreement dated as of March 14, 2011, by and between Alnylam Pharmaceuticals, Inc., on the one hand, and Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology and Max-Planck-Innovation GmbH, on the other hand; and Co-Exclusive License Agreement between Max Planck Innovation GmbH (formerly Garching Innovation GmbH) and Alnylam Europe AG (formerly Ribopharma AG), dated July 30, 2003

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SCHEDULE 1.10 - ALNYLAM EXISTING SUBLICENSES

1. InterfeRx Option Agreement between AlCana Technologies, Inc., and Alnylam Pharmaceuticals, Inc., dated December 9, 2009

2. License and Collaboration Agreement between Alnylam Pharmaceuticals, Inc. and Ascletis Pharmaceuticals (Hangzhou) Co., Ltd., dated June 29, 2012

3. License and Collaboration Agreement between Alnylam Pharmaceuticals, Inc. and Genzyme Corporation, dated October 18, 2012

4. License and Collaboration Agreement between Monsanto Company and Alnylam Pharmaceuticals, Inc., dated August 27, 2012

5. Research Collaboration and License Agreement between Novartis Institutes for BioMedical Research, Inc. and Alnylam Pharmaceuticals, Inc., dated October 12, 2005, as amended by letter amendment dated May 1, 2011

6. Amended and Restated License and Collaboration Agreement among Alnylam Pharmaceuticals, Inc., Isis Pharmaceuticals, Inc., and Regulus Therapeutics Inc. (formerly Regulus Therapeutics LLC), dated January 1, 2009, as amended by amendments dated June 10, 2010 and October 25, 2011

7. License and Collaboration Agreement among F. Hoffmann-La Roche Ltd, Hoffman-La Roche Inc., and Alnylam Pharmaceuticals, Inc., dated July 8, 2007, as amended by letter amendment dated May 29, 2008 (assigned to Arrowhead Research Corporation in October 2011)

8. Collaboration Agreement among Alnylam Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd., and Hoffman-La Roche Inc., dated October 29, 2009 (assigned to Arrowhead Research Corporation in October 2011)

9. License and Collaboration Agreement between Takeda Pharmaceutical Company Limited and Alnylam Pharmaceuticals, Inc., dated May 27, 2008, as supplemented or amended by letter agreements dated August 18, 2009 and March 16, 2011

10. Supplemental Agreement among Alnylam Pharmaceuticals, Inc., Tekmira Pharmaceuticals Corporation, Protiva Biotherapeutics Inc., the University of British Columbia, and AlCana Technologies, Inc., dated July 27, 2009

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SCHEDULE 1.15 - CERTAIN ALNYLAM PATENTS

Case Number	Country Name	Case Type	Application Status	Application Number	Filing Date	Patent Number	Issue Date
[**]	[**]	[**]	[**]	[**]	[**]

A total of 19 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. [**]

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SCHEDULE 1.19 - CERTAIN BIODEFENSE TARGETS

Category A Pathogens:

BACTERIA:

[**]

VIRUSES:

[**]

Category B Pathogens:

BACTERIA:

[**]

VIRUSES:

[**]

Category C Pathogens

BACTERIA:

[**]

VIRUSES:

[**]

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SCHEDULE 1.22 - CATEGORY 1 PATENTS

Case Number	Country Name	Law Firm	Case Type	Application Status	Application Number	Filing Date	Patent Number	Issue Date
[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]	[**]

A total of 8 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. [**]

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SCHEDULE 1.23 - CATEGORY 2 PATENTS

Case Number	Country Name	Law Firm	Case Type	Application Status	Application Number	Filing Date	Patent Number	Issue Date
[**]	[**]	[**]	[**]	[**]	[**]	[**]

A total of 4 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. [**]

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SCHEDULE 1.24 - CATEGORY 3 PATENTS

Case Number	Country Name	Law Firm	Case Type	Application Status	Application Number	Filing Date	Patent Number	Issue Date
[**]	[**]	[**]	[**]	[**]	[**]	[**]

A total of 6 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. [**]

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SCHEDULE 1.70 - TEKMIRA MANUFACTURING DOCUMENTS

Tekmira Manufacturing Documents are limited to the following documents provided to Alnylam by Tekmira:

1. Batch records or master batch records for [**]

2. The following technical protocols and reports: [**]

3. Specifications for raw materials, components and final products for [**]

4. The following technical presentations: [**]

6. Production Plans for [**]

7. Technical transfer plans for [**]

8. [**]

9. Minutes of Production Meeting telecons [**]

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EX-10.51

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions Confidential

Exhibit 10.51

SETTLEMENT AGREEMENT AND GENERAL RELEASE

This Settlement Agreement and General Release (the “Agreement”) is entered into this 12^th day of November 2012 (the “Effective Date”) by and among Tekmira Pharmaceuticals Corporation, a British Columbia corporation with a principal place of business at 100-8900 Glenlyon Parkway, Burnaby, British Columbia, Canada V5J 5J8 (“TPC”), Protiva Biotherapeutics Inc., a wholly-owned subsidiary of TPC and a British Columbia corporation with a principal place of business at 100-8900 Glenlyon Parkway, Burnaby, British Columbia, Canada V5J 5J8 (“Protiva”), Alnylam Pharmaceuticals, Inc., a Delaware corporation with a principal place of business at 300 Third Street, Cambridge, MA 02142 (“Alnylam”), and AlCana Technologies, Inc., a British Columbia corporation with a principal place of business at 2714 West 31^st Avenue, Vancouver, British Columbia, Canada V6L 2A1 (“AlCana”). Each of TPC, Protiva, Alnylam, and AlCana shall be considered a “Party,” and collectively they shall be considered the “Parties.”

WHEREAS, on or about January 8, 2007, Alnylam and Inex Pharmaceuticals Corp. (“Inex”) entered into License and Collaboration Agreement (the “Original Inex-Alnylam LCA”);

WHEREAS, on or about January 8, 2007, Inex sublicensed to Alnylam certain technology that Inex had licensed from the University of British Columbia (“UBC”) (the agreement and all amendments are referred to as the “UBC Sublicense”);

WHEREAS, on or about August 14, 2007, Alnylam and Protiva entered into a Cross-License Agreement (the “Original Alnylam-Protiva CLA”);

WHEREAS, on or about May 28, 2008, Protiva and TPC, which had by then acquired Inex’s assets including Inex’s assignment of the Original Inex-Alnylam LCA, agreed to a Share

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Purchase Agreement pursuant to which TPC purchased all outstanding shares of Protiva, and Protiva became a wholly-owned subsidiary of TPC (the combined entity hereafter referred to as “Tekmira”);

WHEREAS, on or about May 30, 2008, Tekmira and Alnylam agreed to new licensing and collaboration arrangements that superseded and replaced the Original TPC-Alnylam LCA and the Original Alnylam-Protiva CLA, specifically the Amended and Restated License and Collaboration between TPC and Alnylam (the “Amended TPC-Alnylam LCA”) and the Amended and Restated Cross-License Agreement between Alnylam and Protiva (the “Amended Alnylam-Protiva CLA”);

WHEREAS, on or about October 15, 2008, Tekmira terminated the employment of a number of employees, including, among others, Dr. Thomas Madden, Dr. Michael Hope, Dr. Barbara Mui, and Dr. Ying Tam;

WHEREAS, on or about January 2, 2009, Tekmira and Alnylam entered into the Development, Manufacturing and Supply Agreement (the “Manufacturing Agreement”);

WHEREAS, on or about January 8, 2009, the Alnylam-TPC research collaboration expired;

WHEREAS, on or about January 26, 2009, Alnylam retained certain former Tekmira employees and/or contractors as Alnylam consultants, including Dr. Madden, Dr. Hope, Dr. Mui, Dr. Tam, Dr. Steven Ansell, and Dr. Jianxin Chen;

WHEREAS, on or about February 13, 2009, Dr. Madden, Dr. Hope, Dr. Mui, Dr. Tam, Dr. Ansell, Dr. Chen and others formed AlCana;

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WHEREAS, on or about July 27, 2009, Alnylam, TPC, Protiva, AlCana, and UBC entered into a Supplemental Agreement (the “Supplemental Agreement”) that, among other things, provided for (i) the termination of Alnylam’s consulting arrangement with Dr. Madden, Dr. Hope, Dr. Mui, Dr. Tam, Dr. Ansell, and Dr. Chen, (ii) a collaborative research arrangement involving Alnylam, AlCana and UBC relating to, among other things, the discovery of novel lipids (the “Sponsored Research Agreement”), and (iii) licenses to TPC and Protiva permitting certain use of discoveries made during the consulting arrangements or the Alnylam-AlCana-UBC collaboration;

WHEREAS, on or about August 14, 2009, the Alnylam-Protiva research collaboration expired;

WHEREAS, on or about December 9, 2009, Alnylam and AlCana entered into the InterfeRx Option Agreement (the “Option Agreement”);

WHEREAS, on or about February 28, 2011, the Unites States Board of Patent Appeals and Interferences declared an interference proceeding between Alnylam, which is the assignee of U.S. Patent No. 7,718,629, and Protiva, which is the assignee of U.S. Patent Application No. 11/807,872, captioned Protiva Biotherapeutics, Inc. v. Alnylam Pharmaceuticals, Inc., Patent Interference No. 105792 (the “Interference Proceeding”), relating to Alnylam’s and Protiva’s separate patent claims to the same siRNA sequence;

WHEREAS, on or about March 16, 2011, TPC and Protiva filed a lawsuit in the Massachusetts Superior Court for Suffolk County, Tekmira Pharmaceuticals Corp., et al. v. Alnylam Pharmaceuticals, Inc., et al., Civ. A. No. 11-1010-BLS2 (the “Massachusetts State Court Action”), alleging that, among other things, Alnylam had misappropriated certain claimed

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trade secrets and other confidential information that Tekmira provided to Alnylam in connection with the research collaborations in violation of common law and certain statutes including Mass. Gen. Laws ch. 93, § 42 (trade secrets), Mass. Gen. Laws ch. 266, § 91 (false advertising), and Mass. Gen. Laws ch. 93A (unfair and deceptive trade practices);

WHEREAS, on or about April 6, 2011, Alnylam answered Tekmira’s complaint in the Massachusetts State Court Action, denying any and all wrongdoing or liability and asserting counterclaims for, among other things, breach of contract and violation of Mass. Gen. Laws ch. 93A;

WHEREAS, on or about June 3, 2011, Tekmira filed an amended complaint in the Massachusetts State Court Action which added AlCana as a defendant and asserted new claims, allegations and theories, including, among other things, breach of contract, misappropriation of trade secrets in violation of Mass. Gen. Laws ch. 93, § 42, civil conspiracy, tortious interference with contractual relationships, false advertising in violation of Mass. Gen. Laws ch. 266, § 91, and violation of Mass. Gen. Laws ch. 93A;

WHEREAS, on or about June 28, 2011, Alnylam answered the amended complaint in the Massachusetts State Court Action, denying any and all wrongdoing or liability and asserting counterclaims for, among others, breach of contract, misappropriation of trade secrets in violation of Mass. Gen. Laws ch. 93, § 42, and violation of Mass. Gen. Laws ch. 93A;

WHEREAS, on or about July 15, 2011, AlCana answered the amended complaint in the Massachusetts State Court Action, denying any and all wrongdoing or liability and asserting counterclaims for breach of the Supplemental Agreement and violation of Mass. Gen. Laws ch. 93A;

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WHEREAS, on or about August 4, 2011, Tekmira answered AlCana’s counterclaims in the Massachusetts State Court Action, denying any and all wrongdoing or liability;

WHEREAS, on or about October 11, 2011, Tekmira answered Alnylam’s counterclaims in the Massachusetts State Court Action, denying any and all wrongdoing or liability;

WHEREAS, on or about November 16, 2011, TPC filed an action in the Supreme Court of British Columbia, Canada against Drs. Madden, Hope, and Mui individually, captioned Tekmira Pharmaceuticals Corp. v. Michael Hope, et al., No. S117660 (the “B.C. Action”), alleging that they had breached purported common law and contractual duties to TPC;

WHEREAS, on or about February 24, 2012, Dr. Madden, Dr. Hope, and Dr. Mui responded to TPC’s complaint in the B.C. Action, denying any and all wrongdoing or liability;

WHEREAS, on or about January 17, 2012, Alnylam and Isis Pharmaceuticals, Inc. filed a lawsuit in the United States District Court for the District of Massachusetts, captioned Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Civ. A. No. 1:12-CV-10087 (the “U.S. Infringement Action”), alleging that Tekmira has infringed U.S. Patent No. 7,695,902, U.S. Patent No. 6,858,225; U.S. Patent No. 6,815,432; U.S. Patent No. 6,534,484; U.S. Patent No. 6,586,410; and U.S. Patent No. 6,858,224;

WHEREAS, on or about September 25, 2012, Alnylam filed a lawsuit in the Federal Court of Canada, captioned Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Court File No. T-1783-12 (the “Canadian Infringement Action”), alleging that Tekmira infringed CA Patent No. 2,359,180;

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WHEREAS, through the aforementioned litigation matters, the Parties have obtained voluminous information about the claims and defenses in these matters;

WHEREAS, having consulted with competent counsel of their own choosing, each Party wishes to resolve the aforementioned disputes amicably and without the need for further litigation;

WHEREAS, concurrent with this Agreement, Alnylam and Tekmira have agreed to a Cross-License Agreement dated November 12, 2012 (the “2012 Cross-License Agreement”), which supersedes and replaces the Amended TPC-Alnylam LCA, the Amended Alnylam-Protiva CLA, and the Supplemental Agreement as it relates to Alnylam and Tekmira.

WHEREAS, concurrent with this Agreement, AlCana and Tekmira have agreed to a binding term sheet, attached hereto as Exhibit A (the “Binding Term Sheet”);

NOW AND THEREFORE, in consideration of the promises and conditions set forth herein and in the 2012 Cross-License Agreement, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. Dismissal of All Disputes with Prejudice: Simultaneously with the complete execution of this Agreement, the Parties shall direct their respective counsel to execute Stipulations of Dismissal with Prejudice dismissing all claims and counterclaims that were or could have been asserted in the Massachusetts State Court Action, U.S. Infringement Action, Canadian Infringement Action, and B.C. Action, and in the case of the Interference Proceeding, a Request for Adverse Judgment providing that Alnylam concedes priority to Protiva with respect to all claims that correspond to Counts 1-5, i.e., claims 34, 36, 38, and 40-43 of Protiva

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U.S. Application 11/807,872; claims 1-6, 8, 10, 12-18, 21-22, and 32-33 of Alnylam U.S. Patent 7,718,629; and claims 32-38 of Alnylam U.S. Application 13/165,568, and requesting that an adverse judgment be entered against Alnylam as to these claims and priority be awarded to Protiva for U.S. Application 11/807,872. The plaintiffs in each matter, or in the case of the Interference Proceeding, Alnylam, shall file the relevant stipulation in the appropriate matter no later than one business day after the Effective Date. All Parties will bear their own attorneys’ fees and costs, and waive all rights of appeal.

2. Assignment of Protiva Patent Application in Interference Proceeding: Simultaneously with the complete execution of this Agreement and the 2012 Cross-License Agreement, Protiva hereby assigns to Alnylam all of Protiva’s right, title and interest in and to U.S. Patent Application No. 11/807,872, with no additional payment due to Tekmira and will record such assignment with the U.S. Patent and Trademark Office within [**] business days of the Effective Date.

3. Mutual General Releases: The Parties hereby exchange the following general releases, which they intend to be construed as broadly and inclusively as legally permissible:

a. Tekmira’s Release of Alnylam: Tekmira, including both TPC and Protiva, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, both together and individually, release and forever discharge Alnylam and each of its past and present parents, subsidiaries, departments and divisions, and the predecessors and successors in interest, and each of the current and former employees, officers, directors, attorneys, and insurers or any of the foregoing (collectively, the “Alnylam Released Parties”),

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Confidential

and each of them, jointly and severally, from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements, of whatever kind or nature, anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, which Tekmira, TPC and/or Protiva, may now have, have ever had, or in the future may have against any and each of the Alnylam Released Parties that are based on any material fact, known or unknown, in existence at any time prior to the Effective Date as well as all claims and counterclaims that were or could have been brought in the Massachusetts Superior Court Action, the U.S. Infringement Action, the Canadian Infringement Action, the Interference Proceeding, and/or the B.C. Action.

b. Alnylam’s Release of Tekmira: Alnylam, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, releases and forever discharges Tekmira, including both TPC and Protiva, and each of their past and present parents, subsidiaries, departments and divisions, and the predecessors and successors in interest, and each of the current and former employees, officers, directors, attorneys, and insurers, of any of the foregoing (collectively, the “Tekmira Released Parties”), and each of them, jointly and severally, from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements, of whatever kind or nature, anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, which Alnylam may now have, have ever had, or in the future may have against any and each of the

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Tekmira Released Parties that are based on any material fact, known or unknown, in existence at any time prior to the Effective Date as well as all claims and counterclaims that were or could have been brought in the Massachusetts Superior Court Action, the U.S. Infringement Action, the Canadian Infringement Action, the Interference Proceeding, and/or the B.C. Action.

c. Tekmira’s Release of AlCana: Tekmira, including both TPC and Protiva, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, both together and individually, release and forever discharge AlCana and each of its past and present parents, subsidiaries, departments and divisions, and the predecessors, and successors in interest, and each of the current and former employees, officers, directors, attorneys, and insurers of any of the foregoing (collectively, the “AlCana Released Parties”), and each of them, jointly and severally, from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements, of whatever kind or nature, anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, which Tekmira, TPC and/or Protiva, may now have, have ever had, or in the future may have against any and each of the AlCana Released Parties that are based on any material fact, known or unknown, in existence at any time prior to the Effective Date as well as all claims and counterclaims that were or could have been brought in the Massachusetts Superior Court Action and/or the B.C. Action.

d. AlCana’s Release of Tekmira: AlCana, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, releases and forever

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discharges the Tekmira Released Parties, and each of them, jointly and severally, from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements, of whatever kind or nature, anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, which AlCana may now have, have ever had, or in the future may have against any and each of the Tekmira Released Parties that are based on any material fact, known or unknown, in existence at any time prior to the Effective Date of the Agreement as well as all claims and counterclaims that were or could have been brought in the Massachusetts Superior Court Action and/or the B.C. Action.

e. Notwithstanding anything herein to the contrary,

i. even if based on any material, known or unknown fact in existence at any time prior to the Effective Date, the general releases and covenants not to sue set forth in this Agreement are not intended to and do not release the Parties from any of their obligations under this Agreement and are not intended to and do not prohibit claims for breach of this Agreement;

ii. even if based on any material, known or unknown fact in existence at any time prior to the Effective Date, the general releases and covenants not to sue set forth in this Agreement are not intended to and do not release the Parties from any of their obligations under the 2012 Cross-License Agreement or the Binding Term Sheet, as the case may be, and do not prohibit claims for breach of those agreements provided the breach arises after the Effective Date; further provided, however, that no Party may assert that any conduct, act, or omission by

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or on behalf of any released Party prior to the Effective Date constitutes a breach of any of the released Party’s obligations or duties under 2012 Cross-License Agreement or the Binding Term Sheet; and

iii. even if based on any material, known or unknown fact in existence at any time prior to the Effective Date, the general releases and covenants not to sue set forth in this Agreement are not intended to and do not prohibit claims for patent infringement on patents filed on or after April 15, 2010 and which are not entitled to claim priority to any patent prior to April 15, 2010, whether or not the patents claim such priority, but solely for alleged infringing activities that occur after the Effective Date. To each Party’s Knowledge (as defined herein), no activities conducted by any other Party or any of their affiliates, licensees or sublicensees, including without limitation any Identified Sublicensee (as defined in section 4), prior to the Effective Date, will, if continued after the Effective Date, constitute infringement of any patent controlled by the Party making this representation, which patent was filed on or after April 15, 2010 and which is not entitled to claim priority to any patent prior to April 15, 2010. For purposes of this section 3.e.iii., “Knowledge” with respect to Tekmira means the actual knowledge as of the Effective Date of Mark Murray, Paul Brennan, Barry McGurl and/or Elizabeth Howard; with respect to Alnylam means the actual knowledge as of the Effective Date of Barry Greene, Laurence Reid and/or Steve Bossone; and with respect to AlCana means the actual knowledge as of the Effective Date of Tom Madden.

4. Specific Release of Third Party Sublicensees: Each Party acknowledges that the other Parties have sublicensed to the third parties identified on Exhibit B (the “Identified Sublicensees”) certain technology licensed from another Party under the Original TPC-Alnylam

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LCA, the Amended TPC-Alnylam LCA, the Original Alnylam-Protiva CLA, the Amended Alnylam-Protiva CLA, the Manufacturing Agreement, the Supplemental Agreement, and/or the UBC Sublicense Agreement (collectively, the “Original Agreements”).

a. To the extent that the Parties have sublicensed or granted options to license such technology to third parties in accordance with the Parties’ Original Agreements, the rights of those third parties shall not be affected by this Agreement, the 2012 Cross-License Agreement or the Binding Term Sheet.

b. For each of Alnylam’s and AlCana’s Identified Sublicensees respectively, Tekmira, for good and valuable consideration from Alnylam and AlCana, the receipt and sufficiency of which is hereby acknowledged, releases that sublicensee from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, based on that sublicensee’s acquisition or use of Tekmira’s alleged confidential information and trade secrets at issue in the Massachusetts Superior Court Action or the B.C. Action that the sublicensee received from Alnylam or AlCana prior to [**], with the exception of claims for patent infringement.

c. For each of Tekmira’s Identified Sublicensees, Alnylam and AlCana, for good and valuable consideration from Tekmira, the receipt and sufficiency of which is hereby acknowledged, release that sublicensee from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits,

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demands, actions, costs, expenses, fees, covenants, controversies, and agreements anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, based on that sublicensee’s acquisition or use of Alnylam’s or AlCana’s alleged confidential information and trade secrets at issue in the Massachusetts Superior Court Action that the sublicensee received from Tekmira prior to [**], with the exception of claims for patent infringement, other than claims subject to the release provided in section 4.d. below.

d. Alnylam, for good and valuable consideration from Tekmira, the receipt and sufficiency of which is hereby acknowledged, further releases Tekmira’s Identified Sublicensees from any and all claims or counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements anywhere in the world, whether at law, equity, statutory, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, for infringement of patent claims at issue in the U.S. Infringement Action and Canadian Infringement Action.

e. For the avoidance of doubt, nothing in this section 4 shall operate to release any claims the Parties may have pursuant to their own respective agreements with an Identified Sublicensee.

5. Covenant Not to Sue:

a. Each Party hereby covenants not to file or assert in any lawsuit, arbitration, or other proceeding of any nature, anywhere in the world, any and all claims or

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counterclaims, causes, causes of action, counts, remedies, promises, damages, liabilities, obligations, judgments, suits, demands, actions, costs, expenses, fees, covenants, controversies, and agreements that are within the scope of the releases set forth in sections 3 and 4 above. For avoidance of doubt, this covenant shall not prohibit the filing or assertion of any claims for breach of this Agreement, the 2012 Cross-License Agreement, the Binding Term Sheet, or patent infringement, as set forth in sections 3.e.i., ii and iii above.

b. If any Party is found by any court, arbitrator or other tribunal to have breached this covenant not to sue, that Party shall pay each released Party against whom a released claim has been asserted sixty-five million dollars in United States funds ($65,000,000.00) as a liquidated damage, not as a penalty. This liquidated damages provision shall not apply to or be enforceable by the Identified Sublicensees referenced in section 4 above.

6. Termination or Amendment of Prior Agreements:

a. The Parties agree that the terms of this Agreement, the 2012 Cross-License Agreement and the Binding Term Sheet shall extinguish, supersede, and replace their rights and obligations under the Supplemental Agreement and Sponsored Research Agreement solely as between and among each other; provided, however, Alnylam’s payment obligations to UBC (for the benefit of UBC and AlCana, as referenced in section 7.b., below) under the Supplemental Agreement and Sponsored Research Agreement shall survive the execution of this Agreement, the 2012 Cross-License Agreement and the Binding Term Sheet, and shall also survive any termination of the Supplemental Agreement or Sponsored Research Agreement, in each case for the duration of the applicable Royalty Term (as defined in the Sponsored Research Agreement).

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b. In addition:

i. Any and all other prior agreements between Alnylam and Tekmira, TPC, and/or Protiva, whether oral or written, are hereby terminated as of the Effective Date with the sole exceptions of the (i) UBC Sublicense (under which Alnylam shall continue to have sublicenses to all patent rights that were sublicensed to Alnylam under the terms of the UBC Sublicense immediately prior to the Effective Date, including such patent rights sublicensed to Alnylam under the terms of the UBC Sublicense as provided in the Supplemental Agreement); and (ii) Mutual Confidential Disclosure Agreement made as of April 9, 2012. Alnylam and Tekmira acknowledge and agree that simultaneously with the complete execution of this Agreement they have entered into the 2012 Cross-License Agreement that shall survive.

ii. Tekmira and AlCana agree that any and all prior agreements between them, whether oral or written, are hereby terminated. AlCana and Tekmira acknowledge and agree that simultaneously with the complete execution of this Agreement they have entered into the Binding Term Sheet that shall survive.

iii. Alnylam and AlCana agree that the Option Agreement between them is hereby terminated and that the three InterfeRx options granted thereunder will be granted by Alnylam to Tekmira under to the 2012 Cross-License Agreement in exchange for the consideration provided by Tekmira to AlCana pursuant to the Binding Term Sheet.

c. Alnylam and Tekmira acknowledge and agree that an amendment to the UBC Sublicense is desirable in order to harmonize the UBC Sublicense with certain agreements of the Parties reflected in this Agreement and the 2012 Cross-License Agreement, such that the UBC Patents are included in Tekmira Patents (as such terms are defined in the 2012 Cross-License

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Agreement). Accordingly, Alnylam and Tekmira agree that they shall work in good faith to negotiate and enter into an appropriate amendment to the UBC Sublicense as soon as practicable following the Effective Date. Tekmira and Alnylam hereby agree that until and unless the UBC Sublicense is amended, Tekmira retains its rights to milestones and royalties with respect to the UBC Patents, as such rights have been amended in the 2012 Cross-License Agreement, and that until and unless the UBC Sublicense is amended, the licenses under the Patent(s) (as defined in the UBC Sublicense) granted back to Tekmira by Alnylam pursuant to Section 3.2(b) of the UBC Sublicense shall be limited to such Patent(s) that were filed, or that claim priority to such a Patent that was filed, before April 15, 2010.

d. For the period from the Effective Date until the such time as the amendment to the UBC Sublicense contemplated in paragraph (c) above becomes effective, the licenses under the Patent(s) granted back to Tekmira by Alnylam pursuant to Section 3.2(b) of the UBC Sublicense shall be expanded to grant Tekmira such licenses with respect to all Tekmira Products (as defined in the 2012 Cross-License Agreement); provided that, such expanded license back to Tekmira shall be a non-exclusive license with respect to Tekmira Products directed to Tekmira Non-Exclusive Targets (as defined in the 2012 Cross-License Agreement).

e. Alnylam hereby covenants that it and its Existing Affiliates will not initiate any legal suit against Tekmira or any of its Existing Affiliates asserting that:

i. any internal Research performed solely by Tekmira or its Existing Affiliates (and not with any Third Party) and solely for the purpose of identifying a Target for selection as a Tekmira Additional Target during the period starting on the Effective Date and

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continuing until the earlier of (A) the [**] anniversary of the Effective Date and (B) such date that Tekmira completes its selection of the Tekmira Additional Targets pursuant to Article III of the 2012 Cross-License Agreement; or

ii. the formulating in LNP Formulations by Tekmira or any of its Existing Affiliates of oligonucleotides controlled by any bona fide Third Party pharmaceutical collaborator on behalf of such Third Party and solely for Research (but not Development or Commercialization);

constitutes infringement and/or misappropriation of the UBC Patents. For clarity, the Parties agree that the covenants set forth in this section 6.e do not extend to any Third Party.

Capitalized terms used in this section 6.e. and not otherwise defined in this Agreement shall have the meanings ascribed to them in the 2012 Cross-License Agreement.

7. AlCana Assignment of Milestone and Royalty Payments to Tekmira:

a. Tekmira, Protiva and AlCana agree to the terms of the Binding Term Sheet attached hereto as Exhibit A. Alnylam agrees to the terms of the Binding Term Sheet to the extent that its rights are implicated therein.

b. For avoidance of doubt, Alnylam and AlCana represent and warrant that after the execution of this Agreement and the 2012 Cross-License Agreement, Alnylam will continue to be obligated under the Sponsored Research Agreement to pay UBC (for the benefit of UBC and AlCana) milestone payments (as set forth in the Sponsored Research Agreement) and royalties on Net Sales (as defined in the Sponsored Research Agreement) of any Alnylam Product containing the MC3 lipid at a royalty rate of [**]% (subject to reduction pursuant to

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Section 8.4.2.(b) of the Sponsored Research Agreement) for the duration of the applicable Royalty Term (as defined in the Sponsored Research Agreement). AlCana represents and warrants that, as of the Effective Date, UBC, in turn, is obligated to pay to AlCana [**]% of such milestone and royalty payments UBC receives from Alnylam for the ALN-TTR02 product and that, as of the Effective Date, AlCana is not aware of any claim by UBC that would reduce such percentage of milestone and royalty payments for the ALN-TTR02 product due to AlCana in future. Pursuant to the Binding Term Sheet, AlCana agrees to provide Tekmira with [**]% of such milestone and royalty payments AlCana receives from UBC.

c. Alnylam consents to AlCana’s assignment of its milestone and royalty payments to Tekmira as set forth herein, pursuant to the terms of the Binding Term Sheet. Alnylam and AlCana covenant that they will not terminate, amend, or otherwise modify the contractual rights and obligations between and among themselves and UBC in a manner that would impair Tekmira’s right to receive the milestone and royalty payments AlCana is assigning to Tekmira under this Agreement and the Binding Term Sheet.

d. Alnylam and AlCana represent and warrant that they have no contractual rights and/or obligations between and/or among themselves and UBC that are inconsistent with the terms of this Agreement and the 2012 Cross-License and their obligations thereunder.

8. Public Statements: Following the complete execution of this Agreement and at a date and time that agreed to by the Parties in writing, or otherwise if required by law, the Parties will issue the mutually agreed upon press-releases attached hereto as Exhibits C-1 and C-2. They will thereafter make no further public statement about the Massachusetts State Court Action, the Interference Proceeding, the U.S. Infringement Action, the Canadian Infringement

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Action, or the B.C. Action, or with respect to the subject matter of any of those disputes that is substantially inconsistent with the press-release in Exhibits C-1 and C-2 or the content set forth within the mutually acceptable questions and answers document attached as Exhibit C-3.

9. Confidentiality:

a. All negotiations, communications, documents, drafts, and other materials and information relating to and in connection with this Agreement, including all of its terms, shall be treated as strictly private and confidential by the Parties and shall not be disclosed to any third party, disseminated to the public, or released to the press; except that: (i) the Parties may disclose the terms reflected in a redacted copy of this Agreement, to be agreed upon among the Parties promptly following the Effective Date, but only to the extent reasonably necessary to comply with a regulatory requirement, including the rules and regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States; (ii) disclosure of the terms reflected in the redacted copy of this Agreement, as agreed upon among the Parties, is permitted if reasonably required in order for a Party to obtain financing or conduct discussions with actual or prospective development or commercialization partners provided that the recipient is bound by an obligation of confidentiality; and (iii) any Party may disclose the terms reflected in the redacted copy of this Agreement, as agreed upon among the Parties, to an affiliate, actual or prospective collaborator, financial advisor, auditor, lender, rating agency, legal counsel, or consultant with a legitimate business need to be informed provided that such person or entity first agrees in writing to protect the confidentiality of the information.

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b. If a Party is required by judicial or administrative process to disclose any information subject to the preceding paragraph, such Party shall promptly inform each other Party of the disclosure that is being sought in order to provide the each other Party an opportunity to challenge or limit the disclosure obligations. If any Party intends to challenge or limit disclosure, it shall notify the other Party and promptly take commercially reasonable steps to ask an appropriate judicial or administrative body to preclude or limit disclosure. No Party may disclose any information about the Agreement until any such motion or challenge is resolved. Any such information that is disclosed in a judicial or administrative process shall remain otherwise subject to the confidentiality provisions in the preceding paragraph, and the Party disclosing such information shall take all steps reasonably practical, including without limitation seeking an order of confidentiality, to ensure the continued confidential treatment of such information.

10. Future Disputes: The Parties agree that any disputes that arise between them during the period ending on the third anniversary of the Effective Date, including without limitation, claims relating to the enforcement of this Agreement, shall be resolved by binding arbitration conducted in accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the American Arbitration Association (“AAA”). The arbitration shall be conducted by a panel of three persons experienced in large commercial disputes who are independent of the arbitrating Parties and neutral with respect to the dispute presented for arbitration. Within [**] days after initiation of arbitration, each arbitrating Party shall select one person to act as an arbitrator and the Party-selected arbitrators shall select an additional arbitrator within [**] days of their appointment. If the arbitrators selected by the

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Parties are unable or fail to agree on the third arbitrator, the additional arbitrator shall be appointed by the AAA. The place of the arbitration shall be in Chicago, Illinois, USA, and all proceedings and communications shall be in English.

11. Agreement Regarding AlCana: Tekmira agrees not to acquire, whether itself or through a third party, a controlling interest in AlCana for a period of [**] years after the Effective Date.

12. General Provisions:

a. Knowing and Voluntary Entry into this Agreement: Each Party agrees that no other Party has made any representation to it of any kind whatsoever, whether oral or in writing, upon which that Party has relied in entering into this Agreement. Each Party further agrees that in entering into this Agreement, it has received independent legal advice from competent counsel of its choosing. Each Party enters into this Agreement of its own volition, without compulsion of any kind, and after a full and fair opportunity to consider this matter with its own legal advisor.

b. No Admissions or Concessions by Virtue of this Agreement: Each Party to this Agreement acknowledges and agrees that this Agreement is a compromise of claims which the Parties have entered into solely for the purpose of avoiding the burdens, inconvenience, and expense of continuing disputes and litigation. Nothing in this Agreement, or the negotiations that preceded the Agreement, shall be construed to be or deemed an admission or concession by any Party of any liability or wrongdoing, or as an infirmity of any claim or defense. Nor shall it be construed as an admission or concession as to the amount that any Party

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could or would have recovered at trial. Neither this Agreement nor anything related to the negotiations that preceded it may be offered against the Alnylam Released Parties, the AlCana Released Parties, or the Tekmira Released Parties in any proceeding with the sole exception of a proceeding to enforce the terms of this Agreement.

c. No Prior Assignment of Claims: Each Party represents and warrants that it has not voluntarily or involuntarily assigned, pledged, liened or otherwise sold or transferred in any manner whatsoever to any other person or entity, either by instrument, in writing or otherwise, any right, action, claim or counterclaim, cause, cause of action, action, count, remedy, promise, damage, liability, debt, due, sums of money, account, reckoning, obligation, judgment, writ of execution, lien, levy, attachment, suit, demand, cost, expense, fee, bond, bill, specialty, covenant, controversy, agreement, set-off, third party action or proceeding of whatever kind or nature, or any portion thereof, to be released under sections 3 and 4 above.

d. Third Party Beneficiaries: The Parties acknowledge and agree that this Agreement is made solely for the benefit of the Parties hereto, as well as the non-parties identified in the releases set forth in sections 3 and 4 and the covenant not to sue set forth in section 5, each of whom are intended third-party beneficiaries to this Agreement (the “Third Party Beneficiaries”). The Parties further acknowledge and agree that the Third Party Beneficiaries have the right to enforce the provisions in this Agreement to the extent necessary to protect any rights granted to them in this Agreement. Except as provided in the preceding two sentences, this Agreement does not create any other rights, claims or benefits inuring to any person or entity that is not a party to this Agreement, nor does it create any other third party beneficiary hereto.

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e. Applicable Law: This Agreement shall be governed, interpreted and enforced according to the laws of the State of Delaware, without regard to any conflict of law provisions.

f. Invalidity: With the exception of the releases set forth in sections 3 and 4 above and the covenant not to sue set forth in section 5 above, if any provision, or portion thereof, of this Agreement is held invalid, void or unenforceable under any applicable statute or rule of law, only that provision, or portion thereof, shall be deemed omitted from this Agreement, and only to the extent to which it is held invalid, and the remainder of the Agreement shall remain in full force and effect. If any portion of the releases set forth in sections 3 and 4 or the covenant not to sue set forth in section 5 is deemed invalid, it shall be rewritten to conform to the provisions written in this Agreement to the maximum extent permitted by law.

g. Entire Agreement: This Agreement (including the Binding Term Sheet) and the 2012 Cross-License Agreement constitute the entire agreement and understanding between the Parties relating to the subject matter of this Agreement (including the Binding Term Sheet) and the 2012 Cross-License Agreement, and supersede all previous written or oral representations, agreements, drafts and understandings between the Parties. Each Party warrants and represents that no representation or statement of any kind whatsoever, other than in the terms and provisions in this Agreement (including the Binding Term Sheet) and the 2012 Cross-License Agreement, was made to it that in any way whatsoever induced it to enter this Agreement.

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h. Written Modification: This Agreement may only be varied or modified by a written agreement signed by duly authorized representatives of all of the Parties hereto; provided, however, that the material terms of the Binding Term Sheet shall be confirmed by a subsequent written agreement signed by duly authorized representatives of Tekmira and AlCana.

i. Execution in Counterparts: This Agreement may be executed in counterparts and transmitted by email or facsimile, each of which shall be deemed an original and any set of which, when taken together, shall constitute one and the same instrument and be sufficient proof of the instrument so constituted.

j. Binding Agreement between the Parties: This Agreement shall be binding on and inure to the benefit of the Parties, their legal representatives, and their successors.

k. Paragraph Headings: The paragraph headings form no part of this Agreement and may not be used to construe the provisions of this Agreement.

l. Construction of Agreement: Each Party and its counsel have participated in the drafting of this Agreement. The Agreement shall not be construed for or against any Party as the draftsperson hereof. In addition, as used in this Agreement, (a) words of any gender include all genders; (b) words using the singular or plural number also include the plural or singular number, respectively; and (c) the word “including” shall mean “including, but not limited to.”

m. Authority: The Parties represent that each person signing this Agreement on behalf of a Party has the full power and authority to enter into the Agreement.

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n. Additional Documents: Each Party agrees to execute any additional documents and to take further action which reasonably may be required to consummate this Agreement and/or otherwise fulfill the intent of the Parties.

[Signature Page Follows.]

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IN WITNESS WHEREOF, duly authorized representatives of the Parties have executed this Agreement as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.		TEKMIRA PHARMACEUTICALS CORPORATION
By:	/s/ Barry Greene	By:	/s/ Mark J. Murray
Print Name:	/s/ Barry Greene	Print Name:	Mark J. Murray
Title:	President and Chief Operating Officer	Title:	President & CEO
ALCANA TECHNOLOGIES, INC.		PROTIVA BIOTHERAPEUTICS INC.
By:	/s/ T.D. Madden	By:	/s/ Mark J. Murray
Print Name:	Thomas Madden	Print Name:	Mark J. Murray
Title:	President and CEO	Title:	President & CEO

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EXHIBIT A

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TEKMIRA – ALCANA SETTLEMENT BINDING TERM SHEET

This is a confidential, binding summary of settlement terms between Tekmira Pharmaceuticals Corp. and Protiva Biotherapeutics, Inc. (collectively “Tekmira”), on one hand, and AlCana Technologies, Inc. (“AlCana”) on the other hand. This document is intended to and does create expectancies and legally binding rights and obligations. The parties expect to enter into a further agreement implementing these terms in more detail.

Definitions:

“Effective Date” has the same meaning as in the accompanying Settlement Agreement to which this Binding Term Sheet is attached.

“Field of Use” means the delivery of an RNAi Product for any and all purposes.

“Intellectual Property” means any and all discoveries, inventions, information, knowledge, know-how, trade secrets, designs, practices, methods, uses, compositions of matter, articles of manufacture, protocols, formulas, processes, assays, skills, experience, techniques, data, reports, and results of experimentation and testing and other scientific or technical information, patentable or otherwise, controlled by a party after the Effective Date.

“Licensed Product” means any product, good, or service covered by a claim of the Tekmira controlled Intellectual Property or AlCana controlled Intellectual Property.

“siRNA” means a double-stranded ribonucleic acid (RNA) composition designed to act primarily through an RNA interference mechanism that consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridized to one another along a substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing along a substantial portion of its length to form a hairpin.

“RNAi Product” means a product containing, comprised of or based on siRNA, Dicer Substrates, Multivalent RNA, or any derivatives thereof, which are effective in gene function modulation and designed to modulate the function of particular genes or gene products by causing degradation through RNA interference of a Target mRNA to which such siRNAs or siRNA derivatives or moieties are complementary. For greater clarity, an RNAi Product shall not include Antisense.

“Sublicensable Product” means a Supplemental Field Product that has been developed by AlCana and for which AlCana has shown a pharmacological effect of that product against the Target in in vivo studies in a small animal species.

“Supplemental Field” means the delivery of (i) single-stranded oligonucleotides, either chemically modified or unmodified, acting through the RNase H mechanism or by or other

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mechanisms of translational arrest but excluding RNA interference involving RISC (“Antisense”) and (ii) DNA plasmids or messenger RNA (mRNA) either chemically modified or unmodified that are transcribed and/or translated into protein and wherein the pharmacological activity is dependent on expression of the protein (“Gene Therapy”).

“Supplemental Field Product” means a product containing, comprised of, or based on Antisense or Gene Therapy.

“Target” means: (a) a polypeptide or entity comprising a combination of at least one polypeptide and other macromolecules, that is a site or potential site of therapeutic intervention by a therapeutic agent; or a nucleic acid which is required for expression of such polypeptide or other macromolecule if said macromolecule is itself a polypeptide; (b) variants of a polypeptide (including any splice variant or fusions thereof), entity or nucleic acid described in clause (a); or (c) a defined non-peptide entity, including a microorganism, virus, fungi, bacterium or single cell parasite; provided that the entire genome of a virus shall be regarded as a single Target.

A. LICENSE TO TEKMIRA’S LNP TECHNOLOGY

• Tekmira will grant to AlCana a non-exclusive right to use the Tekmira Combined Licensed Technology and the Category 1 Patents (each as defined in the 2012 Cross-License Agreement between Tekmira and Alnylam referenced in the Settlement Agreement) for use in developing and commercializing Supplemental Field Products. The license granted to AlCana supersedes and replaces the licenses granted to AlCana by Alnylam and Tekmira in the current Supplemental Agreement

• AlCana’s right to sub-license will be on a Sublicensable Product-by-Sublicensable Product basis.

• In consideration for this license, AlCana will pay the following to Tekmira for a Supplemental Field Product (covered by Tekmira Intellectual Property)

Milestones

Milestone	Amount (U.S. Dollars)
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]

Royalties

Annual Net Sales (per product)	Royalty*
< $[**]		[**	]%
$[**] to $[**]		[**	]%
>$[**]		[**	]%

* Royalty to be reduced by [**]% if covered only by a pending claim (to be defined), standard royalty offsets of [**]% will be included.

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B. ALCANA’S LICENSE TO TEKMIRA

• AlCana waives any milestone or royalty payments owed to AlCana by Tekmira under the Supplemental Agreement or Sponsored Research Agreement.

• AlCana will grant to Tekmira a non-exclusive license to any AlCana Intellectual Property for use in RNAi Products.

• In consideration for this license, Tekmira will pay the following to AlCana for an RNAi Product (covered by AlCana Intellectual Property).

Milestones

Milestone	Amount (U.S. Dollars)
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]
[**]		[**	]

Royalties

Annual Net Sales (per product)	Royalty*
< $[**]		[**	]%
$[**] to $[**]		[**	]%
>$[**]		[**	]%

* Royalty to be reduced by [**]% if covered only by a pending claim (to be defined), standard royalty offsets of [**]% will be included

C. INTERFERX OPTION RIGHTS

• AlCana agrees to terminate the InterfeRx Option Agreement with Alnylam dated as of December 9, 2009 (“Option Agreement”) and Alnylam will provide the three (3) InterfeRx options to Tekmira, provided that the options will be extended to a period of [**] years from the Effective Date, and will be subject to the terms and conditions of the 2012 Cross-License Agreement.

• In consideration for the termination of the Option Agreement and the transfer of the options to Tekmira, Tekmira will pay to AlCana the following sums:

• $[**] US within [**] days of the Effective Date.

• $[**] US within [**] days of Tekmira successfully exercising each InterfeRx Option (it being understood that Tekmira will exercise its 4 previously negotiated options first)

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D. SETTLEMENT AGREEMENT

• Tekmira, Alnylam and AlCana will dismiss with prejudice and with each party bearing its own costs all claims and counterclaims commenced in the Massachusetts and British Columbia actions. The parties will execute full and final releases in favour of each other and instruct their counsel to file the appropriate documents with the court registries in each jurisdiction to cause the dismissal of the actions.

E. NON-COMPETITION

• AlCana will not undertake any activities by itself or with a third party specifically directed to research and development of a RNAi Product (except as allowed under Section H below) for a period of five (5) years after the Effective Date (“AlCana Non-Competition Period”).

F. REVENUE SHARING FROM SPONSORED RESEARCH AGREEMENT

• In exchange for a payment of $[**] US by Tekmira within [**] business days of execution of the further detailed agreement implementing this Binding Term Sheet, AlCana hereby agrees to provide Tekmira with [**]% of the milestone and royalty payments it receives from the University of British Columbia or Alnylam (directly or indirectly) as set forth in the Sponsored Research Agreement dated July 27^th 2009, but solely with respect to Licensed Products covered by an Outstanding Claim of the UBC Controlled Patent Right (each as defined in the Sponsored Research Agreement) that was filed, or claims priority to a patent that was filed, before April 15, 2010. For the avoidance of doubt, AlCana and Alnylam represent and warrant that such Licensed Products include Alnylam products that include the MC3 lipid.

G. AUDITS

At any given point in time, each Party will have on file complete and accurate records for the last [**] years of all net sales of products for which it is the paying Party, and AlCana shall have on file complete and accurate records for the last [**] years of all payments received from UBC and Alnylam. The other Party to this Agreement will have the right, [**] during each twelve (12) month period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to such Party to review such records solely for accuracy and for no other purpose upon reasonable notice and under a written obligation of confidentiality, during regular business hours. If the audit demonstrates that the payments owed under this Agreement have been understated, the audited Party will pay the balance to such other Party together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to the then current [**]-day United States dollar LIBOR rate plus [**] percent per annum. If the underpayment is greater than five percent of the amount owed, then the audited Party will

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reimburse such other Party for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, such other Party to this Agreement will credit the balance against the next payment due from the audited Party (without interest).

H. CHARITABLE FOUNDATION

AlCana is currently concluding an agreement with a charitable foundation (“Foundation”) covering a research and development program. The name of the Foundation will be disclosed in the detailed agreement. The planned research is directed at development of potential therapeutics for the treatment of a specific chronic and currently untreatable disease (“Foundation Disease”) [**]. The research program will include studies involving potential RNAi therapeutics. Tekmira agrees that AlCana will undertake this program under the following conditions:

i. Any Intellectual Property that is generated in the collaboration will be called “Foundation IP”

ii. All Foundation IP will be held and prosecuted by AlCana

iii. AlCana will grant to Tekmira an exclusive license to the Foundation IP in the Field of Use, subject to the rights granted to the Foundation below

iv. AlCana will grant to the Foundation exclusive rights to the Foundation IP related specifically to the Foundation Disease

The Foundation will pay to AlCana a [**]% royalty (less offsets) on Net Sales. AlCana will pass through [**]% of any royalty it obtains from the Foundation to Tekmira

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EXHIBIT B

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Alnylam Identified Sublicensees:

AlCana Technologies, Inc.

Ascletis Pharmaceuticals (Hangzhou) Co., Ltd.

Genzyme Corporation

Monsanto Company

Novartis Institutes for BioMedical Research, Inc.

Regulus Therapeutics Inc. (formerly Regulus Therapeutics LLC)

F. Hoffmann-La Roche Ltd, Hoffman-La Roche Inc. (and its assignee, Arrowhead Research Corporation)

Takeda Pharmaceutical Company Limited

University of British Columbia

Tekmira Identified Sublicensees

AlCana Technologies, Inc.

Bristol-Myers Squibb Co.

Merck & Co., Inc. (and Sirna Therapeutics, Inc.)

F. Hoffmann-La Roche Ltd, Hoffman-La Roche Inc. (and its assignee, Arrowhead Research Corporation)

AlCana Identified Sublicensees

Alnylam Pharamaceuticals, Inc.

University of British Columbia

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EXHIBIT C

Confidential

Contacts:

Alnylam Pharmaceuticals, Inc.

Cynthia Clayton

Vice President, Investor Relations and

Corporate Communications

617-551-8207

Amanda Sellers (Media)

Spectrum

202-955-6222 x2597

Alnylam and Tekmira Restructure Relationship and Settle All Litigation

Cambridge, Mass., November 12, 2012 – Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) announced today that they and Tekmira Pharmaceuticals Corporation have restructured their relationship with a new licensing agreement and have resolved all litigation between the parties in a settlement agreement. The new license agreement consolidates and clarifies certain intellectual property (IP) elements related to lipid nanoparticle (LNP) technology for RNAi therapeutics. Further, Alnylam has elected to independently manufacture its LNP-based RNAi therapeutic products and to buy-down certain future potential milestone payments and a significant portion of future potential royalties for its ALN-VSP, ALN-PCS, and ALN-TTR02 programs. The settlement of all ongoing litigation between the two companies allows Alnylam to continue to focus its efforts on advancing innovative medicines to patients.

“With this restructuring of our Tekmira relationship, we are gaining independence in our LNP manufacturing and decreasing the milestone and royalty burdens on several of our LNP-based products. Further, the companies have created clarity around the overall patent estate for LNP-based products, while ensuring Alnylam’s full access to use this technology for our products in the future. Of course, we are also pleased to put this legal matter behind us and continue our focus on advancing RNAi therapeutics through clinical trials with the goal of bringing them to the market where we can make an impact in the lives of patients and their caregivers,” said Barry Greene, President and Chief Operating Officer of Alnylam. “Alnylam plans to continue to advance RNAi therapeutic products as part of its ‘Alnylam 5x15’ product strategy with LNP delivery technologies – as employed with ALN-TTR02, ALN-PCS, and ALN-VSP, in addition to the use of the company’s proprietary conjugate-based delivery technology – as employed with ALN-TTRsc, ALN-AT3, and other undisclosed programs.”

Under a new license agreement, Alnylam and Tekmira have agreed to consolidate certain IP elements related to LNP technology for the systemic delivery of RNAi therapeutic products. Specifically, certain patents and patent applications, including the MC3 lipid family, will be assigned by Alnylam to Tekmira. Alnylam retains full rights to use this IP for advancing RNAi therapeutic products to the market, including the rights to sublicense IP on a product-by-product basis. Alnylam has also agreed to grant five additional non-exclusive therapeutic licenses to Tekmira.

Confidential

In addition, Alnylam has elected to buy out its manufacturing obligations to Tekmira with respect to its LNP-based pipeline programs. Alnylam will make a one-time payment of $30 million to Tekmira in order to have the rights to manufacture its own LNP-based products going forward, either itself or through a third-party contractor. Alnylam has established its own Good Manufacturing Practice (GMP) capabilities and process for its LNP-based products. Alnylam will employ this manufacturing capability for the advancement of ALN-TTR02 into Phase III clinical trials, which the company expects to start by the end of 2013.

Further, Alnylam has elected to buy-down certain future potential milestone and royalty payments due to Tekmira for its ALN-VSP, ALN-PCS, and ALN-TTR02 LNP-based products. Specifically, Alnylam will make a one-time payment of $35 million to Tekmira in association with the termination of the prior license agreements between the companies and the significant reduction in milestone and royalty payments for its ALN-VSP, ALN-PCS, and ALN-TTR02 products. Tekmira will also be eligible to receive an additional $10 million in aggregate in contingent milestone payments related to advancement of ALN-VSP and ALN-TTR02 products, which now represent the only potential milestones for ALN-VSP, ALN-PCS and ALN-TTR02 products. Alnylam will otherwise continue to be obligated to pay Tekmira potential milestones and royalties on all other future LNP-based products on terms identical to its original license agreements. Tekmira will continue to be obligated to pay Alnylam potential milestones and royalties on certain RNAi therapeutic products developed under its licenses from Alnylam on terms identical to its original license agreements.

Finally, Alnylam and Tekmira have agreed to settle all ongoing litigation between the parties. The parties have also agreed to a resolution of the interference proceeding related to Alnylam-owned US Patent No. 7,718,629 directed to an siRNA component in ALN-VSP. In addition, Tekmira and AlCana Technologies, Inc. have agreed to drop their claims and counterclaims in both the Massachusetts and British Columbia lawsuits. Finally, the parties have agreed to a covenant not to sue on matters related to the current dispute in the future, which includes liquidated damages to be paid if the covenant is breached, and have also agreed to resolve any future disputes that might arise over the next three years with binding arbitration.

Alnylam will incur a $65 million charge to operating expenses during the fourth quarter of 2012 related to the restructuring of its license agreements with Tekmira. As a result of the payments being made in connection with this restructuring, Alnylam is revising its financial guidance to end 2012 with greater than $215 million in cash.

About RNA Interference (RNAi)

RNAi (RNA interference) is a revolution in biology, representing a breakthrough in understanding how genes are turned on and off in cells, and a completely new approach to drug discovery and development. Its discovery has been heralded as “a major scientific breakthrough that happens once every decade or so,” and represents one of the most promising and rapidly advancing frontiers in biology and drug discovery today which was awarded the 2006 Nobel Prize for Physiology or Medicine. RNAi is a natural process of gene silencing that occurs in

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organisms ranging from plants to mammals. By harnessing the natural biological process of RNAi occurring in our cells, the creation of a major new class of medicines, known as RNAi therapeutics, is on the horizon. Small interfering RNA (siRNA), the molecules that mediate RNAi and comprise Alnylam’s RNAi therapeutic platform, target the cause of diseases by potently silencing specific mRNAs, thereby preventing disease-causing proteins from being made. RNAi therapeutics have the potential to treat disease and help patients in a fundamentally new way.

About Alnylam Pharmaceuticals

Alnylam is a biopharmaceutical company developing novel therapeutics based on RNA interference, or RNAi. The company is leading the translation of RNAi as a new class of innovative medicines with a core focus on RNAi therapeutics for the treatment of genetically defined diseases, including ALN-TTR for the treatment of transthyretin-mediated amyloidosis (ATTR), ALN-AT3 for the treatment of hemophilia, ALN-PCS for the treatment of severe hypercholesterolemia, ALN-HPN for the treatment of refractory anemia, and ALN-TMP for the treatment of hemoglobinopathies. As part of its “Alnylam 5x15TM” strategy, the company expects to have five RNAi therapeutic products for genetically defined diseases in clinical development, including programs in advanced stages, on its own or with a partner by the end of 2015. Alnylam has additional partnered programs in clinical or development stages, including ALN-RSV01 for the treatment of respiratory syncytial virus (RSV) infection, ALN-VSP for the treatment of liver cancers, and ALN-HTT for the treatment of Huntington’s disease. The company’s leadership position on RNAi therapeutics and intellectual property have enabled it to form major alliances with leading companies including Merck, Medtronic, Novartis, Biogen Idec, Roche, Takeda, Kyowa Hakko Kirin, Cubist, Ascletis, Monsanto, and Genzyme. In addition, Alnylam and Isis co-founded Regulus Therapeutics Inc., a company focused on discovery, development, and commercialization of microRNA therapeutics; Regulus has formed partnerships with GlaxoSmithKline, Sanofi, AstraZeneca and Biogen Idec. Alnylam has also formed Alnylam Biotherapeutics, a division of the company focused on the development of RNAi technologies for applications in biologics manufacturing, including recombinant proteins and monoclonal antibodies. Alnylam’s VaxiRNA™ platform applies RNAi technology to improve the manufacturing processes for vaccines; GlaxoSmithKline is a collaborator in this effort. Alnylam scientists and collaborators have published their research on RNAi therapeutics in over 100 peer-reviewed papers, including many in the world’s top scientific journals such as Nature, Nature Medicine, Nature Biotechnology, and Cell. Founded in 2002, Alnylam maintains headquarters in Cambridge, Massachusetts. For more information, please visit www.alnylam.com.

About LNP Technology

Alnylam has licenses to Tekmira LNP intellectual property for use in RNAi therapeutic products using LNP technology.

Alnylam Forward-Looking Statements

Various statements in this release concerning Alnylam’s future expectations, plans and prospects, including without limitation, statements regarding Alnylam’s views with respect to the outcome of this settlement and the restructuring of its relationship with Tekmira, its expectations

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regarding the payment to and receipt from Tekmira of future milestones and royalties, its plans with respect to the manufacture of LNP-based RNAi therapeutics, its expected cash position as of December 31, 2012, and Alnylam’s expectations regarding its “Alnylam 5x15” product strategy, constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, Alnylam’s ability to successfully advance RNAi therapeutics, in particular ALN-VSP, ALN-PCS and ALN-TTR, resulting in the potential achievement of milestone and royalty events and thus the benefit to Alnylam of the buy-down of such payments, Alnylam’s ability to manufacture or have manufactured its LNP-based RNAi therapeutics for clinical and commercial use, obtaining, maintaining and protecting intellectual property and Alnylam’s dependence on Tekmira for the protection of and access to certain LNP IP, obtaining regulatory approval for products, competition from others using technology similar to Alnylam’s and others developing products for similar uses, Alnylam’s ability to raise additional capital, and Alnylam’s ability to establish and maintain strategic business alliances and new business initiatives, as well as those risks more fully discussed in the “Risk Factors” section of its most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission. In addition, any forward-looking statements represent Alnylam’s views only as of today and should not be relied upon as representing its views as of any subsequent date. Alnylam does not assume any obligation to update any forward-looking statements.

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Tekmira and Alnylam Restructure Relationship and Settle All Litigation

FOR IMMEDIATE RELEASE: November 12, 2012

Vancouver, BC – Tekmira Pharmaceuticals Corporation (Nasdaq: TKMR, TSX: TKM) today announced that it has entered into a settlement agreement with Alnylam Pharmaceuticals, Inc. that resolves all litigation between the companies, and has signed a new licensing agreement that restructures the relationship and provides clarity on all intellectual property and licensing issues between the companies. As a result of the restructuring and new agreements, Tekmira will receive $65 million within 10 days and is eligible to receive $10 million in near-term milestone payments expected to be received in 2013.

“Today’s announcement provides assurances for our stakeholders that we accomplished what we set out to do when we initiated this litigation. We now have clarity around the intellectual property that protects our lipid nanoparticle (LNP) technology and a cash payment that will enable us to continue the execution of our business plan into 2015,” said Dr. Mark J. Murray, Tekmira’s President and CEO.

“Tekmira is entering an exciting new era of growth and development. Clarity of rights and ownership around our LNP intellectual property – the leading technology for the systemic delivery of RNAi therapeutics – combined with a strong balance sheet should strengthen our ability to invest in, advance and expand our own product pipeline. We also look forward to establishing new business relationships with pharmaceutical partners driven by intellectual property certainty and recent promising clinical data validating the therapeutic utility of LNP-enabled products,” added Dr. Murray.

As part of this settlement and restructuring, all previous agreements between the companies are terminated and a new license agreement has been established that provides clear terms outlining Tekmira’s LNP intellectual property. Under the terms of the new license agreement:

• Alnylam will transfer all agreed-upon patents and patent applications related to LNP technology for the systemic delivery of RNAi therapeutic products, including the MC3 lipid family, to Tekmira, who will own and control prosecution of this intellectual property portfolio. Tekmira is the only company able to sublicense LNP intellectual property in future platform-type relationships.

• Tekmira will receive a total of $65 million in cash payments within 10 days. This includes $30 million associated with the termination of the manufacturing agreement and $35 million associated with the termination of the previous license agreements, as well as a modification of the milestone and royalty schedules associated with Alnylam’s ALN-VSP, ALN-PCS, and ALN-TTR02 programs.

Confidential

• Tekmira is also eligible to receive an additional $10 million in near-term milestones, comprised of a $5 million payment upon ALN-TTR02 entering a pivotal trial and a $5 million payment related to initiation of clinical trials for ALN-VSP in China. Both near-term milestones are expected to occur in 2013.

• Alnylam no longer has “opt-in” rights to Tekmira’s lead oncology product, TKM-PLK1; Tekmira now holds all development and commercialization rights related TKM-PLK1, which is expected to enter Phase 2 clinical trials in 2013.

• In addition to its eight existing InterfeRx licenses, Tekmira will receive five additional non-exclusive licenses to develop and commercialize RNAi therapeutics based on Alnylam’s siRNA payload technology. Tekmira will pay Alnylam milestones and royalties for these products.

• Alnylam has a license to use Tekmira’s intellectual property to develop and commercialize products, including ALN-TTR02, ALN-VSP, ALN-PCS, and other LNP-enabled products. Alnylam has rights to sublicense Tekmira’s LNP technology if it is part of a product sublicense. Tekmira remains eligible for milestone and royalty payments as Alnylam’s LNP-enabled products are developed and commercialized.

Alnylam and Tekmira have agreed to settle all ongoing litigation between the parties. The parties have also agreed to a resolution of the interference proceeding related to Alnylam-owned US Patent No. 7,718,629 directed to an siRNA component in ALN-VSP. Finally, the parties have agreed to a covenant not to sue on matters related to the current dispute in the future, which includes liquidated damages to be paid if the covenant is breached, and have also agreed to resolve any future disputes that might arise over the next three years with binding arbitration.

Tekmira and AlCana Technologies, Inc. have also agreed to settle all ongoing litigation between the parties. Tekmira expects to enter into a cross license agreement with AlCana which will include milestone and royalty payments, and AlCana has agreed not to compete in the RNAi field for five years.

About RNAi and Tekmira’s LNP Technology

RNAi therapeutics have the potential to treat a broad number of human diseases by “silencing” disease causing genes. The discoverers of RNAi, a gene silencing mechanism used by all cells, were awarded the 2006 Nobel Prize for Physiology or Medicine. RNAi therapeutics, such as “siRNAs,” require delivery technology to be effective systemically. Tekmira believes its LNP technology represents the most widely adopted delivery technology for the systemic delivery of RNAi therapeutics. Tekmira’s LNP platform is being utilized in multiple clinical trials by both Tekmira and its partners. Tekmira’s LNP technology (formerly referred to as stable nucleic acid-lipid particles or SNALP) encapsulates siRNAs with high efficiency in uniform lipid nanoparticles that are effective in delivering RNAi therapeutics to disease sites in numerous

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preclinical models. Tekmira’s LNP formulations are manufactured by a proprietary method which is robust, scalable and highly reproducible and LNP-based products have been reviewed by multiple FDA divisions for use in clinical trials. LNP formulations comprise several lipid components that can be adjusted to suit the specific application.

About Alnylam RNAi Technology

Tekmira has licenses to Alnylam RNAi intellectual property for certain siRNA programs.

About Tekmira

Tekmira Pharmaceuticals Corporation is a biopharmaceutical company focused on advancing novel RNAi therapeutics and providing its leading lipid nanoparticle delivery technology to pharmaceutical partners. Tekmira has been working in the field of nucleic acid delivery for over a decade and has broad intellectual property covering LNPs. Further information about Tekmira can be found at www.tekmirapharm.com. Tekmira is based in Vancouver, B.C.

Forward-Looking Statements and Information

This news release contains “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements are generally identifiable by use of the words “believes,” “may,” “plans,” “will,” “anticipates,” “intends,” “budgets,” “could,” “estimates,” “expects,” “forecasts,” “projects” and similar expressions, and the negative of such expressions. Forward-looking statements in this news release include statements about the settlement to resolve all litigation between Tekmira and Alnylam Pharmaceuticals, Inc. and AlCana Technologies, Inc., including the patent infringement lawsuit; statements about the quantum and timing of Tekmira’s expected payments related to the settlement agreement and new licensing agreement with Alnylam; statements about Tekmira’s expected payments funding the continued execution of its business plan into 2015; Tekmira’s ability to invest in, advance and expand its product pipeline; the establishment of new business relationships with pharmaceutical partners; clinical data validating the therapeutic utility of LNP-enabled products; expected timing of Phase 2 clinical trials for TKM-PLK1; milestones and royalty payments from Alnylam’s LNP-enabled products; the additional five non-exclusive InterfeRx licenses; future disputes and mechanisms for resolution of disputes with Alnylam; Tekmira’s expectations of entering into a cross license agreement with AlCana, which includes anticipated milestone and royalty payments and an expected agreement for AlCana not to compete in the RNAi field for five years; and Tekmira’s strategy, future operations, clinical trials, prospects and the plans of management; RNAi (ribonucleic acid interference) product development programs; the future royalty payments expected from the ALN-TTR, ALN-VSP, ALN-PCS and other LNP-enabled product development programs of Alnylam; and Tekmira’s expectations with respect to existing and future agreements with third parties.

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With respect to the forward-looking statements contained in this news release, Tekmira has made numerous assumptions regarding, among other things: LNP’s status as a leading RNAi delivery technology; the timing and results of clinical data releases and use of LNP technology by Tekmira’s development partners and licensees; the time required to complete research and product development activities; the timing and quantum of payments to be received under contracts with Tekmira’s partners including Alnylam and others; the timing of receipt of an immediate payment of $65 million and $10 million in additional milestone payments from Alnylam expected in 2013; Tekmira’s receipt of five additional non-exclusive InterfeRx licenses; Tekmira’s financial position and its ability to execute on its business strategy; and Tekmira’s ability to protect its intellectual property rights and not to infringe on the intellectual property rights of others. While Tekmira considers these assumptions to be reasonable, these assumptions are inherently subject to significant business, economic, competitive, market and social uncertainties and contingencies.

Additionally, there are known and unknown risk factors which could cause Tekmira’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements contained herein. Known risk factors include, among others: expected payments related to the licensing agreement between Tekmira and Alnylam may not be received in the quantum and on the timing currently anticipated, or at all; payments received from the settlement may not be sufficient to fund Tekmira’s continued business plan as currently anticipated; Tekmira may never invest in, advance or expand its product pipeline; Tekmira may not be able to establish new business relationships with pharmaceutical partners; LNP-enabled products may have no therapeutic utility; TKM-PLK1 may never enter into Phase 2 clinical trials; Tekmira may never receive milestones or royalty payments from Alnylam; Tekmira may not receive any additional non-exclusive InterfeRx licenses; the possibility that Tekmira does not enter into a cross license agreement with AlCana on the terms currently anticipated, or all; the possibility that other organizations have made advancements in RNAi delivery technology that Tekmira is not aware of; difficulties or delays in the progress, timing and results of clinical trials; future operating results are uncertain and likely to fluctuate; economic and capital market conditions; Tekmira’s ability to obtain and protect intellectual property rights, and operate without infringing on the intellectual property rights of others; Tekmira’s research and development capabilities and resources will not meet current or expected demand; Tekmira’s development partners and licensees conducting clinical trial, development programs and joint venture strategic alliances will not result in expected results on a timely basis, or at all; anticipated payments under contracts with Tekmira’s collaborative partners may not be received by Tekmira on a timely basis, or at all, or in the quantum expected by Tekmira; Tekmira’s products may not prove to be effective in the treatment of cancer and infectious disease; and the possibility that Tekmira has not sufficiently budgeted for expenditures necessary to carry out planned activities.

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A more complete discussion of the risks and uncertainties facing Tekmira appears in Tekmira’s annual report on Form 20-F for the year ended December 31, 2011 (Annual Report), which is available at www.sedar.com or at www.sec.gov/edgar.shtml. All forward-looking statements herein are qualified in their entirety by this cautionary statement, and Tekmira disclaims any obligation to revise or update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, except as required by law.

CONTACTS:

TEKMIRA

Investors

Jodi Regts

Director, Investor Relations

Phone: 604-419-3234

Email: jregts@tekmirapharm.com

Media

David Ryan

Longview Communications Inc.

Phone: 416-649-8007

Email: dryan@longviewcomms.ca

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A total of 4 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. [**]

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EX-10.52

Exhibit 10.52

 

February 6, 2013

BY E-MAIL AND FEDERAL EXPRESS

John Maraganore

Chief Executive Officer

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, MA 02142

RE: Termination of the License and Collaboration Agreement dated January 9, 2009, as amended by the First Amendment dated November 2, 2009, (the “Agreement”) between Alnylam Pharmaceuticals, Inc. (“Alnylam”) and Cubist Pharmaceuticals, Inc. (“Cubist”)

Dear John,

This letter agreement (“Letter Agreement”) confirms the understanding and agreement between the signatory parties hereto (the “parties”) with respect to the termination of the Agreement. Unless otherwise stated herein, all capitalized terms used herein have the same definitions as those set forth in the Agreement. The parties have agreed, as follows:

1. Cubist has determined that it does not want to exercise its Opt-In Right for ALN-RSV01. In light of this determination and after discussion, the parties have mutually agreed to terminate the Agreement. The parties shall have no further rights and obligations under the Agreement, notwithstanding anything to the contrary in the Agreement.

2. The effective date of this Letter Agreement and the termination of the Agreement shall be February 6, 2013.

This Letter Agreement may be executed in two or more counterparts, and all counterparts shall collectively constitute one and the same document. Counterparts may be signed and delivered by facsimile or electronic transmission (including by e-mail delivery of .pdf signed copies), and will become binding upon full execution of the Agreement by both parties.

Very truly yours,
CUBIST PHARMACEUTICALS, INC.
By:	/s/ Steven Gilman
Name:	Steven C. Gilman
Title:	Executive Vice President, Research & Development and Chief Scientific Officer

ACKNOWLEDGED AND AGREED:

ALNYLAM PHARMACEUTICALS, INC.

By:	/s/ John Maraganore
Name:	John Maraganore
Title:	Chief Executive Officer

65 Hayden Avenue, Lexington, MA 02421     P 781.860.8660     F (781) 861-0566     www.cubist.com

EX-12

Exhibit 12

STATEMENT REGARDING COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS/DEFICIENCIES TO FIXED CHARGES

(dollars in thousands)

	Fiscal Year Ended December 31,
	2012			2011			2010			2009			2008			2007
Earnings (loss):
Pre-tax loss from continuing operations before adjustment for loss from equity investee	$	(112,064	)	$	(54,144	)	$	(35,362	)	$	(42,098	)	$	(16,240	)	$	(79,146	)
add: Fixed charges (see below)		1,188			1,207			1,207			712			1,115			1,553
Pre-tax income (loss) from continuing operations before adjustment for income/loss from equity investees plus fixed charges	$	(110,876	)	$	(52,937	)	$	(34,155	)	$	(41,386	)	$	(15,125	)	$	(77,593	)
Fixed charges:
Interest expense on indebtedness	$	—		$	—		$	—		$	—		$	872		$	1,083
Interest expense on portion of rent expense representative of interest		1,188			1,207			1,207			712			243			470
Total fixed charges	$	1,188		$	1,207		$	1,207		$	712		$	1,115		$	1,553
Ratio of earnings to fixed charges		—			—			—			—			—			—
Deficiency of earnings available to cover fixed charges	$	(112,064	)	$	(54,144	)	$	(35,362	)	$	(42,098	)	$	(16,240	)	$	(79,146	)

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Name	Ownership Percentage	Jurisdiction of Organization
Alnylam U.S., Inc.	100%	Delaware
Alnylam Europe AG	100%	Germany
Alnylam Securities Corporation	100%	Massachusetts

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-185658, 333-138586, 333-131233, 333-129905, 333-140076 and 333-175694) and S-8 (Nos. 333-127450, 333-116151, 333-148114, 333-157633, 333-165105 and 333-172370) of Alnylam Pharmaceuticals, Inc. of our report dated February 19, 2013 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 19, 2013

EX-23.2

Exhibit 23.2

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm of Regulus Therapeutics Inc.

We consent to the use of our report dated February 9, 2012, with respect to the financial statements of Regulus Therapeutics Inc., incorporated by reference into the Registration Statements (Form S-3 Nos. 333-185658, 333-175694, 333-140076, 333-138586, 333-131233, 333-129905 and Form S-8 Nos. 333-172370, 333-165105, 333-157633, 333-148114, 333-127450, 333-116151) and related Prospectus of Alnylam Pharmaceuticals, Inc., which report is included in Alnylam Pharmaceuticals, Inc.’s Annual Report (Form 10-K) for the year ended December 31, 2012.

/s/ Ernst & Young LLP

San Diego, California

February 15, 2013

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, John M. Maraganore, Ph.D., certify that:

1) I have reviewed this Annual Report on Form 10-K of Alnylam Pharmaceuticals, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2013	/s/ John M. Maraganore, Ph.D.
	John M. Maraganore, Ph.D. Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael P. Mason, certify that:

1) I have reviewed this Annual Report on Form 10-K of Alnylam Pharmaceuticals, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2013	/s/ Michael P. Mason
	Michael P. Mason Vice President of Finance and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Alnylam Pharmaceuticals, Inc. (the “Company”) for the fiscal year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, John M. Maraganore, Ph.D., Chief Executive Officer of the Company, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that, to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 19, 2013	/s/ John M. Maraganore, Ph.D.
	John M. Maraganore, Ph.D. Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Alnylam Pharmaceuticals, Inc. (the “Company”) for the fiscal year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Michael P. Mason, Vice President of Finance and Treasurer of the Company, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that, to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 19, 2013	/s/ Michael P. Mason
	Michael P. Mason Vice President of Finance and Treasurer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders of

Regulus Therapeutics Inc.

We have audited the balance sheets of Regulus Therapeutics Inc. (formerly Regulus Therapeutics LLC)(an equity investment of Alnylam Pharmaceuticals, Inc.) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’(members’) equity, and cash flows for each of the three years in the period ended December 31, 2011 (not presented separately herein). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Regulus Therapeutics Inc. (formerly Regulus Therapeutics LLC) at December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

San Diego, California

February 9, 2012

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Property and Equipment Net- Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 4.6	$ 5.0	$ 4.8

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Reconciliation of Unrecognized Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Schedule of Unrecognized Tax Benefits [Line Items]
Beginning balance	$ 128	$ 428
Subtractions for tax positions related to the prior years	(128)	(300)
Ending balance		$ 128

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Stock Option Activity (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Number of Options
Outstanding, beginning balance	9,778,539
Granted	1,233,086
Exercised	(661,909)
Cancelled	(1,418,133)
Outstanding, ending balance	8,931,583
Exercisable, ending balance	5,885,363	6,033,858	4,983,088
Weighted average exercise price
Outstanding, beginning balance	$ 15.53
Granted	$ 17.02
Exercised	$ 9.67
Cancelled	$ 18.47
Outstanding, ending balance	$ 15.71
Exercisable, ending balance	$ 17.20	$ 18.13	$ 18.60

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Regulus - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended					12 Months Ended		6 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2010	Sep. 30, 2012	Dec. 31, 2011	Mar. 31, 2009	Dec. 31, 2012 Regulus Therapeutics Inc	Mar. 31, 2009 Isis	Jun. 30, 2010 Sanofi	Dec. 31, 2010 Sanofi
Schedule Of Equity Method Investments Joint Ventures [Line Items]
Preferred stock purchased						$ 10,000,000		$ 10,000,000
Equity method investments									10,000,000
Gain loss on equity investment	16,084,000	16,084,000	4,421,000				16,100,000			4,421,000
Company ownership percentage				44.00%
Company ownership percentage	17.00%
Investment in equity securities of Regulus Therapeutics Inc	38,748,000	38,748,000					0
Increase in carrying value	12,400,000	12,400,000					12,400,000
Unrealized gain in other comprehensive income		15,700,000
Net of an intraperiod tax benefit	(10,572,000)	(10,572,000)
Prepaid expenses and other current assets	$ 2,540,000	$ 2,540,000			$ 4,158,000		$ 600,000

XML

Stock Incentive Plans - Additional Information (Detail) (USD $)	12 Months Ended								1 Months Ended						12 Months Ended					12 Months Ended			1 Months Ended	12 Months Ended			1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Jan. 31, 2010	Dec. 31, 2012 Regulus Therapeutics Inc	Dec. 31, 2011 Regulus Therapeutics Inc	Dec. 31, 2010 Regulus Therapeutics Inc	Dec. 31, 2012 Employee Stock Option	Jun. 30, 2009 Stock Incentive Plan 2009	Jun. 30, 2009 Stock Incentive Plan 2009 Board of Directors	Jun. 30, 2009 Stock Incentive Plan 2009 Board of Directors Initial Appointment	Jun. 30, 2009 Stock Incentive Plan 2009 Board of Directors On Date Of Annual Meeting Of Shareholders	Jun. 30, 2009 Stock Incentive Plan 2009 Chairperson of Audit Committee Stock Options Additional Annual Grant	Jun. 30, 2009 Stock Incentive Plan 2009 Chairperson of Science and Technology Committee Stock Options Additional Annual Grant	Dec. 31, 2012 Employee Stock Purchase Plan	Dec. 31, 2011 Employee Stock Purchase Plan	Dec. 31, 2010 Employee Stock Purchase Plan	Jun. 30, 2010 Employee Stock Purchase Plan	Dec. 31, 2004 Employee Stock Purchase Plan	Dec. 31, 2012 Employee Stock Option And Employee Stock Purchase Plan	Dec. 31, 2011 Employee Stock Option And Employee Stock Purchase Plan	Dec. 31, 2010 Employee Stock Option And Employee Stock Purchase Plan	Oct. 31, 2010 Unvested Restricted Common Stock	Dec. 31, 2012 Unvested Restricted Common Stock	Dec. 31, 2011 Unvested Restricted Common Stock	Dec. 31, 2010 Unvested Restricted Common Stock	Jan. 31, 2012 Unvested Restricted Common Stock Current Employees	May 31, 2011 Performance Based Restricted Stock Awards	Dec. 31, 2010 Stock Incentive Plan 2004
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, shares authorized									2,200,000									715,789	315,789										12,366,485
Stock incentive plan, shares authorized for non-employee directors											30,000	15,000	10,000	15,000
Stock incentive plan, non-employee directors required service period										6 months
Stock incentive plan, non-employee directors award vest on each anniversary of grant date									33.333%
Stock incentive plan, shares available for future grant	815,916							541,806							274,110
Options expiration period	10 years
Option vesting percentage on the first anniversary of grant date	25.00%
Option vesting percentage at the end of each successive three-month period	6.25%
Stock-based compensation expense	$ 12,360,000	$ 16,676,000	$ 19,118,000												$ 200,000	$ 300,000	$ 300,000			$ 9,000,000	$ 14,800,000	$ 18,700,000
Non-employee stock-based compensation expenses	1,000,000	400,000		300,000
Joint venture stock-based compensation (Regulus Therapeutics Inc.)	321,000	370,000	289,000		289,000	370,000	321,000
Equity awards granted																							113,370	513,082			513,082	229,806
Fair value of equity awards granted																							1,400,000				5,300,000	2,300,000
Stock awards vesting period																							3 years				2 years
Equity awards, term																												5 years
Restricted stock expense	100,000	1,500,000	2,400,000
Total compensation cost for all stock-based awards	12,700,000	17,100,000	19,400,000
Percentage of Stock options expected to vest	67.00%
Expected annual forfeiture rate	9.50%
Unearned compensation expense related to stock options	14,700,000
Weighted-average recognition period	2 years 7 months 6 days																							1 year
Weighted average remaining contractual life for stock options outstanding	6 years 4 months 24 days
Weighted average remaining contractual life for stock options exercisable	5 years 2 months 12 days
Aggregate intrinsic value of stock option outstanding	41,800,000
Aggregate intrinsic value of stock option exercisable	24,900,000
Aggregate intrinsic value of stock option exercised	4,800,000	40,000	1,800,000
Weighted average fair value of stock options granted	$ 8.68	$ 7.68	$ 5.98
Aggregate intrinsic value of stock options expected to vest	14,700,000
Weighted average fair value of stock options expected to vest	$ 5.56
Weighted average remaining contractual life for stock options expected to vest	8 years 9 months 18 days
weighted average exercise price for these stock options expected to vest during period	$ 12.82
Total fair value of restricted stock awards vested during period																								1,500,000	500,000	0
Unrecognized compensation expense related to non-vested award																								$ 2,800,000
Employee stock purchase plan, offering period															6 months
Employee stock purchase plan, purchase price as a percentage of common stock closing price															85.00%
Employee stock purchase plan, shares issued															73,590	79,038	72,674
Weighted average fair value awards granted															$ 2.82	$ 3.46	$ 5.12							$ 10.49
Weighted-average stock-price volatility															57.00%
Expected option life															6 months
Risk-free interest rate															0.10%

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Fair Value Measured on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	$ 174,823	$ 190,581
Corporate Notes (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	41,268	51,245
U.S. Government Obligations (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	7,500	13,534
Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure		625
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	50,213	67,024
Total	263,784	257,605
Recurring | Corporate Notes (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	91,523	104,839
Recurring | U.S. Government Obligations (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	60,661	73,722
Recurring | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	22,639	11,395
Recurring | Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	38,748	625
Quoted Prices in Active Markets (Level 1) | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	50,213	67,024
Total	50,213	67,024
Significant Observable Inputs (Level 2) | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	213,571	190,581
Significant Observable Inputs (Level 2) | Recurring | Corporate Notes (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	91,523	104,839
Significant Observable Inputs (Level 2) | Recurring | U.S. Government Obligations (Due Within 1 Year)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	60,661	73,722
Significant Observable Inputs (Level 2) | Recurring | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	22,639	11,395
Significant Observable Inputs (Level 2) | Recurring | Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, Fair value disclosure	$ 38,748	$ 625

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Summary Results of Regulus Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$ 38,144
Current assets	38,666
Total assets	42,881
Current liabilities	12,850
Non-current liabilities	28,834
Notes payable	11,259
Net assets	$ 1,197

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2012

Fixed Cancelable Payments under Existing License Agreements

At December 31, 2012, the Company was committed to make the following fixed, estimated and cancelable payments under existing license agreements, in thousands:

Year Ending December 31,
2013	$	14,463
2014		1,563
2015		818
2016		773
2017		793
Thereafter		9,159
Total	$	27,569

Future Minimum Lease Payments under Non-Cancelable Lease

Future minimum payments under the Company’s non-cancelable leases are approximately as follows, in thousands:

Year Ending December 31,
2013		6,065
2014		6,303
2015		6,550
2016		5,192
2017		364
Total	$	24,474

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Deferred Tax Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Net operating loss carryforwards	$ 102,819	$ 46,230
Research and development credits	17,443	12,405
AMT credits	788	788
Foreign tax credits	3,196	3,196
Capitalized research and development and start-up costs	16,102	3,974
Deferred revenue	30,776	53,485
Deferred compensation	24,804	21,855
Intangible assets	2,540	4,302
Partnership interest	7,118	5,338
Other	4,173	2,850
Total deferred tax assets	209,759	154,423
Deferred tax liabilities:
Intangible assets	(38)	(91)
Unrealized gain on available-for-sale securities	(10,572)
Gain on issuance of stock by Regulus	(6,466)
Deferred tax asset valuation allowance	(192,721)	(154,423)
Net deferred tax liability	$ (38)	$ (91)

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Commitments and Contingencies - Additional Information (Detail) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2012 sqft	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012 sqft	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Tekmira Restructured Cross-License Agreement	Dec. 31, 2012 Tekmira Restructured Cross-License Manufacturing Contracts and Service Agreement	Dec. 31, 2012 Tekmira Restructured Cross-License Buy-Down	Dec. 31, 2012 Bmr Fresh Pond Research Park Llc sqft	Dec. 31, 2008 Third Street Lease
Loss Contingencies [Line Items]
Future purchase commitments	$ 11,100,000								$ 11,100,000
Future purchase commitments expected to be incurred in 2013	10,300,000								10,300,000
Future purchase commitments expected to be incurred past 2013	800,000								800,000
Area of office and laboratory space held under operating lease	129,000								129,000						15,000
Lease expiration date									2016-09
Number 0f lease extension options									2						2
Lease extension period									5 years						5 years
Area of premises subleased									34,014
Lease expiration date									Sep. 30, 2016						Aug. 31, 2017
Expected future sublease receivable	10,000,000								10,000,000
Lease incentive received															1,800,000	7,300,000
Rent expense									6,400,000	6,500,000	6,400,000
Operating expenses	96,844,000	34,906,000	32,951,000	31,480,000	34,041,000	33,229,000	33,732,000	36,573,000	196,181,000	137,575,000	144,111,000	65,000,000
One time settlement payment	65,000,000								65,000,000				30,000,000	35,000,000
Contingent milestone payments														10,000,000
Future milestone payments												$ 5,000,000

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Significant Agreements - Additional Information (Detail) (USD $)	12 Months Ended		12 Months Ended					6 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended							6 Months Ended		12 Months Ended	1 Months Ended			6 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended		12 Months Ended	1 Months Ended			12 Months Ended	1 Months Ended			12 Months Ended		1 Months Ended		12 Months Ended		1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Research and Development Expense	Dec. 31, 2011 Research and Development Expense	Dec. 31, 2010 Research and Development Expense	Dec. 31, 2012 Minimum	Dec. 31, 2012 Maximum	Jul. 31, 2007 Roche/Arrowhead	Dec. 31, 2012 Novartis	Oct. 31, 2012 Genzyme	Dec. 31, 2012 Genzyme Minimum	Dec. 31, 2012 Genzyme Maximum	Dec. 31, 2012 Cubist Alliance	Dec. 31, 2012 Platform Alliances Joint Technology Transfer Committee	Dec. 31, 2012 Platform Alliances Joint Delivery Collobartion Committee	Dec. 31, 2012 Platform Alliances Roche/Arrowhead	Jul. 31, 2007 Platform Alliances Roche/Arrowhead	Jul. 31, 2012 Platform Alliances Roche/Arrowhead Alnylam Europe Purchase Agreement	Jul. 31, 2007 Platform Alliances Roche/Arrowhead Common Stock Purchase Agreement	Dec. 31, 2012 Platform Alliances Arrowhead	Mar. 31, 2011 Platform Alliances Takeda	Mar. 31, 2010 Platform Alliances Takeda	Oct. 31, 2008 Platform Alliances Takeda	Jun. 30, 2008 Platform Alliances Takeda	Dec. 31, 2012 Platform Alliances Takeda	Aug. 31, 2012 Platform Alliances Monsanto Alliance	Dec. 31, 2012 Platform Alliances Monsanto Alliance	Dec. 31, 2012 Platform Alliances Monsanto Alliance Loss Of Patent Rights	Dec. 31, 2012 Platform Alliances Cubist Alliance	Sep. 30, 2010 Discovery and Development Alliances	Mar. 31, 2004 Discovery and Development Alliances Isis	Apr. 30, 2009 Discovery and Development Alliances Isis Research and Development Expense	Dec. 31, 2012 Discovery and Development Alliances Isis Research and Development Expense	Mar. 31, 2004 Discovery and Development Alliances Isis Up Front Payment Research and Development Expense	Mar. 31, 2004 Discovery and Development Alliances Isis Milestone Payments Research and Development Expense	Sep. 30, 2010 Discovery and Development Alliances Novartis	Dec. 31, 2012 Discovery and Development Alliances Novartis	Dec. 31, 2005 Discovery and Development Alliances Novartis	Dec. 31, 2012 Discovery and Development Alliances Novartis Technology Support Agreement	Dec. 31, 2012 Discovery and Development Alliances Novartis Maximum	Dec. 31, 2012 Product Alliances Kyowa Hakko Kirin	Dec. 31, 2012 Product Alliances Genzyme	Jan. 31, 2009 Product Alliances Cubist Alliance
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of therapeutic areas																4
Payments for additional therapeutic areas																$ 50,000,000
Upfront fee received								273,500,000					20,000,000											100,000,000			29,200,000				500,000						10,000,000				15,000,000	22,500,000	20,000,000
Maximum number of potential future milestones																100,000,000									171,000,000		5,000,000			75,000,000							64,000,000				78,000,000	50,000,000
Potential future payment for the achievement of specified development milestones																17,500,000									26,000,000																	25,000,000
Potential future payment for the achievement of specified regulatory milestones																62,500,000									40,000,000																	25,000,000
Potential future payment for the achievement of specified commercialization milestones																20,000,000									105,000,000
Next potential milestone payment																1,000,000									2,000,000		2,500,000															7,000,000
License and collaborations agreements, expiration period																10 years																						5 years		10 years
License and collaborations agreements, prior written notice period before termination																180 days									180 days
Upfront fees relating to common stock purchase agreement and the Alnylam Europe Purchase Agreement																		15,000,000	42,500,000
Aggregate upfront and near term payments								331,000,000																	150,000,000
Deferred revenue determined at contract execution																	278,200,000
Revenue recognizing period																5 years				5 years
Granted period of royalty bearing license																									5 years
Profit sharing agreement ratio																									50.00%
Number of licensed products																									4						10					31
Additional number of licensed products																									2						1
Milestone fees to company upon achievement of specified technology transfer milestones																								50,000,000
Milestones considered probable at inception of collaborations																					10,000,000	20,000,000	20,000,000
Maximum life of collaboration committee														7 years	7 years
Deferred revenue													9,700,000												52,800,000	29,200,000	28,700,000	5,000,000									200,000				15,500,000	22,500,000
Period of exclusivity in the collaboration																										10 years
Milestone payment earned																											1,500,000
Estimated range of expiration for fundamental patents						2016	2025				2016	2021
Period for services under contract																				5 years
Future payment of liquidated damages																											5,000,000
Technology transfer milestone																											2,500,000
License fee			5,700,000	1,400,000	2,400,000																											11,000,000	2,500,000	5,000,000	3,400,000
Potential future payment upon the occurrence of achievement of specified development and regulatory milestones																															3,400,000
Premium received on sale of common stock	$ 624,876,000	$ 518,731,000																																			$ 6,400,000
Collaboration and license agreement, term																																							5 years
Percentage of outstanding stock owned by Novartis									7.70%
Estimated year of patent expiration for compounds										2032
Percentage of sharing in development cost	50.00%												50.00%
Life of development and manufacturing services																													8 years
Upfront payment recognition period													8 years

XML

Effective Income Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Reconciliation of Provision of Income Taxes [Line Items]
At U.S. federal statutory rate	35.00%	35.00%	35.00%
State taxes, net of federal effect	4.90%	4.60%	4.20%
Stock compensation	(0.70%)	(3.30%)	(5.00%)
Other permanent items	(1.60%)	(0.20%)	1.30%
Valuation allowance	(28.50%)	(36.10%)	(36.70%)
Effective income tax rate	9.10%		(1.20%)

XML

Valuation Assumptions for Stock Options (Detail)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate, minimum	0.80%	1.20%	1.60%
Risk-free interest rate, maximum	1.00%	2.60%	2.90%
Expected dividend yield
Expected volatility, minimum	57.00%	55.00%	53.00%
Expected volatility, maximum	0.00%	57.00%	55.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life	5 years 7 months 6 days	5 years 9 months 18 days	5 years 10 months 24 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life	5 years 10 months 24 days	5 years 10 months 24 days	6 years 1 month 6 days

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company comprises four entities, Alnylam Pharmaceuticals, Inc. (the parent company) and three wholly-owned subsidiaries (Alnylam U.S., Inc., Alnylam Europe AG (“Alnylam Europe”) and Alnylam Securities Corporation). Alnylam Pharmaceuticals, Inc. is a Delaware corporation that was formed on May 8, 2003. Alnylam U.S., Inc. is also a Delaware corporation that was formed on June 14, 2002. Alnylam Securities Corporation is a Massachusetts corporation that was formed on December 19, 2006. Alnylam Europe was incorporated in Germany in June 2000 under the name Ribopharma AG. The Company acquired Alnylam Europe in July 2003.

The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Reclassifications

Certain reclassifications have been made to prior years’ consolidated financial statements to conform to the 2012 presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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. Actual results could differ from those estimates.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and fixed income marketable securities. At December 31, 2012 and 2011, substantially all of the Company’s cash, cash equivalents and fixed income marketable securities were invested in money market mutual funds, commercial paper, corporate notes and U.S. government securities through highly rated financial institutions. Investments are restricted, in accordance with the Company’s investment policy, to a concentration limit per issuer.

To date, the Company’s revenues from collaborations have been generated from primarily F. Hoffmann-La Roche Ltd and certain of its affiliates (collectively, “Roche”) (which assigned its rights and obligations to Arrowhead Research Corporation (“Arrowhead”) in 2011), Takeda Pharmaceutical Company Limited (“Takeda”), and Novartis Pharma AG and one of its affiliates (collectively, “Novartis”). In addition, the Company and Medtronic, Inc. (“Medtronic”) formed a collaboration with CHDI Foundation, Inc. (“CHDI”) to advance ALN-HTT, a novel drug-device combination for the treatment of Huntington’s disease. Under this collaboration, CHDI agreed to initially fund approximately 50% of the costs of this program up to the point at which an investigational new drug application could be filed. In April 2012, the Company exercised its option under the Medtronic agreement to opt-out of the 50-50 expense/profit share arrangement of the ALN-HTT program and move to a royalty and milestone licensing structure. In connection with the Company’s opt-out, in May 2012, CHDI notified the Company and Medtronic that it would cease further funding of the ALN-HTT program pursuant to the terms of the CHDI agreement. The Company recorded the funding received from CHDI as a reduction to research and development expense. For the year ended December 31, 2012, the composition of the Company’s billed and unbilled collaboration receivables was entirely composed of amounts due from the U.S. Government for the wind-down of completed government contracts.

The following table summarizes customers that represent greater than 10% of the Company’s net revenues from research collaborators, for the periods indicated:

	Year Ended December 31,
	2012			2011			2010
Roche/Arrowhead		56	%		68	%		56	%
Takeda		33	%		27	%		22	%

The following table summarizes customers with amounts due that represent greater than 10% of the Company’s billed and unbilled collaboration receivables balance, at the periods indicated:

	At December 31,
	2012			2011
U.S. Government		100	%		*	%
CHDI		—			51	%
GSK		—			20	%
Medtronic		—			13	%

* Represents 10% or less

Fair Value Measurements

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following tables present information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2012 and 2011, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices (adjusted), interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy level is determined by the lowest level of significant input. Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows, in thousands:

Description	At December 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	50,213	$	50,213	$	—	$	—
Marketable securities (fixed income):
Corporate notes		91,523		—		91,523		—
U.S. Government obligations		60,661		—		60,661		—
Commercial paper		22,639		—		22,639		—
Marketable securities (Regulus equity holdings)		38,748		—		38,748		—
Total	$	263,784	$	50,213	$	213,571	$	—

Description	At December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	67,024	$	67,024	$	—	$	—
Marketable securities (fixed income):
Corporate notes		104,839		—		104,839		—
U.S. Government obligations		73,722		—		73,722		—
Commercial paper		11,395		—		11,395		—
Marketable securities (equity holdings)		625		—		625		—
Total	$	257,605	$	67,024	$	190,581	$	—

For the years ended December 31, 2012 and 2011, there were no transfers between Level 1 and Level 2 financial assets. The carrying amounts reflected in the Company’s consolidated balance sheets for cash, billed and unbilled collaboration receivables, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

Investments in Marketable Securities

The Company invests its excess cash balances in short-term and long-term marketable debt and equity securities. The Company classifies its investments in marketable debt securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time it purchased the securities. At each balance sheet date presented, the Company classified all of its investments in debt and equity securities as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary” and, if so, marks the investment to market through a charge to its consolidated statements of comprehensive loss. The Company did not record any impairment charges related to its fixed income marketable securities during the years ended December 31, 2012, 2011 or 2010. During 2011, the Company recorded an impairment charge of $0.6 million related to its former investment in equity securities of Tekmira Pharmaceuticals Corporation (“TPC”), as the decrease in the fair value of this investment was deemed to be other than temporary. The Company’s marketable securities are classified as cash equivalents if the original maturity, from the date of purchase, is 90 days or less, and as marketable securities if the original maturity, from the date of purchase, is in excess of 90 days. The Company’s cash equivalents are composed of money market funds, U.S. government obligations and commercial paper. At December 31, 2012, the Company accounts for its investment in Regulus as an available-for-sale marketable security. At December 31, 2012, the fair value of these equity securities was $38.7 million. As a result of the Regulus’ initial public offering, the Company’s carrying amount in these equity securities was $12.4 million, with a gross unrealized gain of $26.3 million recorded in other comprehensive income.

The Company obtains fair value measurement data for its marketable securities from independent pricing services. The Company performs validation procedures to ensure the reasonableness of this data. This includes meeting with the independent pricing services to understand the methods and data sources used. Additionally, the Company performs its own review of prices received from the independent pricing services by comparing these prices to other sources and confirming those securities are trading in active markets.

The following tables summarize the Company’s marketable securities at December 31, 2012 and 2011, in thousands:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	22,650	$	1	$	(12	)	$	22,639
Corporate notes (Due within 1 year)		41,249		23		(4	)		41,268
Corporate notes (Due after 1 year through 2 years)		50,322		5		(72	)		50,255
U.S. Government obligations (Due within 1 year)		7,500		—		—			7,500
U.S. Government obligations (Due after 1 year through 2 years)		53,168		2		(9	)		53,161
Total	$	174,889	$	31	$	(97	)	$	174,823

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	11,397	$	—	$	(2	)	$	11,395
Corporate notes (Due within 1 year)		51,273		19		(47	)		51,245
Corporate notes (Due after 1 year through 2 years)		53,592		50		(48	)		53,594
U.S. Government obligations (Due within 1 year)		13,532		2		—			13,534
U.S. Government obligations (Due after 1 year through 2 years)		60,202		7		(21	)		60,188
Equity securities		750		—		(125	)		625
Total	$	190,746	$	78	$	(243	)	$	190,581

Estimated Liability for Development Costs

The Company records accrued liabilities related to expenses for which service providers have not yet billed the Company with respect to products or services that the Company has received, specifically related to ongoing pre-clinical studies and clinical trials. These costs primarily relate to third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator fees. The Company has multiple product candidates in concurrent pre-clinical studies and clinical trials at multiple clinical sites throughout the world. In order to ensure that the Company has adequately provided for ongoing pre-clinical and clinical development costs during the period in which the Company incurs such costs, the Company maintains an accrual to cover these expenses. The Company updates the estimate for this accrual on at least a quarterly basis. The assessment of these costs is a subjective process that requires judgment. Upon settlement, these costs may differ materially from the amounts accrued in the Company’s consolidated financial statements. The Company’s historical accrual estimates have not been materially different from the Company’s actual costs.

Revenue Recognition

The Company has entered into collaboration agreements with leading pharmaceutical and life sciences companies, including Novartis, Biogen Idec Inc. (“Biogen Idec”), Roche, Takeda, Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”), Cubist Pharmaceuticals, Inc. (“Cubist”), Monsanto Company (“Monsanto”) Genzyme Corporation (“Genzyme”) and The Medicines Company (“MedCo”). The terms of the Company’s collaboration agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical and pre-clinical development milestones, regulatory milestones, manufacturing services, sales milestones and royalties on product sales.

In January 2011, the Company adopted new authoritative guidance on revenue recognition for multiple element arrangements. The guidance, which applied to multiple element arrangements entered into or materially modified on or after January 1, 2011, amended the criteria for separating and allocating consideration in a multiple element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use of the residual method. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor specific objective evidence and third-party evidence is not available. Deliverables under the arrangement could be considered separate units of accounting provided that (i) a delivered item has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. The new guidance did not change the criteria for standalone value. As a biotechnology entity with unique and specialized delivered and undelivered performance obligations, the Company has been unable to demonstrate standalone value in its multiple element arrangements. For example, the Company applied the new rules to collaborations executed with Monsanto and Genzyme during 2012, but it was unable to demonstrate standalone value. In addition, the Company has not materially modified any of its multiple element arrangements. As such, the Company will continue to account for other license and collaboration agreements under previously issued revenue recognition guidance for multiple element arrangements, as described below.

Non-refundable license fees are recognized as revenue upon delivery of the license only if the Company has a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the resulting receivable is reasonably assured and the Company has no further performance obligations under the license agreement. Multiple element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license and performance obligations such as research and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. The Company recognizes upfront license payments as revenue upon delivery of the license only if the license has standalone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately as such obligations are fulfilled. If the license is considered to either not have standalone value or have standalone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either a proportional performance or straight-line method. The Company recognizes revenue using the proportional performance method when the level of effort required to complete its performance obligations under an arrangement can be reasonably estimated and such performance obligations are provided on a best-efforts basis. Direct labor hours or full-time equivalents are typically used as the measure of performance. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of level of effort incurred to date to estimated total level of effort required to complete the Company’s performance obligations under the arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the proportional performance method, as of the period ending date.

If the Company cannot reasonably estimate the level of effort to complete its performance obligations under an arrangement, the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method, as of the period ending date.

Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.

Many of the Company’s collaboration agreements entitle it to additional payments upon the achievement of performance-based milestones. These milestones are generally categorized into three types; development milestones which are generally based on the advancement of the Company’s pipeline and initiation of clinical trials, regulatory milestones which are generally based on the submission, filing or approval of regulatory applications such as a new drug application in the United States, and commercialization milestones which are generally based on meeting specific thresholds of sales in certain geographic areas. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in the Company’s revenue model. Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counter-party performance are not included in the Company’s revenue model until the performance conditions are met.

The Company performs an assessment to determine whether a substantive milestone exists at the inception of its collaborative arrangements. In evaluating if a milestone is substantive, the Company considers whether uncertainty exists as to the achievement of the milestone event at the inception of the arrangement, the achievement of the milestone involves substantive effort and can only be achieved based in whole or part on the performance or the occurrence of a specific outcome resulting from the Company’s performance, the amount of the milestone payment appears reasonable either in relation to the effort expected to be expended or to the projected enhancement of the value of the delivered items, there is any future performance required to earn the milestone, and the consideration is reasonable relative to all deliverables and payment terms in the arrangement. When a substantive milestone is achieved, the accounting rules permit the Company to recognize revenue related to the milestone payment in its entirety.

To date, the Company has not recorded any substantive milestones under its collaborations because the Company has not identified any milestones that meet the required criteria listed above. The Company has deferred recognition of payments for achievement of non-substantive milestones and recognized revenue over the estimated period of performance applicable to each collaborative arrangement. As these milestones are achieved, the Company will recognize as revenue a portion of the milestone payment, which is equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment, upon achievement of such milestone. The Company will recognize the remaining portion of the milestone payment over the remaining performance period under the proportional performance method or on a straight-line basis.

For revenue generating arrangements where the Company, as a vendor, provides consideration to a licensor or collaborator, as a customer, the Company applies the accounting standard that governs such transactions. This standard addresses the accounting for revenue arrangements where both the vendor and the customer make cash payments to each other for services and/or products. A payment to a customer is presumed to be a reduction of the selling price unless the Company receives an identifiable benefit for the payment and it can reasonably estimate the fair value of the benefit received. Payments to a customer that are deemed a reduction of selling price are recorded first as a reduction of revenue, to the extent of both cumulative revenue recorded to date and probable future revenues, which include any unamortized deferred revenue balances, under all arrangements with such customer, and then as an expense. Payments that are not deemed to be a reduction of selling price are recorded as an expense.

The Company evaluates its collaborative agreements for proper classification in its consolidated statements of comprehensive loss based on the nature of the underlying activity. Transactions between collaborators recorded in the Company’s consolidated statements of comprehensive loss are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship. The Company generally reflects amounts due under its collaborative agreements related to cost-sharing of development activities as a reduction of research and development expense.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets. Although the Company follows detailed guidelines in measuring revenue, certain judgments affect the application of its revenue policy. For example, in connection with the Company’s existing collaboration agreements, the Company has recorded on its balance sheet short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months are classified as long-term deferred revenue. However, this estimate is based on the Company’s current operating plan and, if its operating plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.

The estimate of deferred revenue also reflects management’s estimate of the periods of the Company’s involvement in certain of its collaborations. The Company’s performance obligations under these collaborations consist of participation on steering committees and the performance of other research and development services. In certain instances, the timing of satisfying these obligations can be difficult to estimate. Accordingly, the Company’s estimates may change in the future. Such changes to estimates would result in a change in revenue recognition amounts. If these estimates and judgments change over the course of these agreements, it may affect the timing and amount of revenue that the Company recognizes and records in future periods. At December 31, 2012, the Company had short-term and long-term deferred revenue of $31.4 million and $100.9 million, respectively, related to its collaborations.

The Company recognizes revenue under government cost reimbursement contracts as the Company performs the underlying research and development activities.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured under enacted tax laws. A valuation allowance is required to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company’s policy is to accrue interest and penalties related to unrecognized tax positions in income tax expense. As of December 31, 2012, the Company has not recorded significant interest and penalty expense related to uncertain tax positions.

Research and Development Costs

The Company expenses research and development costs as incurred. Included in research and development costs are wages, benefits and other operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, and overhead directly related to the Company’s research and development operations, as well as costs to acquire technology licenses.

The Company has entered into several license agreements for rights to utilize certain technologies. The terms of the licenses may provide for upfront payments, annual maintenance payments, milestone payments based upon certain specified events being achieved and royalties on product sales. The Company charges costs to acquire and maintain licensed technology that has not reached technological feasibility and does not have alternative future use to research and development expense as incurred. During the years ended December 31, 2012, 2011 and 2010, the Company charged to research and development expense costs associated with license fees of $5.7 million, $1.4 million and $2.4 million, respectively.

Accounting for Stock-Based Compensation

The Company has stock incentive plans and an employee stock purchase plan under which it grants equity instruments. The Company accounts for all stock-based awards granted to employees at their fair value and generally recognizes compensation expense over the vesting period of the award. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of stock options as of the grant date. The Company calculates the grant date fair values using the Black-Scholes valuation model. The Company’s expected stock price volatility assumption is based on a combination of the historical and implied volatility of the Company’s publicly traded stock.

For stock-based awards granted to non-employees, the Company generally recognizes compensation expense over the vesting period of the award, which is generally the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to vesting, the Company re-measures the value of these stock-based awards (as calculated using the Black-Scholes option-pricing model) using the then-current fair value of the Company’s common stock. Stock options granted by the Company to non-employees, other than members of the Company’s Board of Directors and Scientific Advisory Board members, generally vest over the service period.

The fair value of restricted stock awards granted to employees is based upon the quoted closing market price per share on the date of grant, adjusted for assumed forfeitures. For performance-based restricted stock awards, the value of the awards is measured when the Company determines that the achievement of such performance conditions is deemed probable. This determination requires significant judgment by management. Expense is recognized over the vesting period, commencing when the Company determines that it is probable that the awards will vest.

Accounting for Joint Venture

From the formation of Regulus in September 2007 to October 2012, the Company accounted for its interest in Regulus using the equity method of accounting. The Company reviewed the consolidation guidance that defines a variable interest entity (“VIE”) and concluded that Regulus qualified as a VIE during such time period. The Company recorded any gains or losses recognized from the issuance of stock by its equity method investee as other income (expense) in its consolidated statements of comprehensive loss. The Company did not consolidate Regulus’ financial results as the Company lacked the power to direct the activities that could significantly impact the economic success of Regulus. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Based upon the Company’s new ownership percentage of 17%, as well as qualitative factors, the Company does not believe that it has the ability to exercise significant influence over the operating decisions and financial policies of Regulus and has therefore discontinued the equity method of accounting for Regulus. Accordingly, beginning in October 2012, the Company has accounted for its investment in Regulus as an available-for-sale marketable security. For additional details on the accounting for the Company’s investment in Regulus, see Note 10.

Comprehensive Loss

Comprehensive loss is comprised of net loss and certain changes in stockholders’ equity that are excluded from net loss. The Company includes foreign currency translation adjustments in other comprehensive loss for Alnylam Europe as the functional currency is not the United States dollar. The Company also includes unrealized gains and losses on certain marketable securities in other comprehensive loss.

Net Loss Per Common Share

The Company computes basic net loss per common share by dividing net loss by the weighted average number of common shares outstanding. The Company computes 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. Potential common shares consist of shares issuable upon the exercise of stock options (using the treasury stock method), and unvested restricted stock awards. Because the inclusion of potential common shares would be anti-dilutive for all periods presented, diluted net loss per common share is the same as basic net loss per common share.

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

	December 31,
	2012		2011		2010
Options to purchase common stock		8,932		9,779		8,975
Unvested restricted common stock		604		312		113
		9,536		10,091		9,088

Segment Information

The Company operates in a single reporting segment, the discovery, development and commercialization of RNAi therapeutics.

Subsequent Events

The Company evaluated all events or transactions that occurred after December 31, 2012 up through the date these consolidated financial statements were issued. During this period, the Company did not have any material recognized subsequent events. However, the Company did have the following nonrecognized subsequent events, which are more fully described in Notes 3, 7 and 12:

• In January 2013, the Company sold an aggregate of 9,200,000 shares of its common stock through an underwritten public offering at a price to the public of $20.13 per share. See Note 7.

• In January 2013, the Company and MedCo entered into a license and collaboration agreement (the “MedCo Agreement”), pursuant to which the Company granted to MedCo an exclusive license to develop and commercialize specified RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9 (“PCSK9”). See Note 12.

• In February 2013, Cubist notified the Company that it would not exercise its opt-in right for the Company’s ALN-RSV01 program for the treatment of respiratory syncytial virus infection in lung transplant patients. In light of this determination, the parties mutually agreed to terminate their license and collaboration agreement entered into in January 2009 (the “Cubist Agreement”). See Note 3.

• On February 19, 2013, the Company and Genzyme entered into an amendment to their license and collaboration agreement (the “Genzyme Agreement”). See Note 3.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This standard is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. The Company adopted this amendment on January 1, 2012. The adoption of this new standard did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, a company may present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, a company is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. The Company adopted this amendment on January 1, 2012. Other than a change in presentation, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. Other than a change in presentation, the Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

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Future Fixed Cancelable Payments under Existing License Agreements (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
License Agreements [Line Items]
2013	$ 14,463
2014	1,563
2015	818
2016	773
2017	793
Thereafter	9,159
Total	$ 27,569

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QUARTERLY FINANCIAL DATA (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Quarterly Financial Information

The following information has been derived from unaudited consolidated financial statements that, in the opinion of management, include all recurring adjustments necessary for a fair statement of such information.

	Three Months Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
	(In thousands, except per share data)
Revenues	$	20,587		$	20,884		$	16,759		$	8,495
Operating expenses		31,480			32,951			34,906			96,844
Net loss		(11,368	)		(12,956	)		(19,502	)		(62,188	)
Net loss per common share — basic and diluted	$	(0.25	)	$	(0.25	)	$	(0.38	)	$	(1.20	)
Weighted average common shares — basic and diluted		46,210			51,280			51,542			51,821

The increase in operating expenses for the three months ended December 31, 2012 resulted from a $65.0 million charge to operating expenses in connection with the restructuring of the Company’s license agreement with Tekmira in November 2012. This increase in operating expenses was offset by a gain in other income of $16.1 million and a tax benefit of $10.6 million recorded as part of the Company’s accounting for the Regulus initial public offering.

	Three Months Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
	(In thousands, except per share data)
Revenues	$	20,897		$	20,614		$	20,791		$	20,455
Operating expenses		36,573			33,732			33,229			34,041
Net loss		(16,285	)		(13,824	)		(13,237	)		(14,303	)
Net loss per common share — basic and diluted	$	(0.38	)	$	(0.33	)	$	(0.31	)	$	(0.33	)
Weighted average common shares — basic and diluted		42,345			42,379			42,654			42,715

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REGULUS (Tables)

12 Months Ended

Dec. 31, 2012

Summary Results of Regulus' Operation

Summary results of Regulus’ statements of comprehensive loss for the nine months ended September 30, 2012 and the years ended December 31, 2011 and 2010 and the balance sheet at December 31, 2011 are presented in the tables below, in thousands:

	Nine months ended September 30,			Year ended December 31,
	2012			2011			2010
Statements of Comprehensive Loss Data:
Net revenues	$	9,462		$	13,789		$	8,601
Operating expenses		17,733			20,926			24,099
Loss from operations		(8,271	)		(7,137	)		(15,498	)
Other (expense) income		(2,289	)		(259	)		(91	)
Income tax benefit (expense)		28			(206	)		30
Net loss	$	(10,532	)	$	(7,602	)	$	(15,559	)

Summary Results of Regulus' Balance Sheet

	December 31, 2011
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	38,144
Current assets		38,666
Total assets		42,881
Current liabilities		12,850
Non-current liabilities		28,834
Notes payable		11,259
Net assets		1,197

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Summary Results of Regulus Operation (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Statements of Comprehensive Loss Data:
Net revenues	$ 9,462	$ 13,789	$ 8,601
Operating expenses	17,733	20,926	24,099
Loss from operations	(8,271)	(7,137)	(15,498)
Other (expense) income	(2,289)	(259)	(91)
Income tax benefit (expense)	28	(206)	30
Net loss	$ (10,532)	$ (7,602)	$ (15,559)

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Future Minimum Lease Payments under Non-Cancelable Lease (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Schedule of Operating Leases [Line Items]
2013	$ 6,065
2014	6,303
2015	6,550
2016	5,192
2017	364
Total	$ 24,474

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended				1 Months Ended	12 Months Ended
	Feb. 29, 2012	Dec. 31, 2012 Entity	Dec. 31, 2012 D Entity	Dec. 31, 2011	Sep. 30, 2012	Dec. 31, 2012 Equity Securities	Jan. 31, 2013 Common Stock Issued In Public Offering	Dec. 31, 2012 Research and Development Expense	Dec. 31, 2011 Research and Development Expense	Dec. 31, 2010 Research and Development Expense
Significant Accounting Policies [Line Items]
Number of entities that comprises the Company		4	4
Number of wholly-owned subsidiaries			3
Percentage of sharing in development cost			50.00%
Other than temporary impairment on equity securities				$ 595,000
Policy for cash equivalents			90
Policy for marketable securities			90 days
Investment in equity securities of Regulus Therapeutics Inc		38,748,000	38,748,000
Carrying value of equity securities		12,400,000	12,400,000
Unrealized gain on available securities		31,000	31,000	78,000		26,300,000
Deferred revenue		31,417,000	31,417,000	62,366,000
Deferred revenue, net of current portion		100,874,000	100,874,000	78,487,000
License fee								$ 5,700,000	$ 1,400,000	$ 2,400,000
Company ownership percentage		17.00%
Company ownership percentage					44.00%
Common stocks issued through underwritten public offering	8,625,000						9,200,000
Underwritten public offering amount per share	$ 10.75						$ 20.13

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Customers that Represent Greater than Ten Percent of Net Revenues from Research Collaborators (Detail) (Revenue from Rights Concentration Risk)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Roche/Arrowhead
Concentration Risk [Line Items]
Concentration risk percentage	56.00%	68.00%	56.00%
Takeda
Concentration Risk [Line Items]
Concentration risk percentage	33.00%	27.00%	22.00%

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NATURE OF BUSINESS

12 Months Ended

Dec. 31, 2012

NATURE OF BUSINESS

1. NATURE OF BUSINESS

Alnylam Pharmaceuticals, Inc. (the “Company” or “Alnylam”) commenced operations on June 14, 2002 as a biopharmaceutical company seeking to develop and commercialize novel therapeutics based on RNA interference (“RNAi”). Alnylam is focused on discovering, developing and commercializing RNAi therapeutics by establishing strategic alliances with leading pharmaceutical and life sciences companies, establishing and maintaining a strong intellectual property position in the RNAi field, generating revenues through licensing agreements, and ultimately developing and commercializing RNAi therapeutics for its own account. The Company has devoted substantially all of its efforts to business planning, research and development, acquiring, filing and expanding intellectual property rights, recruiting management and technical staff, and raising capital.

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Customers that Represent Greater than Ten Percent of Billed and Unbilled Collaboration Receivables (Detail) (Accounts Receivable)	12 Months Ended
	Dec. 31, 2012 Government contract	Dec. 31, 2011 Chdi Foundation, Inc	Dec. 31, 2011 Glaxo, Smith, Kline	Dec. 31, 2011 Medtronic
Concentration Risk [Line Items]
Concentration risk percentage	100.00%	51.00%	20.00%	13.00%

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Two Thousand Twelve Restructuring - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended
	Jan. 31, 2012 Employee	Mar. 31, 2012
Restructuring Cost and Reserve [Line Items]
Percentage of workforce reduced by company	33.00%
Number of employees remaining	115
Restructuring-related costs		$ 3.9

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Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Taxes [Line Items]
Increase in valuation allowance due to increase in operating losses and tax credit carryforwards	$ 38,300,000	$ 23,000,000	$ 15,200,000
Benefit from (provision for) income taxes	(10,572,000)	0	514,000
Excess tax benefit from exercise of stock options		(120,000)	(220,000)
Net operating loss carryforwards expiration year	2032
Research And Development Tax Credit
Income Taxes [Line Items]
Excess tax benefit from exercise of stock options	500,000
Tax credit carryforwards expiration year	2032
Alternative Minimum Tax
Income Taxes [Line Items]
Tax credit carryforwards	800,000
Net Operating Loss Carryforwards
Income Taxes [Line Items]
Excess tax benefit from exercise of stock options	10,100,000
Federal
Income Taxes [Line Items]
Net operating loss carryforward	272,700,000
Federal | Research And Development Tax Credit
Income Taxes [Line Items]
Tax credit carryforwards	15,300,000
State and Local Jurisdiction
Income Taxes [Line Items]
Net operating loss carryforward	337,800,000
State and Local Jurisdiction | Research And Development Tax Credit
Income Taxes [Line Items]
Tax credit carryforwards	5,600,000
Foreign Tax Authority
Income Taxes [Line Items]
Tax credit carryforwards	$ 3,200,000
Tax credit carryforwards expiration year	2017

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 51,405	$ 70,228
Marketable securities	71,407	76,174
Billed and unbilled collaboration receivables	104	1,468
Prepaid expenses and other current assets	2,540	4,158
Total current assets	125,456	152,028
Marketable securities	103,416	114,407
Investment in equity securities of Regulus Therapeutics Inc	38,748
Property and equipment, net	19,799	14,643
Other assets	101	839
Total assets	287,520	281,917
Current liabilities:
Accounts payable	4,420	5,800
Accrued expenses	11,558	12,340
Deferred rent	950	484
Deferred revenue	31,417	62,366
Total current liabilities	48,345	80,990
Deferred rent, net of current portion	4,248	3,727
Deferred revenue, net of current portion	100,874	78,487
Other long-term liabilities		716
Total liabilities	153,467	163,920
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized and no shares issued and outstanding at December 31, 2012 and 2011
Common stock, $0.01 par value per share, 125,000,000 shares authorized; 52,489,936 shares issued and outstanding at December 31, 2012; 42,721,942 shares issued and outstanding at December 31, 2011	525	427
Additional paid-in capital	624,876	518,731
Accumulated other comprehensive income (loss)	15,662	(165)
Accumulated deficit	(507,010)	(400,996)
Total stockholders' equity	134,053	117,997
Total liabilities and stockholders' equity	$ 287,520	$ 281,917

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Stockholders Equity - Additional Information (Detail) (USD $)	1 Months Ended	12 Months Ended		1 Months Ended
	Feb. 29, 2012	Dec. 31, 2012	Dec. 31, 2011	Jan. 31, 2013 Common Stock Issued In Public Offering	Jul. 31, 2005 Rights	Jul. 13, 2005 Rights
Stockholders Equity [Line Items]
Preferred stock, shares authorized		5,000,000	5,000,000
Preferred stock, par value		$ 0.01	$ 0.01
Right to buy Series A Junior Preferred stock declared as dividend						0.001
Date on which rights expire						Jul. 13, 2015
Acquisition of outstanding common stock that trigger exercise of right					50.00%
Tender or exchange offer for outstanding common stock that trigger exercise of right					20.00%
Cash purchase price of Series A Junior Preferred stock						80.00
Common stocks issued through underwritten public offering	8,625,000			9,200,000
Underwritten public offering amount per share	$ 10.75			$ 20.13
Net proceeds from public issue, after deducting expenses	$ 86,800,000	$ 86,800,000		$ 173,600,000
Underwriting discounts and commissions and other estimated offering expenses	$ 5,900,000			$ 11,600,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning Balance at Dec. 31, 2009	$ 177,965	$ 418	$ 476,663	$ 716	$ (299,832)
Beginning Balance (in shares) at Dec. 31, 2009		41,837,427
Exercise of common stock options (in shares)		227,970
Exercise of common stock options	1,733	2	1,731
Issuance of common stock under other types of equity plans (in shares)		164,656
Issuance of common stock under other types of equity plans	2,425	2	2,423
Issuance of restricted stock, net of cancellations and tax withholdings (in shares)		113,370
Issuance of restricted stock, net of cancellations and tax withholdings		1	(1)
Stock-based compensation expense	19,118		19,118
Foreign currency translation	(29)			(29)
Joint venture stock-based compensation (Regulus Therapeutics Inc.)	289		289
Tax benefit from stock-based compensation	220		220
Other comprehensive income	27			27
Net loss	(43,515)				(43,515)
Ending Balance at Dec. 31, 2010	158,233	423	500,443	714	(343,347)
Ending Balance (in shares) at Dec. 31, 2010		42,343,423
Exercise of common stock options (in shares)		16,800
Exercise of common stock options	103		103
Issuance of common stock under other types of equity plans (in shares)		124,815
Issuance of common stock under other types of equity plans	1,023	2	1,021
Issuance of restricted stock, net of cancellations and tax withholdings (in shares)		236,904
Issuance of restricted stock, net of cancellations and tax withholdings		2	(2)
Stock-based compensation expense	16,676		16,676
Joint venture stock-based compensation (Regulus Therapeutics Inc.)	370		370
Tax benefit from stock-based compensation	120		120
Other comprehensive income	(879)			(879)
Net loss	(57,649)				(57,649)
Ending Balance at Dec. 31, 2011	117,997	427	518,731	(165)	(400,996)
Ending Balance (in shares) at Dec. 31, 2011		42,721,942
Exercise of common stock options (in shares)	661,909	661,909
Exercise of common stock options	6,402	7	6,395
Issuance of common stock under other types of equity plans (in shares)		97,459
Issuance of common stock under other types of equity plans	879	1	878
Issuance of restricted stock, net of cancellations and tax withholdings (in shares)		383,626
Issuance of restricted stock, net of cancellations and tax withholdings	(519)	4	(523)
Issuance of common stock, net of offering costs (in shares)		8,625,000
Issuance of common stock, net of offering costs	86,800	86	86,714
Stock-based compensation expense	12,360		12,360
Joint venture stock-based compensation (Regulus Therapeutics Inc.)	321		321
Other comprehensive income	15,827			15,827
Net loss	(106,014)				(106,014)
Ending Balance at Dec. 31, 2012	$ 134,053	$ 525	$ 624,876	$ 15,662	$ (507,010)
Ending Balance (in shares) at Dec. 31, 2012		52,489,936

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Quarterly Financial Data - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2010
Quarterly Financial Information [Line Items]
Increase in operating expenses	$ 65,000	$ 65,000
Gain from other income	16,084	16,084	4,421
Income tax benefit from initial public offering	$ (10,572)	$ (10,572)

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Potential Common Shares Common Shares Excluded from Calculation of Net Loss Per Common Share (Detail) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings	9,536	10,091	9,088
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings	8,932	9,779	8,975
Unvested Restricted Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings	604	312	113

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SIGNIFICANT AGREEMENTS (Tables)

12 Months Ended

Dec. 31, 2012

Revenue from Research Collaborators

The following table summarizes the Company’s total consolidated net revenues from research collaborators, for the periods indicated, in thousands:

	Year Ended December 31,
	2012		2011		2010
Roche/Arrowhead	$	37,318	$	55,978	$	55,978
Takeda		21,973		22,248		22,250
Cubist		2,777		2,467		2,363
Monsanto		1,954		—		—
Novartis		60		149		9,313
Government contract		—		152		4,335
Other		2,643		1,763		5,802
Total net revenues from research collaborators	$	66,725	$	82,757	$	100,041

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Revenue from Research Collaborators (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators	$ 8,495	$ 16,759	$ 20,884	$ 20,587	$ 20,455	$ 20,791	$ 20,614	$ 20,897	$ 66,725	$ 82,757	$ 100,041
Roche/Arrowhead
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									37,318	55,978	55,978
Takeda
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									21,973	22,248	22,250
Cubist
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									2,777	2,467	2,363
Monsanto
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									1,954
Novartis
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									60	149	9,313
Government contract
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators										152	4,335
Other
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total net revenues from research collaborators									$ 2,643	$ 1,763	$ 5,802

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2012 RESTRUCTURING (Tables)

12 Months Ended

Dec. 31, 2012

Restructuring Activities

The following table summarizes the components of the Company’s restructuring expenses recorded in operating expenses and in current liabilities, in thousands:

	Original Charges and Amounts Accrued		(Reversals) or Adjustments to Charges			Amounts Paid Through December 31, 2012		Amounts Accrued at December 31, 2012
Employee severance, benefits and related costs	$	3,909	$	(202	)	$	3,666	$	41

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities:
Net loss	$ (106,014)	$ (57,649)	$ (43,515)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	9,035	5,125	4,941
Deferred income taxes			10,742
Non-cash stock-based compensation	12,360	16,676	19,118
Charge for 401(k) company stock match	364	488	495
Equity in loss of joint venture (Regulus Therapeutics Inc.)	4,522	3,505	7,639
Tax benefit from stock-based compensation		120	220
Other than temporary impairment on equity securities		595
Realized gain on sale of marketable securities	(255)
Gain on issuance of stock by joint venture	(16,084)		(4,421)
Benefit from intraperiod tax allocation on marketable securities	(10,572)
Changes in operating assets and liabilities:
Proceeds from landlord tenant improvements	1,780
Billed and unbilled collaboration receivables	1,364	1,982	2,594
Income taxes receivable		10,669	(10,669)
Prepaid expenses and other assets	1,780	2,731	(2,738)
Accounts payable	(1,736)	(3,512)	(3,177)
Income taxes payable			(5,516)
Accrued expenses and other	(3,591)	2,457	651
Deferred revenue	(8,562)	(70,255)	(60,705)
Net cash used in operating activities	(115,609)	(87,068)	(84,341)
Cash flows from investing activities:
Purchases of property and equipment	(8,348)	(1,291)	(4,732)
Increase in restricted cash	(162)
Purchases of marketable securities	(277,129)	(293,115)	(390,473)
Sales and maturities of marketable securities	289,013	376,365	413,043
Net cash provided by investing activities	3,374	81,959	17,838
Cash flows from financing activities:
Proceeds from exercise of stock options and other types of equity	6,971	738	2,670
Proceeds from issuance of common stock, net of offering costs	86,800
Payments for repurchase of common stock for employee tax withholding	(359)
Proceeds from issuance of shares to Novartis			993
Net cash provided by financing activities	93,412	738	3,663
Effect of exchange rate on cash			(29)
Net decrease in cash and cash equivalents	(18,823)	(4,371)	(62,869)
Cash and cash equivalents, beginning of period	70,228	74,599	137,468
Cash and cash equivalents, end of period	51,405	70,228	74,599
Supplemental disclosure of cash flows:
(Cash paid for income taxes) proceeds from income tax refunds	(17)	10,657	(5,767)
Supplemental disclosure of noncash investing activities:
Fixed asset expenditures included in accounts payable and accrued expenses	$ 1,441

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	52,489,936	42,721,942
Common stock, shares outstanding	52,489,936	42,721,942

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REGULUS

12 Months Ended

Dec. 31, 2012

REGULUS

10. REGULUS

In September 2007, the Company and Isis established Regulus, a company focused on the discovery, development and commercialization of microRNA therapeutics, a potential new class of drugs to treat the pathways of human disease. Regulus, which initially was established as a limited liability company, converted to a C corporation in January 2009 and changed its name to Regulus Therapeutics Inc. Regulus operates as an independent company with a separate board of directors, scientific advisory board and management team.

In consideration for the Company’s and Isis’ initial interests in Regulus, each party granted Regulus exclusive licenses to its intellectual property for certain microRNA therapeutic applications as well as certain patents in the microRNA field. In addition, the Company made an initial cash contribution to Regulus of $10.0 million, resulting in the Company and Isis making approximately equal aggregate initial capital contributions to Regulus. In March 2009, the Company and Isis each purchased $10.0 million of Series A preferred stock of Regulus. In October 2010, in connection with its strategic alliance with Regulus formed in June 2010, Sanofi made a $10.0 million equity investment in Regulus. As a result of the $10.0 million equity investment made by Sanofi, the Company recognized a gain of $4.4 million. This amount was recorded as other income in the Company’s consolidated statements of comprehensive loss for the year ended December 31, 2010.

From the formation of Regulus in September 2007 to October 2012, the Company accounted for its interest in Regulus using the equity method of accounting. The Company reviewed the consolidation guidance that defines a VIE and concluded that Regulus qualified as a VIE during such time period. The Company did not consolidate Regulus as the Company lacked the power to direct the activities that could significantly impact the economic success of this entity.

Summary results of Regulus’ statements of comprehensive loss for the nine months ended September 30, 2012 and the years ended December 31, 2011 and 2010 and the balance sheet at December 31, 2011 are presented in the tables below, in thousands:

	Nine months ended September 30,			Year ended December 31,
	2012			2011			2010
Statements of Comprehensive Loss Data:
Net revenues	$	9,462		$	13,789		$	8,601
Operating expenses		17,733			20,926			24,099
Loss from operations		(8,271	)		(7,137	)		(15,498	)
Other (expense) income		(2,289	)		(259	)		(91	)
Income tax benefit (expense)		28			(206	)		30
Net loss	$	(10,532	)	$	(7,602	)	$	(15,559	)

	December 31, 2011
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	38,144
Current assets		38,666
Total assets		42,881
Current liabilities		12,850
Non-current liabilities		28,834
Notes payable		11,259
Net assets		1,197

Under the equity method of accounting, the Company was required to recognize losses up to the amount of Regulus’ debt, which was guaranteed by the Company. This resulted in a negative carrying amount. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Upon the completion of the Regulus’ initial public offering, the Company’s debt guarantee was terminated.

Based upon the Company’s new ownership percentage of 17%, as well as a review of qualitative factors, the Company does not believe that it has the ability to exercise significant influence over the operating decisions and financial policies of Regulus and has therefore discontinued the equity method of accounting for Regulus at September 30, 2012. The Company determined that the period between September 30, 2012 and the date on which Regulus’ closed its initial public offering was immaterial for additional equity method accounting. Accordingly, beginning October 10, 2012, the Company has accounted for its investment in Regulus as an available-for-sale marketable security due to its readily determinable fair value. At December 31, 2012, the fair value of the Regulus equity securities was $38.7 million. As a result of the issuance of additional common stock by Regulus, the Company recognized a gain of $16.1 million. This amount was recorded as other income in the Company’s consolidated statements of comprehensive loss for the year ended December 31, 2012. The Company’s carrying amount in Regulus increased to $12.4 million following the initial public offering, which became the initial basis of its investment in Regulus under the accounting standard for marketable securities. In addition, the Company recorded $15.7 million as an unrealized gain in other comprehensive income, net of an intraperiod tax benefit of $10.6 million.

The Company has historically classified the equity method investment amount in the financial statement caption “Investment in joint venture (Regulus Therapeutics Inc.)” on the Company’s consolidated balance sheets. For the purposes of the 2012 balance sheet, this amount is zero and the Company has reclassified the 2011 balance of $0.6 million to the financial statement caption “Other assets.”

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Jan. 31, 2013	Jun. 30, 2012
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Trading Symbol	ALNY
Entity Registrant Name	ALNYLAM PHARMACEUTICALS, INC.
Entity Central Index Key	0001178670
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		61,866,821
Entity Public Float			$ 532,319,660

XML

QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2012

QUARTERLY FINANCIAL DATA

11. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following information has been derived from unaudited consolidated financial statements that, in the opinion of management, include all recurring adjustments necessary for a fair statement of such information.

	Three Months Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
	(In thousands, except per share data)
Revenues	$	20,587		$	20,884		$	16,759		$	8,495
Operating expenses		31,480			32,951			34,906			96,844
Net loss		(11,368	)		(12,956	)		(19,502	)		(62,188	)
Net loss per common share — basic and diluted	$	(0.25	)	$	(0.25	)	$	(0.38	)	$	(1.20	)
Weighted average common shares — basic and diluted		46,210			51,280			51,542			51,821

The increase in operating expenses for the three months ended December 31, 2012 resulted from a $65.0 million charge to operating expenses in connection with the restructuring of the Company’s license agreement with Tekmira in November 2012. This increase in operating expenses was offset by a gain in other income of $16.1 million and a tax benefit of $10.6 million recorded as part of the Company’s accounting for the Regulus initial public offering.

	Three Months Ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011
	(In thousands, except per share data)
Revenues	$	20,897		$	20,614		$	20,791		$	20,455
Operating expenses		36,573			33,732			33,229			34,041
Net loss		(16,285	)		(13,824	)		(13,237	)		(14,303	)
Net loss per common share — basic and diluted	$	(0.38	)	$	(0.33	)	$	(0.31	)	$	(0.33	)
Weighted average common shares — basic and diluted		42,345			42,379			42,654			42,715

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Net revenues from research collaborators	$ 66,725		$ 82,757		$ 100,041
Operating expenses:
Research and development	86,569	[1]	99,295	[1]	106,384	[1]
General and administrative	44,612	[1]	38,280	[1]	37,727	[1]
Restructuring of Tekmira license agreement	65,000
Total operating expenses	196,181		137,575		144,111
Loss from operations	(129,456)		(54,818)		(44,070)
Other income (expense):
Equity in loss of joint venture (Regulus Therapeutics Inc.)	(4,522)		(3,505)		(7,639)
Gain on issuance of stock by Regulus Therapeutics Inc.	16,084				4,421
Interest income	977		1,205		2,305
Other income (expense)	331		(531)		1,982
Total other income (expense)	12,870		(2,831)		1,069
Loss before income taxes	(116,586)		(57,649)		(43,001)
Benefit from (provision for) income taxes	10,572		0		(514)
Net loss	(106,014)		(57,649)		(43,515)
Net loss per common share - basic and diluted	$ (2.11)		$ (1.36)		$ (1.04)
Weighted average common shares used to compute basic and diluted net loss per common share	50,286		42,410		42,040
Comprehensive loss:
Net loss	(106,014)		(57,649)		(43,515)
Foreign currency translation					(29)
Unrealized gain (loss) on marketable securities, net of tax	15,827		(879)		27
Comprehensive loss	$ (90,187)		$ (58,528)		$ (43,517)

[1] Non-cash stock-based compensation expenses included in operating expenses are as follows: Research and development $ 8,041 $ 10,921 $ 11,689 General and administrative 4,319 5,755 7,429

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2012 RESTRUCTURING

12 Months Ended

Dec. 31, 2012

2012 RESTRUCTURING

5. 2012 RESTRUCTURING

In January 2012, the Company’s Board of Directors approved, and the Company implemented, a strategic corporate restructuring pursuant to which the Company reduced its overall workforce by approximately 33%, to approximately 115 employees.

During the three months ended March 31, 2012, the Company substantially completed the implementation of the strategic corporate restructuring and recorded $3.9 million of restructuring-related costs in operating expenses, including employee severance, benefits and related costs. The Company paid substantially all of these restructuring costs during 2012. The Company did not incur any additional significant costs associated with this restructuring and does not expect to incur any additional significant costs in the future.

The following table summarizes the components of the Company’s restructuring expenses recorded in operating expenses and in current liabilities, in thousands:

	Original Charges and Amounts Accrued		(Reversals) or Adjustments to Charges			Amounts Paid Through December 31, 2012		Amounts Accrued at December 31, 2012
Employee severance, benefits and related costs	$	3,909	$	(202	)	$	3,666	$	41

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

PROPERTY AND EQUIPMENT

4. PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following at December 31, 2012 and 2011, in thousands:

			December 31,
	Useful Life		2012			2011
Laboratory equipment		5 years	$	21,201		$	19,994
Computer equipment and software		3 years		4,203			4,112
Furniture and fixtures		5 years		1,793			1,784
Leasehold improvements		*		19,862			19,676
Construction in progress		—		8,209			—
				55,268			45,566
Less: accumulated depreciation				(35,469	)		(30,923	)
			$	19,799		$	14,643

* Shorter of asset life or lease term

The Company’s construction in progress balance is due to the construction of the Company’s manufacturing facility.

During the years ended December 31, 2012, 2011 and 2010, the Company recorded $4.6 million, $5.0 million and $4.8 million, respectively, of depreciation expense related to its property and equipment.

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2012

Property Plant and Equipment

Property and equipment consist of the following at December 31, 2012 and 2011, in thousands:

			December 31,
	Useful Life		2012			2011
Laboratory equipment		5 years	$	21,201		$	19,994
Computer equipment and software		3 years		4,203			4,112
Furniture and fixtures		5 years		1,793			1,784
Leasehold improvements		*		19,862			19,676
Construction in progress		—		8,209			—
				55,268			45,566
Less: accumulated depreciation				(35,469	)		(30,923	)
			$	19,799		$	14,643

* Shorter of asset life or lease term

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SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2012

SUBSEQUENT EVENT

12. SUBSEQUENT EVENT

On February 4, 2013, the Company and MedCo entered into the MedCo Agreement pursuant to which the Company granted to MedCo an exclusive, worldwide license to develop, manufacture and commercialize RNAi therapeutics targeting PCSK9, including ALN-PCS02 and ALN-PCSsc, for the treatment of hypercholesterolemia and other human diseases (collectively, “Licensed Products”). ALN-PCS02 is an intravenously administered RNAi therapeutic for which the Company completed a Phase I clinical trial, and ALN-PCSsc is a subcutaneously administered RNAi therapeutic currently in pre-clinical development.

In consideration for the rights granted to MedCo under the MedCo Agreement, MedCo paid the Company an upfront cash payment of $25.0 million. In addition, MedCo is required to make payments to the Company upon the achievement of specified clinical development, regulatory approval and commercialization milestones totaling up to $180.0 million, and to pay the Company scaled double-digit royalties based on annual worldwide net sales, if any, of Licensed Products by MedCo, its affiliates and sublicensees, subject to reduction under specified circumstances. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from MedCo.

Under the MedCo Agreement, the parties will collaborate in the further development of Licensed Products. The Company will retain responsibility for the development of Licensed Products until Phase I Completion (as defined in the MedCo Agreement) at its cost, up to an agreed upon initial development cost cap. MedCo will assume all other responsibility for the development and commercialization of Licensed Products, at its sole cost. Initially the collaboration will include the development of both ALN-PCS02 and ALN-PSCsc in parallel, provided that the parties intend to select one of ALN-PCS02 or ALN-PSCsc for ongoing development at a specified development stage, in accordance with the terms of the MedCo Agreement. The collaboration between MedCo and the Company will be governed by a joint steering committee that will be comprised of an equal number of representatives from each party.

The Company will be solely responsible for obtaining supply of finished product reasonably required for the conduct of its obligations under the initial development plan through Phase I Completion, and supplying MedCo with finished product reasonably required for the first Phase II study of a Licensed Product conducted by MedCo, at the Company’s expense, provided such costs do not exceed the development costs cap, subject to certain exceptions. After such time, MedCo will have the sole right and responsibility to manufacture and supply Licensed Product for development and commercialization under the MedCo development plan, subject to the terms of the MedCo Agreement. The Company and MedCo intend to enter into a supply and technical transfer agreement to provide for supply of Licensed Products to MedCo within a specified time following the effective date of the MedCo Agreement.

Unless terminated earlier in accordance with the terms of the agreement, the MedCo Agreement expires on a Licensed Product-by-Licensed Product and country-by-country basis upon expiration of the last royalty term for any Licensed Product in any country, where a royalty term is defined as the latest to occur of (1) the expiration of the last valid claim of patent rights covering a Licensed Product, (2) the expiration of the Regulatory Exclusivity (as defined in the MedCo Agreement), and (3) the twelfth anniversary of the first commercial sale of the Licensed Product in such country. The Company estimates that its fundamental RNAi patents covering Licensed Products under the MedCo Agreement will expire both in and outside of the United States generally between 2015 and 2023. The Company also estimates that its ALN-PCS product-specific patents covering Licensed Products under the MedCo Agreement in the United States and elsewhere will expire at the end of 2033. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future.

Either party may terminate the MedCo Agreement in the event the other party fails to cure a material breach or upon patent-related challenges by the other party. The Company may terminate the agreement in the event that a lead Licensed Product has not been designated by the joint steering committee within a designated time period. In addition, MedCo has the right to terminate the agreement without cause at any time upon four months’ prior written notice.

During the term of the MedCo Agreement, neither party will, alone or with an affiliate or third party, research, develop or commercialize, or grant a license to any third party to research, develop or commercialize, in any country, any product directed to the PCSK9 gene, other than a Licensed Product, without the prior written agreement of the other party, subject to the terms of the MedCo Agreement.

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STOCK INCENTIVE PLANS

12 Months Ended

Dec. 31, 2012

STOCK INCENTIVE PLANS

8. STOCK INCENTIVE PLANS

Stock Plans

In June 2009, the Company’s stockholders approved an amendment and restatement of the Company’s 2004 Stock Incentive Plan (the “Amended and Restated 2004 Plan”), which replaced the Company’s 2004 Stock Incentive Plan, as amended (the “2004 Plan”). At December 31, 2010, the Amended and Restated 2004 Plan provided for the granting of stock options to purchase up to 12,366,485 shares of common stock. Prior to the adoption of the Amended and Restated 2004 Plan, the Company was authorized to grant both stock options and restricted stock awards under the 2004 Plan. As of the effective date of the Amended and Restated 2004 Plan, the Company may only grant stock options under the Amended and Restated 2004 Plan, provided that the terms and conditions of any restricted stock awards outstanding under the 2004 Plan will continue to be governed by the Amended and Restated 2004 Plan.

In June 2009, the Company’s stockholders also approved the Company’s 2009 Stock Incentive Plan (the “2009 Plan”). The 2009 Plan provides for the granting of stock options, restricted stock awards and units, stock appreciation rights and other stock-based awards to purchase up to 2,200,000 shares of common stock. The 2009 Plan has a fungible share pool. Any award that is not a full value award shall be counted against the authorized share limits specified in the 2009 Plan as one share for each share of common stock subject to award, and all full value awards, defined in the 2009 Plan as restricted stock awards or other stock-based awards, shall be counted as one and a half shares for each one share of common stock subject to such full value award. In addition, the 2009 Plan includes a non-employee director stock option program under which each eligible non-employee director is entitled to (1) a grant of an option to purchase 30,000 shares of common stock upon his or her initial appointment to the Board of Directors, or such other amount as the Board of Directors deems appropriate, and (2) a subsequent annual grant of an option to purchase 15,000 shares of common stock based on continued service, made on the date of each annual meeting of stockholders, provided the non-employee director has served as a director for at least six months and is serving as a director immediately prior to and following such annual meeting. The chairman of the audit committee will receive an additional annual grant of an option to purchase 10,000 shares of common stock based on continued service and the chairman of the science and technology committee will receive an additional annual grant of an option to purchase 15,000 shares of common stock based on continued service. Stock options granted by the Company to non-employee directors upon their appointment to the Board of Directors vest as to one-third of such shares on each of the first, second and third anniversaries of the date of grant, and those granted at each year’s annual meeting at which they serve as a director vest in full on the first anniversary of the date of grant.

At December 31, 2012, an aggregate of 815,916 shares of common stock were reserved for issuance under the Company’s stock plans, including 541,806 shares of common stock available for equity awards and 274,110 shares available for future grant under the Company’s 2004 Employee Stock Purchase Plan (the “2004 Purchase Plan”). Each option shall expire within ten years of issuance. Stock options granted by the Company 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 until fully vested.

Stock-Based Compensation

The Company recorded $9.0 million, $14.8 million and $18.7 million of stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively, related to employee stock options and the 2004 Purchase Plan.

The Company accounts for non-employee grants as an expense over the vesting period of the underlying stock options. At the end of each financial reporting period prior to vesting, the Company re-measures the value of these stock options (as calculated using the Black-Scholes option-pricing model) using the then-current fair value of the Company’s common stock. The Company recognized $1.0 million, $0.4 million and $0.3 million of non-employee stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively.

In connection with the establishment of Regulus, the Company granted stock options to the members of Regulus’ scientific advisory board and board of directors and certain Regulus employees. In addition to the total stock-based compensation expense stated above, the Company recorded $0.3 million, $0.4 million and $0.3 million of stock-based compensation expense related to these stock option grants in equity in loss of joint venture (Regulus Therapeutics Inc.) in its consolidated statements of comprehensive loss for the years ended December 31, 2012, 2011 and 2010, respectively.

In October 2010, the Company granted 113,370 shares of restricted stock of the Company to certain employees. These restricted stock awards were valued at $1.4 million on the grant date. These restricted stock awards vest ratably over an approximate three-year period. In May 2011, the Company granted an aggregate of 229,806 shares of performance-based restricted stock awards to its employees, excluding the Company’s leadership team. These restricted stock awards were valued at $2.3 million on the grant date and have a term of five years. The vesting of these awards is predicated on the Company’s achievement of certain clinical development goals. In January 2012, as part of its post-restructuring retention program, the Company granted an aggregate of 513,082 shares of restricted stock to its retained employees, excluding the Company’s chief executive officer and president and chief operating officer. These restricted stock awards were valued at $5.3 million on the grant date and vest in full on the second anniversary of the grant date. The Company recognized an aggregate of $2.4 million, $1.5 million and $0.1 million of stock-based compensation expense related to all of these restricted stock awards for the years ended December 31, 2012, 2011 and 2010, respectively.

Total compensation cost for all stock-based awards for the years ended December 31, 2012, 2011 and 2010 was $12.7 million, $17.1 million and $19.4 million, respectively. No amounts relating to the stock-based compensation have been capitalized.

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. The Company’s expected stock-price volatility assumption for 2012 and 2011 is based on the historical volatility of the Company’s publicly traded stock. The expected life assumption for 2012 and 2011 is based on the Company’s historical data. The Company’s expected stock-price volatility assumption for 2010 is based on a combination of implied volatilities of its publicly traded stock option prices as well as the historical volatility of the Company’s publicly traded stock. The expected life assumption for 2010 is based on the equal weighting of the Company’s historical data and the historical data of the Company’s pharmaceutical and biotechnology peers. The dividend yield assumption is based on the fact that the Company has never paid cash dividends and has 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 Company currently expects, based on an analysis of its historical forfeitures, excluding the impact of its corporate restructurings, that approximately 67% of its stock options will actually vest, and therefore has applied an annual forfeiture rate of 9.5% to all unvested employee stock options at December 31, 2012. The Company will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior expense if the actual forfeitures are higher than estimated.

	2012			2011			2010
Risk-free interest rate		0.8-1.0	%		1.2-2.6	%		1.6-2.9	%
Expected dividend yield		—			—			—
Expected option life		5.6-5.9 years			5.8-5.9 years			5.9-6.1 years
Expected volatility		57	%		55-57	%		53-55	%

At December 31, 2012, there was $14.7 million of unearned compensation expense remaining related to unvested employee stock options to be recognized as expense over a weighted-average period of approximately 2.6 years.

Stock Option Activity

The following table summarizes the activity of the Company’s stock option plans:

	Number of Options			Weighted Average Exercise Price
Outstanding, December 31, 2011		9,778,539		$	15.53
Granted		1,233,086		$	17.02
Exercised		(661,909	)	$	9.67
Cancelled		(1,418,133	)	$	18.47
Outstanding, December 31, 2012		8,931,583		$	15.71
Exercisable at December 31, 2010		4,983,088		$	18.60
Exercisable at December 31, 2011		6,033,858		$	18.13
Exercisable at December 31, 2012		5,885,363		$	17.20

The weighted average remaining contractual life for stock options outstanding and stock options exercisable at December 31, 2012 was 6.4 years and 5.2 years, respectively.

The aggregate intrinsic value of stock options outstanding at December 31, 2012 was $41.8 million, of which $24.9 million related to exercisable stock options. The intrinsic value of stock options exercised was $4.8 million, $40,000 and $1.8 million for the years ended December 31, 2012, 2011 and 2010, respectively. The weighted average fair value of stock options granted was $8.68, $7.68 and $5.98 per share for the years ended December 31, 2012, 2011 and 2010, respectively.

The aggregate intrinsic value of stock options expected to vest at December 31, 2012 was $14.7 million. The weighted average fair value of stock options expected to vest was $5.56. The weighted average remaining contractual life for stock options expected to vest was 8.8 years and the weighted average exercise price for these stock options was $12.82 per share at December 31, 2012.

Restricted Stock Awards

The following table summarizes the activity of the Company’s restricted stock awards:

	Number of Awards			Weighted Average Grant Date Fair Value
Unvested at December 31, 2011		312,482		$	10.68
Granted		513,082		$	10.49
Vested		(141,740	)	$	10.42
Forfeited		(80,064	)	$	5.94
Unvested at December 31, 2012		603,760		$	9.37

The total fair value of restricted stock awards that vested during the years ended December 31, 2012, 2011 and 2010 was $1.5 million, $0.5 million and zero, respectively. At December 31, 2012, there remained $2.8 million of unearned compensation expense related to unvested restricted stock awards to be recognized as expense over a weighted-average period of approximately one year.

Employee Stock Purchase Plan

In 2004, the Company adopted the 2004 Purchase Plan with 315,789 shares authorized for issuance. In June 2010, the Company’s stockholders approved an amendment to the 2004 Purchase Plan, which increased the shares authorized for issuance from 315,789 shares to 715,789 shares. Under the 2004 Purchase Plan, 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. The per-share purchase price at the end of each offering period is equal to the lesser of 85% of the closing price of the common stock at the beginning or end of the offering period. The Company issued 73,590, 79,038 and 72,674 shares during the years ended December 31, 2012, 2011 and 2010, respectively, and at December 31, 2012, 274,110 shares were available for issuance under the 2004 Purchase Plan.

The weighted average fair value of stock purchase rights granted as part of the 2004 Purchase Plan was $2.82, $3.46 and $5.12 per share for the years ended December 31, 2012, 2011 and 2010, respectively. The fair value was estimated using the Black-Scholes option-pricing model. The Company used a weighted-average stock-price volatility of 57%, expected option life assumption of six months and a risk-free interest rate of 0.1%. The Company recorded $0.2 million, $0.3 million and $0.3 million of stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010, respectively, related to the 2004 Purchase Plan.

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Subsequent Event - Additional Information (Detail) (Medco, USD $) In Millions, unless otherwise specified	1 Months Ended
	Feb. 28, 2013
Medco
Subsequent Event [Line Items]
Upfront cash payment	$ 25.0
Payments made to the company for clinical development, regulatory approval and commercial milestones total	$ 180.0

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES

6. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company has future purchase commitments totaling $11.1 million at December 31, 2012, of which $10.3 million is expected to be incurred in 2013 and $0.8 million is expected to be incurred past 2013. These commitments are related to purchase orders, clinical and pre-clinical agreements, and other purchase commitments for goods or services.

Technology License Commitments

The Company has licensed from third parties the rights to use certain technologies in its research processes as well as in any products the Company may develop including these licensed technologies. In accordance with the related license agreements, the Company is 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 the Company has licensed. At December 31, 2012, the Company was committed to make the following fixed, estimated and cancelable payments under existing license agreements, in thousands:

Year Ending December 31,
2013	$	14,463
2014		1,563
2015		818
2016		773
2017		793
Thereafter		9,159
Total	$	27,569

Operating Leases

The Company leases office and laboratory space located at 300 Third Street, Cambridge, Massachusetts (the “Premises”) for its corporate headquarters and primary research facility under a non-cancelable operating lease agreement (the “Third Street Lease”) with ARE-MA Region No. 28 LLC (the “Landlord”). Under the Third Street Lease, the Company leases a total of approximately 129,000 square feet of office and laboratory space at the Premises. The term of the Third Street Lease expires in September 2016. The Company has the option to extend the Third Street Lease for two successive five-year extensions.

The Company separately agreed, with the Landlord’s consent, to sublease a portion of the Premises consisting of 34,014 square feet (the “Subleased Premises) beginning on September 1, 2010 pursuant to a sublease agreement between the Company and sanofi-aventis U.S. Inc. (“Sanofi”) dated August 3, 2010 (the “Sublease”). In November 2011, the Company and Sanofi entered into a first amendment to the Sublease, pursuant to which the Company agreed, with the Landlord’s consent, to extend the Sublease of the Subleased Premises through September 30, 2016 (the Sublease, as so amended by the first amendment, the “Amended Sublease”). Pursuant to the terms of the Amended Sublease, Sanofi has an option to terminate the Amended Sublease on December 31, 2013, with advance notice and payment of a termination fee to the Company. A one-time upfront payment from Sanofi, together with the future rental payments by Sanofi under the Amended Sublease will partially offset the Company’s obligations under the Third Street Lease through 2016 by approximately $10.0 million. In connection with the execution of the Amended Sublease, the Company and the Landlord entered into an amendment to the Third Street Lease (the Third Street Lease, as so amended, the “Amended Third Street Lease”) to, among other things, change the allocation as between the Company and the Landlord of Excess Income (as defined in the Amended Third Street Lease) received by the Company in connection with any assignment or subletting of any or all of the Premises (including the Subleased Premises).

On February 10, 2012, the Company entered into a non-cancelable real property lease agreement (“the BMR Lease”) with BMR-Fresh Pond Research Park LLC (“BMR”) for the Company’s manufacturing facility. Under the BMR Lease, the Company leases approximately 15,000 square feet of office and laboratory space located at 665 Concord Avenue, Cambridge, Massachusetts. The term of the BMR Lease expires August 31, 2017. The Company has the option to extend the BMR Lease for two successive five-year extensions.

From 2004 through 2008, the Company received $7.3 million in leasehold improvement incentives from the Landlord in connection with the Third Street Lease. In addition, the Company received $1.8 million in leasehold improvement incentives from BMR during the year ended December 31, 2012. These leasehold improvement incentives are being accounted for as a reduction in rent expense ratably over the Amended Third Street and BMR Lease terms. The balance from these leasehold improvement incentives is included in current portion of deferred rent and deferred rent, net of current portion in the consolidated balance sheets at December 31, 2012 and 2011.

Total rent expense, including operating expenses, under the Company’s real property leases was $6.4 million, $6.5 million and $6.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Future minimum payments under the Company’s non-cancelable leases are approximately as follows, in thousands:

Year Ending December 31,
2013		6,065
2014		6,303
2015		6,550
2016		5,192
2017		364
Total	$	24,474

Litigation

University of Utah Litigation

On March 22, 2011, The University of Utah (“Utah”) filed a civil complaint in the United States District Court for the District of Massachusetts against the Company, Max Planck Gesellschaft Zur Foerderung Der Wissenschaften e.V. and Max Planck Innovation GmbH (together, “Max Planck”), the Whitehead Institute for Biomedical Research (“Whitehead”), the Massachusetts Institute of Technology (“MIT”) and the University of Massachusetts (“UMass”), claiming a professor at Utah is the sole inventor or, in the alternative, a joint inventor, of the Tuschl patents. Utah did not serve the original complaint on the Company or the other defendants. On July 6, 2011, Utah filed an amended complaint alleging substantially the same claims against the Company, Max Planck, Whitehead, MIT and UMass. The amended complaint was served on the Company on July 14, 2011. Utah is seeking changes to the inventorship of the Tuschl patents, unspecified damages and other relief. On October 31, 2011, the Company, Max Planck, Whitehead, MIT and UMass filed a motion to dismiss. Also on October 31, 2011, UMass filed a motion to dismiss on separate grounds, which the Company, Max Planck, Whitehead and MIT have joined. On December 31, 2011, the University filed a second amended complaint dropping UMass as a defendant and adding as defendants several UMass officials. In June 2012, the Court denied both motions to dismiss. The Company, Max Planck, Whitehead, MIT and UMass have filed an appeal of the Court’s ruling on the motion to dismiss for lack of jurisdiction and have filed a motion requesting that the Court stay the case pending the outcome of the appeal. In July 2012, the Court stayed discovery in the case pending the outcome of the defendants’ appeal. Oral arguments in the appeal are scheduled to be heard in early March 2013 in the United States Court of Appeals for the Federal Circuit.

Although the Company believes it has meritorious defenses and intends to vigorously defend itself in this matter, litigation is subject to inherent uncertainty and a court could ultimately rule against the Company. In addition, the defense of litigation and related matters are costly and may divert the attention of the Company’s management and other resources that would otherwise be engaged in other activities. The Company has not recorded an estimate of the possible loss associated with this legal proceeding due to the uncertainties related to both the likelihood and the amount of any possible loss or range of loss.

The Company’s accounting policy for accrual of legal costs is to recognize such expenses as incurred.

Tekmira Settlement Agreement

On November 12, 2012, the Company, TPC, Protiva Biotherapeutics, Inc., a wholly owned subsidiary of TPC (“Protiva,” and together with TPC, “Tekmira”) and AlCana Technologies, Inc. (“AlCana”) entered into a settlement agreement and general release resolving all ongoing litigation, as well as a patent interference proceeding between the Company and Protiva. The terms of the settlement agreement include mutual releases and dismissal with prejudice of all claims and counterclaims in the following litigation between the parties: (i) Tekmira Pharmaceuticals Corp., et al. v. Alnylam Pharmaceuticals, Inc., et al., Civ. A. No. 11-1010-BLS2, pending in the Business Litigation Section of the Massachusetts Superior Court for Suffolk County; (ii) Tekmira Pharmaceuticals Corp. v. Michael Hope, et al., No. S117660, pending in the Supreme Court of British Columbia, Canada; (iii) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Civ. A. No. 1:12-CV-10087, pending in the United States District Court for the District of Massachusetts; and (iv) Alnylam Pharmaceuticals, Inc., et al. v. Tekmira Pharmaceuticals Corp., Court File No. T-1783-12, pending in the Federal Court of Canada. In addition, as part of the settlement agreement, the parties agreed to a covenant not to sue one another in the future on matters released under the settlement agreement, as well as substantial liquidated damages to be paid by any party that breaches such covenant. The parties have also agreed to resolve any future disputes that may arise over the next three years through binding arbitration.

Pursuant to the settlement agreement, the Company and Tekmira also agreed to resolve the interference proceeding declared by the United States Board of Patent Appeals and Interferences between the Company and Protiva, captioned Protiva Biotherapeutics, Inc. v. Alnylam Pharmaceuticals, Inc., Patent Interference No. 105792.

Contemporaneously with the execution of the settlement agreement, the Company and Tekmira restructured their contractual relationship and entered into a cross-license agreement that supersedes the prior license and manufacturing agreements among the Company, TPC and Protiva. In connection with this restructuring, the Company incurred a $65.0 million charge to operating expenses for the year ended December 31, 2012. Specifically, the Company made a one-time payment of $30.0 million to Tekmira for the termination of, and its release from, all of its obligations under the manufacturing agreement with TPC, including without limitation the obligations to obtain materials and/or services from TPC. Further, the Company elected to buy-down certain future potential milestone and royalty payments due to Tekmira for certain of the Company’s RNAi therapeutics, formulated using LNP technology. Specifically, pursuant to the cross-license agreement, the Company made a one-time payment of $35.0 million to Tekmira, which amount constituted payment for the termination of the 2008 license agreements with TPC and Protiva and the parties’ rights and obligations thereunder, as well as the buy-down of certain milestone payments and the significant reduction of royalty rates for ALN-VSP, ALN-PCS and ALN-TTR. In addition, under the 2012 cross-license agreement, the Company will be obligated to pay TPC an aggregate of $10.0 million in contingent milestone payments related to advancement of ALN-VSP and ALN-TTR, which now represent the only potential milestones due to Tekmira for ALN-VSP, ALN-PCS and ALN-TTR lipid nanoparticle (“LNP”)-based RNAi therapeutics. Specifically, the Company will be obligated to pay TPC a $5.0 million milestone payment upon each of (i) the initiation of a Phase III clinical trial of an LNP-based ALN-TTR therapeutic, and (ii) the manufacture of ALN-VSP clinical trial material for use in China. The Company will expense these potential milestones when incurred and record them as research and development expense. A description of the Company’s cross-license agreement with Tekmira is included in Part I, Item 1, “ —Delivery-Related Licenses and Collaborations—Tekmira,” of this annual report on Form 10-K.

Indemnifications

Licensor indemnification — In connection with the Company’s license agreements with Max Planck relating to the Tuschl I and Tuschl II patent applications, the Company is required to indemnify Max Planck for certain damages arising in connection with the intellectual property rights licensed under the agreements. Under the Max Planck indemnification agreement, the Company is 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 Tuschl patents, which was settled during 2011. In connection with the Company’s research agreement with AlCana, the Company agreed to indemnify AlCana for certain legal costs, subject to certain exceptions and limitations, associated with the Tekmira litigation described above. These indemnification costs were charged to general and administrative expense. The Company has also agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of the Company’s ongoing litigation matters.

The Company is also a party to a number of agreements entered into in the ordinary course of business, which contain typical provisions that obligate the Company to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations.

The maximum potential future liability of the Company under any such indemnification provisions is uncertain. However, to date, other than certain costs associated with the certain previously settled litigation related to the Tuschl patents, and the Tekmira litigation described in Part I, Item 3, “Legal Proceedings,” of this annual report on Form 10-K, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has determined that the estimated aggregate fair value of its potential liabilities under all such indemnification provisions is minimal and has not recorded any liability related to such indemnification provisions at December 31, 2012 or 2011.

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

STOCKHOLDERS' EQUITY

7. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized up to 5,000,000 shares of preferred stock, $0.01 par value per share, for issuance. The preferred stock will have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Company’s Board of Directors upon its issuance. At December 31, 2012 and 2011, there were no shares of preferred stock outstanding.

Stockholder Rights Agreement

On July 13, 2005, the Board of Directors of the Company declared a dividend of one right (collectively, the “Rights”) to buy one one-thousandth of a share of newly designated Series A Junior Participating Preferred Stock (“Series A Junior Preferred Stock”) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on July 26, 2005. Initially, the Rights are not exercisable and will be attached to all certificates representing outstanding shares of common stock. The Rights will expire at the close of business on July 13, 2015 unless earlier redeemed or exchanged. Until a Right is exercised, the holder thereof will have no rights as a stockholder of the Company, including the right to vote or to receive dividends. Subject to the terms and conditions of the rights agreement (the “Rights Agreement”), the Rights will become exercisable upon the earlier of (1) ten business days following the later of (a) the first date of a public announcement that a person or group (an “Acquiring Person”) acquires, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding shares of common stock of the Company or (b) the first date on which an executive officer of the Company has actual knowledge that an Acquiring Person has become such or (2) ten business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning more than 20% of the outstanding shares of common stock of the Company. Each Right entitles the holder to purchase one one-thousandth of a share of Series A Junior Preferred Stock at an initial purchase price of $80.00 in cash, subject to adjustment. In the event that any person or group becomes an Acquiring Person, unless the event causing the 20% threshold to be crossed is a Permitted Offer (as defined in the Rights Agreement), each Right not owned by the Acquiring Person will entitle its holder to receive, upon exercise, that number of shares of common stock of the Company (or in certain circumstances, cash, property or other securities of the Company) which equals the exercise price of the Right divided by 50% of the current market price (as defined in the Rights Agreement) per share of such common stock at the date of the occurrence of the event. In the event that, at any time after any person or group becomes an Acquiring Person, (i) the Company is consolidated with, or merged with and into, another entity and the Company is not the surviving entity of such consolidation or merger (other than a consolidation or merger which follows a Permitted Offer) or if the Company is the surviving entity, but shares of its outstanding common stock are changed or exchanged for stock or securities (of any other person) or cash or any other property, or (ii) more than 50% of the Company’s assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth in the Rights Agreement) shall thereafter have the right to receive, upon exercise, that number of shares of common stock of the acquiring company which equals the exercise price of the Right divided by 50% of the current market price of such common stock at the date of the occurrence of the event.

Public Offerings

In February 2012, the Company sold an aggregate of 8,625,000 shares of its common stock through an underwritten public offering at a price to the public of $10.75 per share. As a result of this offering, the Company received aggregate net proceeds of approximately $86.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $5.9 million.

In January 2013, the Company sold an aggregate of 9,200,000 shares of its common stock through an underwritten public offering at a price to the public of $20.13 per share. As a result of this offering, the Company received aggregate net proceeds of approximately $173.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses of approximately $11.6 million.

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES

9. INCOME TAXES

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. The Company establishes a valuation allowance when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax (liability) asset at December 31, 2012 and 2011 are as follows, in thousands:

	2012			2011
Deferred tax assets:
Net operating loss carryforwards	$	102,819		$	46,230
Research and development credits		17,443			12,405
AMT credits		788			788
Foreign tax credits		3,196			3,196
Capitalized research and development and start-up costs		16,102			3,974
Deferred revenue		30,776			53,485
Deferred compensation		24,804			21,855
Intangible assets		2,540			4,302
Partnership interest		7,118			5,338
Other		4,173			2,850
Total deferred tax assets		209,759			154,423
Deferred tax liabilities:
Intangible assets		(38	)		(91	)
Unrealized gain on available-for-sale securities		(10,572	)		—
Gain on issuance of stock by Regulus		(6,466	)		—
Deferred tax asset valuation allowance		(192,721	)		(154,423	)
Net deferred tax liability	$	(38	)	$	(91	)

The (benefit from) provision for income taxes for the years ended December 31, 2012, 2011 and 2010 are as follows, in thousands:

	2012			2011			2010
U.S.:
Current	$	52		$	52		$	(9,928	)
Deferred		(10,572	)		—			10,494
Total U.S.		(10,520	)		52			566
Foreign:
Current		—			—			—
Deferred		(52	)		(52	)		(52	)
Total Foreign		(52	)		(52	)		(52	)
Provision for income taxes	$	(10,572	)	$	—		$	514

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
At U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal effect		4.9			4.6			4.2
Stock compensation		(0.7	)		(3.3	)		(5.0	)
Other permanent items		(1.6	)		(0.2	)		1.3
Valuation allowance		(28.5	)		(36.1	)		(36.7	)
Effective income tax rate		9.1	%		—	%		(1.2	)%

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. The Company has concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of all of its deferred tax assets. Accordingly, the Company has recorded a valuation allowance against the deferred tax assets that management believes will not be realized. The Company reevaluates the positive and negative evidence on a quarterly basis. The valuation allowance increased by $38.3 million, $23.0 million and $15.2 million for the years ended December 31, 2012, 2011 and 2010 respectively, due primarily to additional operating losses. Increases to the valuation allowance were partially offset by decreases related to the recognition of deferred revenue.

For the year ended December 31, 2012, the Company recorded a tax benefit of $10.6 million. For the years ended December 31, 2011 and 2010, the Company recorded a provision for income taxes of zero and $0.5 million, respectively. For the year ended December 31, 2012, the Company recorded unrealized gains on its investments in available-for-sale securities in other comprehensive income. The benefit of $10.6 million for the year ended December 31, 2012 is due to the recognition of corresponding income tax expense associated with the increase in the value of the Company’s investment in Regulus that the Company carried at fair market value during the same period. The corresponding income tax expense has been recorded in other comprehensive income. Intraperiod tax allocation rules require the Company to allocate its provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income. In periods in which the Company has a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as other comprehensive income, the Company must allocate the tax provision to the other categories of earnings. The Company then records a related tax benefit in continuing operations.

The deferred tax assets above exclude $10.1 million of net operating losses and $0.5 million of federal and state research and development credits related to tax deductions from the exercise of stock options subsequent to the adoption of the 2006 accounting standard on stock-based compensation. This amount represents an excess tax benefit and has not been included in the gross deferred tax assets.

At December 31, 2012, the Company had federal and state net operating loss carryforwards of $272.7 million and $337.8 million, respectively, to reduce future taxable income that will expire at various dates through 2032. At December 31, 2012, federal and state research and development credit carryforwards were $15.3 million and $5.6 million, respectively, available to reduce future tax liabilities that expire at various dates through 2032. At December 31, 2012, foreign tax credit carryforwards were $3.2 million available to reduce future tax liabilities that expire in 2017. At December 31, 2012, alternative minimum tax credits of $0.8 million are available to reduce future regular tax liabilities to the extent such regular tax less other non-refundable credits exceeds the tentative minimum tax. Ownership changes, as defined in the Internal Revenue Code, including those resulting from the issuance of common stock in connection with the Company’s public offerings, may limit the amount of net operating loss that can be utilized to offset future taxable income or tax liability. The Company has determined that based on the value of the Company, in the event there was an annual limitation under Section 382, all net operating loss and tax credit carryforwards would still be available to offset taxable income.

At December 31, 2012, the Company had no unrecognized tax benefits that, if recognized, would favorably impact the Company’s effective income tax rate in future periods. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, in thousands:

Balance at December 31, 2010	$	428
Subtractions for tax positions related to the prior years		(300	)
Balance at December 31, 2011		128
Subtractions for tax positions related to the prior years		(128	)
Balance at December 31, 2012	$	—

The tax years 2010 through 2012 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the United States, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period. In July 2011, the Internal Revenue Service completed its audits of the Company’s 2008 and 2009 tax years. The Company did not record any tax expense related to these audits. The Company has not recorded any interest and penalties on any unrecognized tax benefits since its inception.

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Summary of Company's Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 174,889	$ 190,746
Gross Unrealized Gains	31	78
Gross Unrealized Losses	(97)	(243)
Fair Value	174,823	190,581
Commercial Paper (Due Within 1 Year)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	22,650	11,397
Gross Unrealized Gains	1
Gross Unrealized Losses	(12)	(2)
Fair Value	22,639	11,395
Corporate Notes (Due Within 1 Year)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	41,249	51,273
Gross Unrealized Gains	23	19
Gross Unrealized Losses	(4)	(47)
Fair Value	41,268	51,245
Corporate Notes (Due After 1 Year Through 2 Years]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	50,322	53,592
Gross Unrealized Gains	5	50
Gross Unrealized Losses	(72)	(48)
Fair Value	50,255	53,594
U.S. Government Obligations (Due Within 1 Year)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,500	13,532
Gross Unrealized Gains		2
Fair Value	7,500	13,534
U.S. Government Obligations (Due After 1 Year Through 2 Years)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	53,168	60,202
Gross Unrealized Gains	2	7
Gross Unrealized Losses	(9)	(21)
Fair Value	53,161	60,188
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		750
Gross Unrealized Gains	26,300
Gross Unrealized Losses		(125)
Fair Value		$ 625

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Provision for Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule Of Income Taxes [Line Items]
Current	$ 52	$ 52	$ (9,928)
Deferred	(10,572)		10,494
Total U.S.	(10,520)	52	566
Current
Deferred	(52)	(52)	(52)
Total Foreign	(52)	(52)	(52)
Provision for income taxes	$ (10,572)	$ 0	$ 514

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2012

Schedules of Concentration of Risk by Risk Factor

The following table summarizes customers that represent greater than 10% of the Company’s net revenues from research collaborators, for the periods indicated:

	Year Ended December 31,
	2012			2011			2010
Roche/Arrowhead		56	%		68	%		56	%
Takeda		33	%		27	%		22	%

The following table summarizes customers with amounts due that represent greater than 10% of the Company’s billed and unbilled collaboration receivables balance, at the periods indicated:

	At December 31,
	2012			2011
U.S. Government		100	%		*	%
CHDI		—			51	%
GSK		—			20	%
Medtronic		—			13	%

* Represents 10% or less

Fair Value Measured on Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows, in thousands:

Description	At December 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	50,213	$	50,213	$	—	$	—
Marketable securities (fixed income):
Corporate notes		91,523		—		91,523		—
U.S. Government obligations		60,661		—		60,661		—
Commercial paper		22,639		—		22,639		—
Marketable securities (Regulus equity holdings)		38,748		—		38,748		—
Total	$	263,784	$	50,213	$	213,571	$	—

Description	At December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	67,024	$	67,024	$	—	$	—
Marketable securities (fixed income):
Corporate notes		104,839		—		104,839		—
U.S. Government obligations		73,722		—		73,722		—
Commercial paper		11,395		—		11,395		—
Marketable securities (equity holdings)		625		—		625		—
Total	$	257,605	$	67,024	$	190,581	$	—

Summary of Company's Marketable Securities

The following tables summarize the Company’s marketable securities at December 31, 2012 and 2011, in thousands:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	22,650	$	1	$	(12	)	$	22,639
Corporate notes (Due within 1 year)		41,249		23		(4	)		41,268
Corporate notes (Due after 1 year through 2 years)		50,322		5		(72	)		50,255
U.S. Government obligations (Due within 1 year)		7,500		—		—			7,500
U.S. Government obligations (Due after 1 year through 2 years)		53,168		2		(9	)		53,161
Total	$	174,889	$	31	$	(97	)	$	174,823

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	11,397	$	—	$	(2	)	$	11,395
Corporate notes (Due within 1 year)		51,273		19		(47	)		51,245
Corporate notes (Due after 1 year through 2 years)		53,592		50		(48	)		53,594
U.S. Government obligations (Due within 1 year)		13,532		2		—			13,534
U.S. Government obligations (Due after 1 year through 2 years)		60,202		7		(21	)		60,188
Equity securities		750		—		(125	)		625
Total	$	190,746	$	78	$	(243	)	$	190,581

Common Shares Excluded From the Calculation of Net Loss Per Common Share

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

	December 31,
	2012		2011		2010
Options to purchase common stock		8,932		9,779		8,975
Unvested restricted common stock		604		312		113
		9,536		10,091		9,088

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STOCK INCENTIVE PLANS (Tables)

12 Months Ended

Dec. 31, 2012

Valuation Assumptions for Stock Options

	2012			2011			2010
Risk-free interest rate		0.8-1.0	%		1.2-2.6	%		1.6-2.9	%
Expected dividend yield		—			—			—
Expected option life		5.6-5.9 years			5.8-5.9 years			5.9-6.1 years
Expected volatility		57	%		55-57	%		53-55	%

Stock Option Activity

The following table summarizes the activity of the Company’s stock option plans:

	Number of Options			Weighted Average Exercise Price
Outstanding, December 31, 2011		9,778,539		$	15.53
Granted		1,233,086		$	17.02
Exercised		(661,909	)	$	9.67
Cancelled		(1,418,133	)	$	18.47
Outstanding, December 31, 2012		8,931,583		$	15.71
Exercisable at December 31, 2010		4,983,088		$	18.60
Exercisable at December 31, 2011		6,033,858		$	18.13
Exercisable at December 31, 2012		5,885,363		$	17.20

Restricted Stock Awards Activity

The following table summarizes the activity of the Company’s restricted stock awards:

	Number of Awards			Weighted Average Grant Date Fair Value
Unvested at December 31, 2011		312,482		$	10.68
Granted		513,082		$	10.49
Vested		(141,740	)	$	10.42
Forfeited		(80,064	)	$	5.94
Unvested at December 31, 2012		603,760		$	9.37

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Restricted Stock Awards (Detail) (Unvested Restricted Common Stock, USD $)	1 Months Ended	12 Months Ended
	Oct. 31, 2010	Dec. 31, 2012
Unvested Restricted Common Stock
Number of awards
Unvested at December 31, 2011		312,482
Granted	113,370	513,082
Vested		(141,740)
Forfeited		(80,064)
Unvested at December 31, 2012		603,760
Weighted Average Grant Date Fair Value
Unvested at December 31, 2011		$ 10.68
Granted		$ 10.49
Vested		$ 10.42
Forfeited		$ 5.94
Unvested at December 31, 2012		$ 9.37

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Restructuring Activities (Detail) (Current Liabilities, Employee severance, benefits and related costs, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Current Liabilities | Employee severance, benefits and related costs
Restructuring Cost and Reserve [Line Items]
Original Charges and Amounts Accrued	$ 3,909
(Reversals) or Adjustments to Charges	(202)
Amounts Paid Through December 31, 2012	3,666
Amounts Accrued at December 31, 2012	$ 41

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Non-cash stock-based compensation expenses included in operating expenses are as follows:
Research and development	$ 8,041	$ 10,921	$ 11,689
General and administrative	$ 4,319	$ 5,755	$ 7,429

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SIGNIFICANT AGREEMENTS

12 Months Ended

Dec. 31, 2012

SIGNIFICANT AGREEMENTS

3. SIGNIFICANT AGREEMENTS

The following table summarizes the Company’s total consolidated net revenues from research collaborators, for the periods indicated, in thousands:

	Year Ended December 31,
	2012		2011		2010
Roche/Arrowhead	$	37,318	$	55,978	$	55,978
Takeda		21,973		22,248		22,250
Cubist		2,777		2,467		2,363
Monsanto		1,954		—		—
Novartis		60		149		9,313
Government contract		—		152		4,335
Other		2,643		1,763		5,802
Total net revenues from research collaborators	$	66,725	$	82,757	$	100,041

Platform Alliances

Roche/Arrowhead Alliance

In July 2007, the Company and, for limited purposes, Alnylam Europe, entered into a license and collaboration agreement (the “LCA”) with Roche. Under the LCA, which became effective in August 2007, the Company granted Roche a non-exclusive license to the Company’s intellectual property, including delivery-related intellectual property existing as of the date of the LCA, to develop and commercialize therapeutic products that function through RNAi, subject to the Company’s existing contractual obligations to third parties. In November 2010, Roche announced the discontinuation of certain activities in research and early development, including its RNAi research efforts. In October 2011, Arrowhead announced its acquisition of RNA therapeutics assets from Roche, including the LCA. As a result of the assignment, Arrowhead owns all of the rights and obligations of Roche under the LCA. The license is initially limited to four therapeutic areas, and may be expanded to include additional therapeutic areas upon payment to the Company by Arrowhead of an additional $50.0 million for each additional therapeutic area, if any.

In consideration for the rights the Company granted under the LCA, Roche paid the Company $273.5 million in upfront cash payments. In addition, in exchange for the Company’s contributions under the LCA, for each RNAi therapeutic product developed by Arrowhead, its affiliates or sublicensees under the LCA, the Company is entitled to receive milestone payments upon achievement of specified development, regulatory and commercialization events, totaling up to an aggregate of $100.0 million per therapeutic target, together with a single-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments for each therapeutic target include up to $17.5 million for the achievement of specified development milestones, up to $62.5 million for the achievement of specified regulatory milestones and up to $20.0 million for the achievement of specified commercialization milestones. The Company could potentially earn the next development milestone payment of $1.0 million under the LCA based upon the initiation of the first Phase I clinical trial by Arrowhead for an RNAi therapeutic product. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Arrowhead. Under the LCA, the Company and Roche also established a discovery collaboration in October 2009 (“Discovery Collaboration”), subject to the Company’s existing contractual obligations to third parties.

The term of the LCA generally ends upon the later of ten years from the first commercial sale of a licensed product and the expiration of the last-to-expire patent covering a licensed product. Arrowhead may terminate the LCA, on a licensed product-by-licensed product, licensed patent-by-licensed patent, and country-by-country basis, upon 180-days’ prior written notice, but is required to continue to make milestone and royalty payments to the Company if any royalties were payable on net sales of a terminated licensed product during the previous 12 months. The LCA may also be terminated by either party in the event the other party fails to cure a material breach under the LCA.

In July 2007, the Company executed a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Roche Finance Ltd, an affiliate of Roche. In connection with the execution of the LCA and the Common Stock Purchase Agreement, the Company also executed a share purchase agreement (the “Alnylam Europe Purchase Agreement”) with Alnylam Europe and Roche Beteiligungs GmbH, an affiliate of Roche (“Roche Germany”). Under the terms of the Alnylam Europe Purchase Agreement, the Company sold substantially all of the non-intellectual property assets of Alnylam Europe to Roche Germany for an aggregate purchase price of $15.0 million.

In summary, the Company received upfront payments totaling $331.0 million under the Roche alliance, which included an upfront payment under the LCA of $273.5 million, $42.5 million under the Common Stock Purchase Agreement and $15.0 million under the Alnylam Europe Purchase Agreement. The Company initially recorded $278.2 million of these proceeds as deferred revenue in connection with this alliance.

The Company determined that the deliverables under these agreements included the license, the Alnylam Europe assets and employees, the steering committees (joint steering committee and future technology committee) and the services under the Discovery Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and assets of Alnylam Europe are not separable from the undelivered services (i.e., the steering committees and Discovery Collaboration) and, accordingly the license and the services were treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Arrowhead alliance, the steering committee services and the Discovery Collaboration services are the final deliverables and all such services ended, contractually, in August 2012, five years from the effective date of the LCA.

The Company recognized the revenue related to these agreements on a straight-line basis over five years because the Company could not reasonably estimate the total level of effort required to complete its service obligations under the LCA, and therefore, could not utilize a proportional performance model. At December 31, 2012, there was no remaining deferred revenue under the LCA as the Company recognized all remaining Roche/Arrowhead revenue during the quarter ended September 30, 2012. The Company will recognize future milestones under the LCA, if any, when such milestones are achieved.

Takeda Alliance

In May 2008, the Company entered into a license and collaboration agreement (the “Takeda Agreement”) with Takeda to pursue the development and commercialization of RNAi therapeutics. Under the Takeda Agreement, the Company granted to Takeda a non-exclusive, worldwide, royalty-bearing license to the Company’s intellectual property, including delivery-related intellectual property, controlled by the Company as of the date of the agreement or during the five years thereafter, to develop, manufacture, use and commercialize RNAi therapeutics, subject to the Company’s existing contractual obligations to third parties. The license initially is limited to the fields of oncology and metabolic disease and may be expanded at Takeda’s option to include other therapeutic areas, subject to specified conditions. Under the Takeda Agreement, Takeda is the Company’s exclusive platform partner in the Asian territory, as defined in the Takeda Agreement, through May 2013.

In consideration for the rights granted to Takeda under the Takeda Agreement, Takeda agreed to pay the Company $150.0 million in upfront and near-term technology transfer payments. In addition, the Company has the option, exercisable until the start of Phase III development, to opt-in under a 50-50 profit sharing agreement to the development and commercialization in the United States of up to four Takeda licensed products, and would be entitled to opt-in rights for two additional products for each additional field expansion, if any, elected by Takeda under the Takeda Collaboration Agreement. In June 2008, Takeda paid the Company an upfront payment of $100.0 million and agreed to pay to the Company an additional $50.0 million upon achievement of specified technology transfer milestones. Of this $50.0 million, $20.0 million was paid to the Company in October 2008, $20.0 million was paid to the Company in March 2010, and $10.0 million was paid to the Company in March 2011 (collectively, the “Technology Transfer Milestones”). If Takeda elects to expand its license to additional therapeutic areas, Takeda will be required to pay the Company $50.0 million for each additional field selected, if any. In addition, for each RNAi therapeutic product developed by Takeda, its affiliates and sublicensees, the Company is entitled to receive specified development, regulatory and commercialization milestone payments, totaling up to $171.0 million per product, together with up to a double-digit percentage royalty payment based on worldwide annual net sales, if any. The potential future milestone payments per product include up to $26.0 million for the achievement of specified development milestones, up to $40.0 million for the achievement of specified regulatory milestones and up to $105.0 million for the achievement of specified commercialization milestones. The Company could potentially earn the next milestone payment of $2.0 million under the Takeda Agreement based upon the achievement of a specified pre-clinical event by Takeda for an RNAi therapeutic product. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any additional milestone payments or any royalty payments from Takeda.

Pursuant to the Takeda Agreement, the Company and Takeda are also collaborating on the research of RNAi therapeutics directed to one or two disease targets agreed to by the parties (the “Research Collaboration”), subject to the Company’s existing contractual obligations with third parties. Takeda also has the option, subject to certain conditions, to collaborate with the Company on the research and development of RNAi drug delivery technology for targets agreed to by the parties. In addition, through May 2013, Takeda has a right of first negotiation for the development and commercialization of the Company’s RNAi therapeutic products in the Asian territory, excluding the Company’s ALN-RSV, ALN-TTR and ALN-PCS programs. In addition to the 50-50 profit sharing option, the Company has a similar right of first negotiation to participate with Takeda in the development and commercialization of licensed products in the United States. The collaboration is governed by a joint technology transfer committee (the “JTTC”), a joint research collaboration committee (the “JRCC”) and a joint delivery collaboration committee (the “JDCC”), each of which is comprised of an equal number of representatives from each party.

The term of the Takeda Agreement generally ends upon the later of (1) the expiration of the Company’s last-to-expire patent covering a licensed product and (2) the last-to-expire term of a profit sharing agreement in the event the Company elects to enter into such an agreement. The Takeda Agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Takeda may terminate the agreement on a licensed product-by-licensed product or country-by-country basis upon 180-days’ prior written notice to the Company, provided, however, that Takeda is required to continue to make royalty payments to the Company for the duration of the royalty term with respect to a licensed product.

The Company has determined that the deliverables under the Takeda Agreement include the license, the joint committees (the JTTC, JRCC and JDCC), the technology transfer activities and the services that the Company will be obligated to perform under the Research Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered services (i.e., the joint committees and the Research Collaboration) are not separable and, accordingly, the license and services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Takeda Agreement, the last elements to be delivered are the JDCC and JTTC services, each of which has a life of no more than seven years.

The Company is recognizing the upfront payment of $100.0 million and the Technology Transfer Milestones of $50.0 million, the receipt of which the Company believed was probable at the commencement of the collaboration, on a straight-line basis over seven years because the Company is unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the Research Collaboration is largely unknown, and therefore, cannot utilize a proportional performance model. As future milestones are achieved, if any, the Company will recognize as revenue a portion of the milestone payment equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment. At December 31, 2012, deferred revenue under the Takeda Agreement was $52.8 million.

Monsanto Alliance

In August 2012, the Company and Monsanto Company (“Monsanto”) entered into a license and collaboration agreement (the “Monsanto Agreement”), pursuant to which the Company granted to Monsanto a worldwide, exclusive, royalty bearing right and license, including the right to grant sublicenses, to the Company’s RNAi platform technology and intellectual property controlled by the Company as of the date of the Monsanto Agreement or during the 30 months thereafter, in the field of agriculture. The Monsanto Agreement also includes the transfer of technology from the Company to Monsanto and a collaborative research project (the “Monsanto Discovery Collaboration”). Under the Monsanto Agreement, Monsanto will be the Company’s exclusive collaborator in the agriculture field for a ten-year period (the “Exclusivity Period”).

In consideration for the rights granted to Monsanto under the Monsanto Agreement, Monsanto paid the Company $29.2 million in upfront cash payments. Monsanto is also required to make near-term milestone payments to the Company upon the achievement of specified technology transfer and patent-related milestones. The Company is also entitled to receive additional funding for collaborative research efforts. In the aggregate, the Company can earn up to $5.0 million in potential future milestone payments and research funding under the Monsanto Agreement. In addition, Monsanto is required to pay to the Company a percentage of specified fees from certain sublicense agreements Monsanto may enter into that include access to the Company’s intellectual property, as well as low single-digit royalty payments on worldwide, net sales by Monsanto, its affiliates and sublicensees of certain Licensed Products (as defined in the Monsanto Agreement), if any. In December 2012, the Company received a milestone payment of $1.5 million of the $5.0 million in potential milestone payments under the Monsanto Agreement based upon the achievement of a specified patent-related event. The Company could potentially earn the next milestone payment of $2.5 million under the Monsanto Agreement based upon the completion of technology transfer activities. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of the application of RNAi technology in the field of agriculture, the Company may not receive any additional milestone payments or any royalty payments from Monsanto.

The term of the Monsanto Agreement generally ends upon the expiration of the last-to-expire patent licensed under the agreement. The Company estimates that its fundamental RNAi patents licensed under the Monsanto Agreement will expire both in and outside the United States generally between 2016 and 2025, subject to any potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. After August 27, 2013, Monsanto may terminate the Monsanto Agreement in its entirety upon 30-days’ prior written notice to the Company, provided, however, that Monsanto is required to continue to make royalty payments to the Company if any royalties were payable on net sales of a Licensed Product during the previous 24 months. The Monsanto Agreement may also be terminated by either party in the event the other party fails to cure a material breach under the agreement.

The Company determined that the significant deliverables under the Monsanto Agreement include the license, the technology transfer activities and the services that the Company will be obligated to perform under the Monsanto Discovery Collaboration. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered technical transfer activities and Monsanto Discovery Collaboration services do not have standalone value due to the specialized nature of the services to be provided by the Company. In addition, while Monsanto has the ability to grant sublicenses, it cannot grant access to certain of the Company’s proprietary technology. The uniqueness of the Company’s services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered technical transfer activities and Monsanto Discovery Collaboration services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition model on the final deliverable. Under the Monsanto Agreement, the last deliverable to be completed is the Monsanto Discovery Collaboration, which must be completed within five years. The Company is recognizing revenue under the Monsanto Agreement on a straight-line basis over five years. The Company is not utilizing a proportional performance model since it is unable to reasonably estimate the level of effort to fulfill these obligations, primarily because the effort required under the Monsanto Discovery Collaboration is largely unknown.

The Company received a payment of $29.2 million from Monsanto in August 2012, which was initially recorded as deferred revenue. Under the terms of the Monsanto Agreement, in the event that during the Exclusivity Period Monsanto loses certain patent rights, and such loss has a material adverse effect on the Licensed Products, then the Company would be required to pay Monsanto up to $5.0 million as liquidated damages, and Monsanto’s royalty obligations to the Company under the Monsanto Agreement would be reduced or, under certain circumstances, terminated. The Company has the right to cure any such loss of patent rights under the Monsanto Agreement. The Company has determined that this amount is not fixed and determinable and therefore, the Company has excluded this amount from its revenue model and is deferring the recognition of $5.0 million of revenue. The Company will continue to reassess when this amount can be considered fixed and determinable. If the achievement of a milestone is considered probable at the inception of the collaboration, the Company’s policy is to include the related payment in its revenue model. The Company has concluded that the receipt of the technology transfer payment of $2.5 million is probable, and has therefore included this amount in the Company’s revenue model. As future milestones are achieved, if any, the Company will recognize as revenue a portion of the milestone payment equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment. At December 31, 2012, deferred revenue under the Monsanto Agreement was $28.7 million.

Discovery and Development Alliances

Isis Collaboration and License Agreement

In April 2009, the Company and Isis amended and restated their existing strategic collaboration and license agreement (as amended and restated, the “Amended and Restated Isis Agreement”), originally entered into in March 2004, to extend the broad cross-licensing arrangement regarding double-stranded RNAi that was established in 2004, pursuant to which Isis granted the Company licenses to its current and future patents and patent applications relating to chemistry and to RNA-targeting mechanisms for the research, development and commercialization of double-stranded RNA (“dsRNA”) products. The Company has the right to use Isis technologies in its development programs or in collaborations and Isis agreed not to grant licenses under these patents to any other organization for the discovery, development and commercialization of dsRNA products designed to work through an RNAi mechanism, except in the context of a collaboration in which Isis plays an active role. The Company granted Isis non-exclusive licenses to its current and future patents and patent applications relating to RNA-targeting mechanisms and to chemistry for research use. The Company also granted Isis the non-exclusive right to develop and commercialize dsRNA products developed using RNAi technology against a limited number of targets. In addition, the Company granted Isis non-exclusive rights to research, develop and commercialize single-stranded RNA products. In August 2012, the Company and Isis amended the Amended and Restated Isis Agreement to provide for the discovery, development and commercialization of dsRNA products by the Company or its sublicensees in the field of agriculture.

In 2004, under the terms of the original Isis agreement, the Company paid Isis an upfront license fee of $5.0 million. The Company also agreed to pay Isis milestone payments, totaling up to approximately $3.4 million, upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product that the Company or a collaborator develops using Isis intellectual property. In addition, the Company agreed to pay to Isis a percentage of specified fees from strategic collaborations the Company may enter into that include access to Isis’ intellectual property.

Isis agreed to pay the Company, per therapeutic target, a license fee of $0.5 million, and milestone payments totaling approximately $3.4 million, payable upon the occurrence of specified development and regulatory events, and royalties on sales, if any, for each product developed by Isis or a collaborator that utilizes the Company’s intellectual property. Isis has the right to elect up to ten non-exclusive target licenses under the agreement and has the right to purchase one additional non-exclusive target per year during the term of the collaboration.

As part of the Amended and Restated Isis Agreement, the Company and Isis established a collaborative effort focused on single-stranded RNAi (“ssRNAi”) technology and the Company obtained from Isis a co-exclusive, worldwide license to research, develop and commercialize ssRNAi products. The Company paid Isis $11.0 million in license fees upon signing the agreement in connection with the ssRNAi research program. In November 2010, the Company exercised its right to terminate the ssRNAi collaborative effort, and all licenses to ssRNAi products granted by Isis to the Company, and any obligation thereunder requiring the Company to provide further research funding or pay additional license fees, milestone payments, royalties or sublicense payments to Isis for such ssRNAi products, also terminated. The termination of this collaborative effort did not affect the remainder of the Amended and Restated Isis Agreement, including the Company’s licenses to Isis’ current and future patents and patent applications relating to dsRNAs, which remains in effect.

The term of the Amended and Restated Isis Agreement generally ends upon the expiration of the last-to-expire patent licensed thereunder, whether such patent is a patent licensed by the Company to Isis, or vice versa. As the license will include additional patents, if any, filed to cover future inventions, if any, the date of expiration cannot be determined at this time.

During 2012, as a result of certain payments received by the Company in connection with the Monsanto and Genzyme alliances, the Company paid $2.5 million to Isis. These license fees were charged to research and development expense.

Novartis Alliance

In the second half of 2005, the Company entered into a series of transactions with Novartis, which included a stock purchase agreement, an investor rights agreement (the “Investor Rights Agreement”) and a research collaboration and license agreement (the “Collaboration and License Agreement”) (collectively the “Novartis Agreements”). The Collaboration and License Agreement had a five-year research term. In October 2010, the research program under the Collaboration and License Agreement was substantially completed in accordance with the terms of the Collaboration and License Agreement, subject to certain surviving rights and obligations of the parties.

In September 2010, Novartis exercised its right under the Collaboration and License Agreement to select 31 designated gene targets, for which Novartis has exclusive rights to discover, develop and commercialize RNAi therapeutic products using the Company’s intellectual property and technology, including delivery-related intellectual property and related technology. Under the terms of the Collaboration and License Agreement, for any RNAi therapeutic products Novartis develops against these targets, the Company is entitled to receive milestone payments upon achievement of certain specified development and annual net sales events, up to an aggregate of $75.0 million per therapeutic product, as well as royalties on annual net sales of any such product. For purposes of potential future revenue recognition, the Company does not believe these milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Novartis.

Novartis may terminate the Collaboration and License Agreement in the event that the Company materially breaches its obligations. The Company may terminate the Collaboration and License Agreement with respect to particular programs, products and/or countries in the event of specified material breaches by Novartis of its obligations, or in its entirety under specified circumstances for multiple such breaches.

The Company initially deferred the non-refundable $10.0 million upfront payment and the $6.4 million premium paid on the common stock of the Company purchased by Novartis. These payments, in addition to research funding and certain milestone payments, together totaled approximately $64.0 million, and are being amortized into revenue using the proportional performance method over the estimated duration of the Collaboration and License Agreement. Under this method, the Company estimates the level of effort to be expended over the term of the agreement and recognizes revenue based on the lesser of the amount calculated based on proportional performance of total expected revenue or the amount of non-refundable payments earned.

The Company believes the estimated period of performance under the Collaboration and License Agreement is ten years, which includes the five-year term of the agreement and limited support as part of a technology transfer until 2015, the fifth anniversary of the completion of the research term under the Collaboration and License Agreement. The Company continues to use an expected term of ten years in its proportional performance model. The Company reevaluates the expected term when new information is known that could affect the Company’s estimate. In the event the Company’s period of performance is different than estimated, the Company will adjust the amount of revenue recognized on a prospective basis. At December 31, 2012, deferred revenue under the Novartis Collaboration and License Agreement was $0.2 million.

At December 31, 2012, Novartis owned approximately 7.7% of the Company’s outstanding common stock.

Product Alliances

Kyowa Hakko Kirin Alliance

In June 2008, the Company entered into a license and collaboration agreement (the “KHK Agreement”) with Kyowa Hakko Kirin. Under the KHK Agreement, the Company granted Kyowa Hakko Kirin an exclusive license to its intellectual property in Japan and other markets in Asia (the “Licensed Territory”) for the development and commercialization of an RNAi therapeutic for the treatment of respiratory syncytial virus (“RSV”) infection. The KHK Agreement covers ALN-RSV01, as well as additional RSV-specific RNAi therapeutic compounds that comprise the ALN-RSV program (“Additional Compounds”). The Company retains all development and commercialization rights worldwide outside of the Licensed Territory.

Under the terms of the KHK Agreement, in June 2008, Kyowa Hakko Kirin paid the Company an upfront cash payment of $15.0 million. In addition, Kyowa Hakko Kirin is required to make payments to the Company upon achievement of specified development and sales milestones totaling up to $78.0 million, and royalty payments based on annual net sales, if any, of RNAi therapeutics for the treatment of RSV by Kyowa Hakko Kirin, its affiliates and sublicensees in the Licensed Territory. For purposes of potential future revenue recognition, the Company does not believe these milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Kyowa Hakko Kirin.

The collaboration between Kyowa Hakko Kirin and the Company is governed by a joint steering committee that is comprised of an equal number of representatives from each party. Under the agreement, Kyowa Hakko Kirin is establishing a development plan for the ALN-RSV program relating to the development activities to be undertaken in the Licensed Territory, with the initial focus on Japan. Kyowa Hakko Kirin is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of RSV in Japan and the rest of the Licensed Territory. The Company is responsible for supply of the product to Kyowa Hakko Kirin under a supply agreement unless Kyowa Hakko Kirin elects, prior to the first commercial sale of the product in the Licensed Territory, to manufacture the product itself or arrange for a third party to manufacture the product.

The term of the KHK Agreement generally ends on a country-by-country basis upon the later of (1) the expiration of the Company’s last-to-expire patent covering a licensed product and (2) the tenth anniversary of the first commercial sale in the country of sale. Additional patent filings relating to the collaboration may be made in the future. The KHK Agreement may be terminated by either party in the event the other party fails to cure a material breach under the agreement. In addition, Kyowa Hakko Kirin may terminate the agreement without cause upon 180-days’ prior written notice to the Company, subject to certain conditions.

The Company has determined that the deliverables under the KHK Agreement include the license, the joint steering committee, the manufacturing services and any Additional Compounds. The Company has determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the individual deliverables are not separable and, accordingly, must be accounted for as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable.

The Company is currently unable to reasonably estimate its period of performance under the KHK Agreement, as it is unable to estimate the timeline of its deliverables related to the fixed-price option granted to Kyowa Hakko Kirin for any Additional Compounds. The Company is deferring all revenue under the KHK Agreement until it is able to reasonably estimate its period of performance. The Company will continue to reassess whether it can reasonably estimate the period of performance to fulfill its obligations under the KHK Agreement. At December 31, 2012, deferred revenue under the KHK Agreement was $15.5 million.

Genzyme Alliance

In October 2012, the Company and Genzyme entered into the Genzyme Agreement pursuant to which the Company granted to Genzyme an exclusive license in Japan and the Asia-Pacific region (“the Genzyme Territory”) to develop and commercialize RNAi therapeutics targeting transthyretin (“TTR”) for the treatment of transthyretin-mediated amyloidosis (“ATTR”) and other human diseases. The Genzyme Agreement covers ALN-TTR02 and ALN-TTRsc, and may in the future cover additional TTR-specific RNAi therapeutic compounds that comprise the Company’s TTR program (together, “Licensed Products”), subject, in the case of Improvement Products (as defined in the Genzyme Agreement), to specified additional terms and conditions. The Company retains all development and commercialization rights worldwide outside of the Genzyme Territory.

In consideration for the rights granted to Genzyme under the Genzyme Agreement, Genzyme paid the Company an upfront cash payment of $22.5 million. Upon achievement of certain milestones, the Company will be entitled to receive milestone payments, up to an aggregate of $50.0 million, including up to $25.0 million in specified development milestones and $25.0 million in specified regulatory milestones. In addition, the Company will be entitled to tiered royalties expected to yield an effective royalty rate percentage ranging from the mid-teens to mid-twenties based on annual net sales, if any, of Licensed Products in the Genzyme Territory by Genzyme, its affiliates and sublicensees. The Company could potentially earn the next development milestone payment of $7.0 million under the Genzyme Agreement based upon the completion of a successful Phase II ALN-TTR clinical trial, as defined in the Genzyme Agreement. For purposes of potential future revenue recognition, the Company does not believe this milestone or any future milestones are substantive. Due to the uncertainty of pharmaceutical development and the high historical failure rates generally associated with drug development, the Company may not receive any milestone or royalty payments from Genzyme.

Under the Genzyme Agreement, the parties will collaborate in the development of Licensed Products, with Genzyme assuming primary responsibility for the development and commercialization of Licensed Products in the Genzyme Territory and the Company retaining primary responsibility for the development and commercialization of Licensed Products in the rest of the world. The collaboration between Genzyme and the Company is governed by a joint steering committee that will be comprised of an equal number of representatives from each party. Under the agreement, Genzyme is establishing a development plan for the ALN-TTR program relating to the development activities to be undertaken in the Genzyme Territory. Genzyme is responsible, at its expense, for all development activities under the development plan that are reasonably necessary for the regulatory approval and commercialization of an RNAi therapeutic for the treatment of ATTR in the Genzyme Territory. The Company and Genzyme intend to enter into a supply agreement to provide for supply of Licensed Products to Genzyme for clinical trials, and, at Genzyme’s request, commercial sales. Genzyme may elect, at any time during the term of the Genzyme Agreement, to manufacture Licensed Products itself or arrange for a third party to manufacture the product.

Genzyme also has a right of first negotiation in the event that the Company desires to grant any third party rights to develop and/or commercialize a Licensed Product for the treatment of ATTR or other human diseases outside of the Genzyme Territory.

The Company has agreed to indemnify Genzyme for legal costs and other losses or amounts required to be paid by Genzyme, if any, in connection with or related to certain of the Company’s ongoing litigation matters. Unless terminated earlier in accordance with the terms of the agreement, the Genzyme Agreement expires on a Licensed Product-by-Licensed Product and country-by-country basis upon the latest to occur of (1) the expiration of the last valid claim of the Company patents or joint patents covering a Licensed Product, (2) the expiration of the Regulatory Exclusivity (as defined in the Genzyme Agreement), and (3) twenty-five years from first commercial sale of such Licensed Product in such country. The Company estimates that its fundamental RNAi patents covering ALN-TTR compounds under the Genzyme Agreement will expire both in and outside of the United States generally between 2016 and 2021. The Company also estimates that its patents covering ALN-TTR compounds under the Genzyme Agreement in the United States and elsewhere will expire in 2032. These patent rights are subject to potential patent term extensions and/or supplemental protection certificates extending such terms in countries where such extensions may become available. In addition, more patent filings relating to the collaboration may be made in the future. Either party may terminate the Genzyme Agreement in the event the other party fails to cure a material breach or in the event that development ends after a specified time period without regulatory approval of a Licensed Product. The Company may terminate the agreement upon patent-related challenges by Genzyme. Genzyme has the right to terminate the agreement without cause at any time upon six months’ prior written notice. Genzyme may also terminate the agreement upon forty-five days prior written notice if Genzyme determines that specified success criteria have not been met following the completion of a Phase II clinical trial.

During the period from the effective date of the Genzyme Agreement until the first commercial sale of a Licensed Product in a country in the Genzyme Territory, and thereafter during any period during which Genzyme is paying the Company any royalties on net sales of any Licensed Product in such country, neither party will, alone or with an affiliate or agreed upon third party, develop or commercialize in such country, any product for the treatment of ATTR, other than a Licensed Product or an agreed complementary product, without the prior written agreement of the other party.

The Genzyme Agreement originally provided that if development of a Licensed Product was terminated by the Company or Genzyme under certain limited circumstances, Genzyme would have the right to terminate the Genzyme Agreement and the Company would be required to refund amounts paid by Genzyme to the Company under the agreement prior to such termination. On February 19, 2013, the Company and Genzyme agreed to amend the Genzyme Agreement to remove this provision.

The Company has determined that the significant deliverables under the Genzyme Agreement include the license, the joint steering committee and any additional TTR-specific RNAi therapeutic compounds that comprise the ALN-TTR program. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered joint steering committee and any additional TTR-specific RNAi therapeutic compounds do not have standalone value due to the specialized nature of the services to be provided by the Company. In addition, while Genzyme has the ability to grant sublicenses, it cannot sublicense all or substantially all of its rights under the Genzyme Agreement. The uniqueness of the Company’s services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable.

The Company is currently unable to reasonably estimate its period of performance under the Genzyme Agreement, as it is unable to estimate the timeline of its deliverables related to the deliverable for any additional TTR-specific RNAi therapeutic compounds. The Company is deferring all revenue under the Genzyme Agreement until it is able to reasonably estimate its period of performance. The Company will continue to reassess whether it can reasonably estimate the period of performance to fulfill its obligations under the Genzyme Agreement. At December 31, 2012, deferred revenue under the Genzyme Agreement was $22.5 million

Cubist Alliance

In January 2009, the Company entered into the Cubist Agreement to develop and commercialize therapeutic products based on certain of the Company’s RNAi technology for the treatment of RSV infection. Licensed products initially included ALN-RSV01, as well as several other second-generation RNAi-based RSV inhibitors. In November 2009, the Company and Cubist entered into an amendment to the Cubist Agreement (the “Amendment”), which provided that the Company and Cubist would focus their collaboration and joint development efforts on ALN-RSV02, a second-generation compound, intended for use in pediatric patients. In December 2010, the Company and Cubist jointly made a portfolio decision to put the development of ALN-RSV02 on hold. Pursuant to the terms of the Amendment, the Company continued to develop ALN-RSV01 for adult transplant patients at its sole discretion and expense and Cubist had the right to opt into collaborating with the Company on ALN-RSV01, subject to specified conditions.

In February 2013, Cubist notified the Company that it would not exercise its opt-in right for ALN-RSV01. In light of this determination, the Company and Cubist mutually agreed to terminate the license and collaboration agreement effective as of February 6, 2013 (the “Effective Date”). As of the Effective Date, the parties have no further rights and obligations under the Cubist Agreement, notwithstanding anything to the contrary in the Cubist Agreement.

In consideration for the rights granted to Cubist under the Cubist Agreement, in January 2009, Cubist paid the Company an upfront cash payment of $20.0 million. Under the terms of the Cubist Agreement, the Company and Cubist shared responsibility for developing licensed products in North America and each was responsible for one-half of the related development costs, subject to the terms of the Amendment. The Company’s collaboration

with Cubist for the development of licensed products in North America was governed by a joint steering committee comprised of an equal number of representatives from each party. Cubist had the sole right to commercialize licensed products in North America with costs associated with such activities and any resulting profits or losses to be split equally between the Company and Cubist.

The Company determined that the deliverables under the Cubist Agreement included the licenses, technology transfer related to the ALN-RSV program, the joint steering committee and the development and manufacturing services that the Company was obligated to perform during the development period. The Company also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the licenses and undelivered services were not separable and, accordingly, the licenses and services were treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, the Company bases its revenue recognition pattern on the final deliverable. Under the Cubist Agreement, the last element to be delivered was the development and manufacturing services, which had an expected life of approximately eight years.

The Company was recognizing the upfront payment of $20.0 million on a straight-line basis over approximately eight years because the Company was unable to reasonably estimate the level of effort to fulfill its performance obligations, and therefore, could not utilize a proportional performance model. At December 31, 2012, deferred revenue under the Cubist Agreement was $9.7 million. As a result of the termination of the Cubist Agreement in February 2013 and the end of the Company’s performance obligations thereunder, the Company expects to recognize the remaining deferred revenue of $9.7 million during the first quarter of 2013.

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Quarterly Financial Data (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Quarterly Financial Data [Line Items]
Revenues	$ 8,495	$ 16,759	$ 20,884	$ 20,587	$ 20,455	$ 20,791	$ 20,614	$ 20,897	$ 66,725	$ 82,757	$ 100,041
Operating expenses	96,844	34,906	32,951	31,480	34,041	33,229	33,732	36,573	196,181	137,575	144,111
Net loss	$ (62,188)	$ (19,502)	$ (12,956)	$ (11,368)	$ (14,303)	$ (13,237)	$ (13,824)	$ (16,285)	$ (106,014)	$ (57,649)	$ (43,515)
Net loss per common share - basic and diluted	$ (1.20)	$ (0.38)	$ (0.25)	$ (0.25)	$ (0.33)	$ (0.31)	$ (0.33)	$ (0.38)	$ (2.11)	$ (1.36)	$ (1.04)
Weighted average common shares - basic and diluted	51,821	51,542	51,280	46,210	42,715	42,654	42,379	42,345	50,286	42,410	42,040

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Deferred Tax Assets and Liabilities

 Components of the net deferred tax (liability) asset at December 31, 2012 and 2011 are as follows, in thousands:

	2012			2011
Deferred tax assets:
Net operating loss carryforwards	$	102,819		$	46,230
Research and development credits		17,443			12,405
AMT credits		788			788
Foreign tax credits		3,196			3,196
Capitalized research and development and start-up costs		16,102			3,974
Deferred revenue		30,776			53,485
Deferred compensation		24,804			21,855
Intangible assets		2,540			4,302
Partnership interest		7,118			5,338
Other		4,173			2,850
Total deferred tax assets		209,759			154,423
Deferred tax liabilities:
Intangible assets		(38	)		(91	)
Unrealized gain on available-for-sale securities		(10,572	)		—
Gain on issuance of stock by Regulus		(6,466	)		—
Deferred tax asset valuation allowance		(192,721	)		(154,423	)
Net deferred tax liability	$	(38	)	$	(91	)

Provision for Income Taxes

The (benefit from) provision for income taxes for the years ended December 31, 2012, 2011 and 2010 are as follows, in thousands:

	2012			2011			2010
U.S.:
Current	$	52		$	52		$	(9,928	)
Deferred		(10,572	)		—			10,494
Total U.S.		(10,520	)		52			566
Foreign:
Current		—			—			—
Deferred		(52	)		(52	)		(52	)
Total Foreign		(52	)		(52	)		(52	)
Provision for income taxes	$	(10,572	)	$	—		$	514

Effective Income Tax Rate

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
At U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal effect		4.9			4.6			4.2
Stock compensation		(0.7	)		(3.3	)		(5.0	)
Other permanent items		(1.6	)		(0.2	)		1.3
Valuation allowance		(28.5	)		(36.1	)		(36.7	)
Effective income tax rate		9.1	%		—	%		(1.2	)%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, in thousands:

Balance at December 31, 2010	$	428
Subtractions for tax positions related to the prior years		(300	)
Balance at December 31, 2011		128
Subtractions for tax positions related to the prior years		(128	)
Balance at December 31, 2012	$	—

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Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Furniture and fixtures	$ 1,793		$ 1,784
Leasehold improvements	19,862		19,676
Construction in progress	8,209
Property Plant And Equipment Gross	55,268		45,566
Less: accumulated depreciation	(35,469)		(30,923)
Property Plant And Equipment Net	19,799		14,643
Laboratory Equipment
Property, Plant and Equipment [Line Items]
Property, and equipment, useful life	5 years
Property and equipment other, gross	21,201		19,994
Computer Equipment And Software
Property, Plant and Equipment [Line Items]
Property, and equipment, useful life	3 years
Property and equipment other, gross	$ 4,203		$ 4,112
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property, and equipment, useful life	5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, and equipment, useful life	-	[1]
Construction in progress
Property, Plant and Equipment [Line Items]
Property, and equipment, useful life	0 years

[1] Shorter of asset life or lease term

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The Company comprises four entities, Alnylam Pharmaceuticals, Inc. (the parent company) and three wholly-owned subsidiaries (Alnylam U.S., Inc., Alnylam Europe AG (“Alnylam Europe”) and Alnylam Securities Corporation). Alnylam Pharmaceuticals, Inc. is a Delaware corporation that was formed on May 8, 2003. Alnylam U.S., Inc. is also a Delaware corporation that was formed on June 14, 2002. Alnylam Securities Corporation is a Massachusetts corporation that was formed on December 19, 2006. Alnylam Europe was incorporated in Germany in June 2000 under the name Ribopharma AG. The Company acquired Alnylam Europe in July 2003.

The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Reclassifications

Reclassifications

Certain reclassifications have been made to prior years’ consolidated financial statements to conform to the 2012 presentation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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. Actual results could differ from those estimates.

Concentrations of Credit Risk and Significant Customers

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and fixed income marketable securities. At December 31, 2012 and 2011, substantially all of the Company’s cash, cash equivalents and fixed income marketable securities were invested in money market mutual funds, commercial paper, corporate notes and U.S. government securities through highly rated financial institutions. Investments are restricted, in accordance with the Company’s investment policy, to a concentration limit per issuer.

To date, the Company’s revenues from collaborations have been generated from primarily F. Hoffmann-La Roche Ltd and certain of its affiliates (collectively, “Roche”) (which assigned its rights and obligations to Arrowhead Research Corporation (“Arrowhead”) in 2011), Takeda Pharmaceutical Company Limited (“Takeda”), and Novartis Pharma AG and one of its affiliates (collectively, “Novartis”). In addition, the Company and Medtronic, Inc. (“Medtronic”) formed a collaboration with CHDI Foundation, Inc. (“CHDI”) to advance ALN-HTT, a novel drug-device combination for the treatment of Huntington’s disease. Under this collaboration, CHDI agreed to initially fund approximately 50% of the costs of this program up to the point at which an investigational new drug application could be filed. In April 2012, the Company exercised its option under the Medtronic agreement to opt-out of the 50-50 expense/profit share arrangement of the ALN-HTT program and move to a royalty and milestone licensing structure. In connection with the Company’s opt-out, in May 2012, CHDI notified the Company and Medtronic that it would cease further funding of the ALN-HTT program pursuant to the terms of the CHDI agreement. The Company recorded the funding received from CHDI as a reduction to research and development expense. For the year ended December 31, 2012, the composition of the Company’s billed and unbilled collaboration receivables was entirely composed of amounts due from the U.S. Government for the wind-down of completed government contracts.

The following table summarizes customers that represent greater than 10% of the Company’s net revenues from research collaborators, for the periods indicated:

	Year Ended December 31,
	2012			2011			2010
Roche/Arrowhead		56	%		68	%		56	%
Takeda		33	%		27	%		22	%

The following table summarizes customers with amounts due that represent greater than 10% of the Company’s billed and unbilled collaboration receivables balance, at the periods indicated:

	At December 31,
	2012			2011
U.S. Government		100	%		*	%
CHDI		—			51	%
GSK		—			20	%
Medtronic		—			13	%

* Represents 10% or less

Fair Value Measurements

Fair Value Measurements

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following tables present information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2012 and 2011, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices (adjusted), interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy level is determined by the lowest level of significant input. Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows, in thousands:

Description	At December 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	50,213	$	50,213	$	—	$	—
Marketable securities (fixed income):
Corporate notes		91,523		—		91,523		—
U.S. Government obligations		60,661		—		60,661		—
Commercial paper		22,639		—		22,639		—
Marketable securities (Regulus equity holdings)		38,748		—		38,748		—
Total	$	263,784	$	50,213	$	213,571	$	—

Description	At December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	67,024	$	67,024	$	—	$	—
Marketable securities (fixed income):
Corporate notes		104,839		—		104,839		—
U.S. Government obligations		73,722		—		73,722		—
Commercial paper		11,395		—		11,395		—
Marketable securities (equity holdings)		625		—		625		—
Total	$	257,605	$	67,024	$	190,581	$	—

For the years ended December 31, 2012 and 2011, there were no transfers between Level 1 and Level 2 financial assets. The carrying amounts reflected in the Company’s consolidated balance sheets for cash, billed and unbilled collaboration receivables, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

Investments in Marketable Securities

Investments in Marketable Securities

The Company invests its excess cash balances in short-term and long-term marketable debt and equity securities. The Company classifies its investments in marketable debt securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time it purchased the securities. At each balance sheet date presented, the Company classified all of its investments in debt and equity securities as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary” and, if so, marks the investment to market through a charge to its consolidated statements of comprehensive loss. The Company did not record any impairment charges related to its fixed income marketable securities during the years ended December 31, 2012, 2011 or 2010. During 2011, the Company recorded an impairment charge of $0.6 million related to its former investment in equity securities of Tekmira Pharmaceuticals Corporation (“TPC”), as the decrease in the fair value of this investment was deemed to be other than temporary. The Company’s marketable securities are classified as cash equivalents if the original maturity, from the date of purchase, is 90 days or less, and as marketable securities if the original maturity, from the date of purchase, is in excess of 90 days. The Company’s cash equivalents are composed of money market funds, U.S. government obligations and commercial paper. At December 31, 2012, the Company accounts for its investment in Regulus as an available-for-sale marketable security. At December 31, 2012, the fair value of these equity securities was $38.7 million. As a result of the Regulus’ initial public offering, the Company’s carrying amount in these equity securities was $12.4 million, with a gross unrealized gain of $26.3 million recorded in other comprehensive income.

The Company obtains fair value measurement data for its marketable securities from independent pricing services. The Company performs validation procedures to ensure the reasonableness of this data. This includes meeting with the independent pricing services to understand the methods and data sources used. Additionally, the Company performs its own review of prices received from the independent pricing services by comparing these prices to other sources and confirming those securities are trading in active markets.

The following tables summarize the Company’s marketable securities at December 31, 2012 and 2011, in thousands:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	22,650	$	1	$	(12	)	$	22,639
Corporate notes (Due within 1 year)		41,249		23		(4	)		41,268
Corporate notes (Due after 1 year through 2 years)		50,322		5		(72	)		50,255
U.S. Government obligations (Due within 1 year)		7,500		—		—			7,500
U.S. Government obligations (Due after 1 year through 2 years)		53,168		2		(9	)		53,161
Total	$	174,889	$	31	$	(97	)	$	174,823

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper (Due within 1 year)	$	11,397	$	—	$	(2	)	$	11,395
Corporate notes (Due within 1 year)		51,273		19		(47	)		51,245
Corporate notes (Due after 1 year through 2 years)		53,592		50		(48	)		53,594
U.S. Government obligations (Due within 1 year)		13,532		2		—			13,534
U.S. Government obligations (Due after 1 year through 2 years)		60,202		7		(21	)		60,188
Equity securities		750		—		(125	)		625
Total	$	190,746	$	78	$	(243	)	$	190,581

Estimated Liability for Development Costs

Estimated Liability for Development Costs

The Company records accrued liabilities related to expenses for which service providers have not yet billed the Company with respect to products or services that the Company has received, specifically related to ongoing pre-clinical studies and clinical trials. These costs primarily relate to third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator fees. The Company has multiple product candidates in concurrent pre-clinical studies and clinical trials at multiple clinical sites throughout the world. In order to ensure that the Company has adequately provided for ongoing pre-clinical and clinical development costs during the period in which the Company incurs such costs, the Company maintains an accrual to cover these expenses. The Company updates the estimate for this accrual on at least a quarterly basis. The assessment of these costs is a subjective process that requires judgment. Upon settlement, these costs may differ materially from the amounts accrued in the Company’s consolidated financial statements. The Company’s historical accrual estimates have not been materially different from the Company’s actual costs.

Revenue Recognition

Revenue Recognition

The Company has entered into collaboration agreements with leading pharmaceutical and life sciences companies, including Novartis, Biogen Idec Inc. (“Biogen Idec”), Roche, Takeda, Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”), Cubist Pharmaceuticals, Inc. (“Cubist”), Monsanto Company (“Monsanto”) Genzyme Corporation (“Genzyme”) and The Medicines Company (“MedCo”). The terms of the Company’s collaboration agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical and pre-clinical development milestones, regulatory milestones, manufacturing services, sales milestones and royalties on product sales.

In January 2011, the Company adopted new authoritative guidance on revenue recognition for multiple element arrangements. The guidance, which applied to multiple element arrangements entered into or materially modified on or after January 1, 2011, amended the criteria for separating and allocating consideration in a multiple element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use of the residual method. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor specific objective evidence and third-party evidence is not available. Deliverables under the arrangement could be considered separate units of accounting provided that (i) a delivered item has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. The new guidance did not change the criteria for standalone value. As a biotechnology entity with unique and specialized delivered and undelivered performance obligations, the Company has been unable to demonstrate standalone value in its multiple element arrangements. For example, the Company applied the new rules to collaborations executed with Monsanto and Genzyme during 2012, but it was unable to demonstrate standalone value. In addition, the Company has not materially modified any of its multiple element arrangements. As such, the Company will continue to account for other license and collaboration agreements under previously issued revenue recognition guidance for multiple element arrangements, as described below.

Non-refundable license fees are recognized as revenue upon delivery of the license only if the Company has a contractual right to receive such payment, the contract price is fixed or determinable, the collection of the resulting receivable is reasonably assured and the Company has no further performance obligations under the license agreement. Multiple element arrangements, such as license and development arrangements, are analyzed to determine whether the deliverables, which often include a license and performance obligations such as research and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. The Company recognizes upfront license payments as revenue upon delivery of the license only if the license has standalone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately as such obligations are fulfilled. If the license is considered to either not have standalone value or have standalone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either a proportional performance or straight-line method. The Company recognizes revenue using the proportional performance method when the level of effort required to complete its performance obligations under an arrangement can be reasonably estimated and such performance obligations are provided on a best-efforts basis. Direct labor hours or full-time equivalents are typically used as the measure of performance. The amount of revenue recognized under the proportional performance method is determined by multiplying the total payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of level of effort incurred to date to estimated total level of effort required to complete the Company’s performance obligations under the arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the proportional performance method, as of the period ending date.

If the Company cannot reasonably estimate the level of effort to complete its performance obligations under an arrangement, the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method, as of the period ending date.

Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.

Many of the Company’s collaboration agreements entitle it to additional payments upon the achievement of performance-based milestones. These milestones are generally categorized into three types; development milestones which are generally based on the advancement of the Company’s pipeline and initiation of clinical trials, regulatory milestones which are generally based on the submission, filing or approval of regulatory applications such as a new drug application in the United States, and commercialization milestones which are generally based on meeting specific thresholds of sales in certain geographic areas. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in the Company’s revenue model. Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counter-party performance are not included in the Company’s revenue model until the performance conditions are met.

The Company performs an assessment to determine whether a substantive milestone exists at the inception of its collaborative arrangements. In evaluating if a milestone is substantive, the Company considers whether uncertainty exists as to the achievement of the milestone event at the inception of the arrangement, the achievement of the milestone involves substantive effort and can only be achieved based in whole or part on the performance or the occurrence of a specific outcome resulting from the Company’s performance, the amount of the milestone payment appears reasonable either in relation to the effort expected to be expended or to the projected enhancement of the value of the delivered items, there is any future performance required to earn the milestone, and the consideration is reasonable relative to all deliverables and payment terms in the arrangement. When a substantive milestone is achieved, the accounting rules permit the Company to recognize revenue related to the milestone payment in its entirety.

To date, the Company has not recorded any substantive milestones under its collaborations because the Company has not identified any milestones that meet the required criteria listed above. The Company has deferred recognition of payments for achievement of non-substantive milestones and recognized revenue over the estimated period of performance applicable to each collaborative arrangement. As these milestones are achieved, the Company will recognize as revenue a portion of the milestone payment, which is equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment, upon achievement of such milestone. The Company will recognize the remaining portion of the milestone payment over the remaining performance period under the proportional performance method or on a straight-line basis.

For revenue generating arrangements where the Company, as a vendor, provides consideration to a licensor or collaborator, as a customer, the Company applies the accounting standard that governs such transactions. This standard addresses the accounting for revenue arrangements where both the vendor and the customer make cash payments to each other for services and/or products. A payment to a customer is presumed to be a reduction of the selling price unless the Company receives an identifiable benefit for the payment and it can reasonably estimate the fair value of the benefit received. Payments to a customer that are deemed a reduction of selling price are recorded first as a reduction of revenue, to the extent of both cumulative revenue recorded to date and probable future revenues, which include any unamortized deferred revenue balances, under all arrangements with such customer, and then as an expense. Payments that are not deemed to be a reduction of selling price are recorded as an expense.

The Company evaluates its collaborative agreements for proper classification in its consolidated statements of comprehensive loss based on the nature of the underlying activity. Transactions between collaborators recorded in the Company’s consolidated statements of comprehensive loss are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship. The Company generally reflects amounts due under its collaborative agreements related to cost-sharing of development activities as a reduction of research and development expense.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets. Although the Company follows detailed guidelines in measuring revenue, certain judgments affect the application of its revenue policy. For example, in connection with the Company’s existing collaboration agreements, the Company has recorded on its balance sheet short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months are classified as long-term deferred revenue. However, this estimate is based on the Company’s current operating plan and, if its operating plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.

The estimate of deferred revenue also reflects management’s estimate of the periods of the Company’s involvement in certain of its collaborations. The Company’s performance obligations under these collaborations consist of participation on steering committees and the performance of other research and development services. In certain instances, the timing of satisfying these obligations can be difficult to estimate. Accordingly, the Company’s estimates may change in the future. Such changes to estimates would result in a change in revenue recognition amounts. If these estimates and judgments change over the course of these agreements, it may affect the timing and amount of revenue that the Company recognizes and records in future periods. At December 31, 2012, the Company had short-term and long-term deferred revenue of $31.4 million and $100.9 million, respectively, related to its collaborations.

The Company recognizes revenue under government cost reimbursement contracts as the Company performs the underlying research and development activities.

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured under enacted tax laws. A valuation allowance is required to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company’s policy is to accrue interest and penalties related to unrecognized tax positions in income tax expense. As of December 31, 2012, the Company has not recorded significant interest and penalty expense related to uncertain tax positions.

Research and Development Costs

Research and Development Costs

The Company expenses research and development costs as incurred. Included in research and development costs are wages, benefits and other operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, and overhead directly related to the Company’s research and development operations, as well as costs to acquire technology licenses.

The Company has entered into several license agreements for rights to utilize certain technologies. The terms of the licenses may provide for upfront payments, annual maintenance payments, milestone payments based upon certain specified events being achieved and royalties on product sales. The Company charges costs to acquire and maintain licensed technology that has not reached technological feasibility and does not have alternative future use to research and development expense as incurred. During the years ended December 31, 2012, 2011 and 2010, the Company charged to research and development expense costs associated with license fees of $5.7 million, $1.4 million and $2.4 million, respectively.

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation

The Company has stock incentive plans and an employee stock purchase plan under which it grants equity instruments. The Company accounts for all stock-based awards granted to employees at their fair value and generally recognizes compensation expense over the vesting period of the award. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of stock options as of the grant date. The Company calculates the grant date fair values using the Black-Scholes valuation model. The Company’s expected stock price volatility assumption is based on a combination of the historical and implied volatility of the Company’s publicly traded stock.

For stock-based awards granted to non-employees, the Company generally recognizes compensation expense over the vesting period of the award, which is generally the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to vesting, the Company re-measures the value of these stock-based awards (as calculated using the Black-Scholes option-pricing model) using the then-current fair value of the Company’s common stock. Stock options granted by the Company to non-employees, other than members of the Company’s Board of Directors and Scientific Advisory Board members, generally vest over the service period.

The fair value of restricted stock awards granted to employees is based upon the quoted closing market price per share on the date of grant, adjusted for assumed forfeitures. For performance-based restricted stock awards, the value of the awards is measured when the Company determines that the achievement of such performance conditions is deemed probable. This determination requires significant judgment by management. Expense is recognized over the vesting period, commencing when the Company determines that it is probable that the awards will vest.

Accounting for Joint Venture

Accounting for Joint Venture

From the formation of Regulus in September 2007 to October 2012, the Company accounted for its interest in Regulus using the equity method of accounting. The Company reviewed the consolidation guidance that defines a variable interest entity (“VIE”) and concluded that Regulus qualified as a VIE during such time period. The Company recorded any gains or losses recognized from the issuance of stock by its equity method investee as other income (expense) in its consolidated statements of comprehensive loss. The Company did not consolidate Regulus’ financial results as the Company lacked the power to direct the activities that could significantly impact the economic success of Regulus. In October 2012, Regulus completed an initial public offering, resulting in the Company’s ownership percentage decreasing from approximately 44% to 17% of Regulus’ outstanding common stock. Based upon the Company’s new ownership percentage of 17%, as well as qualitative factors, the Company does not believe that it has the ability to exercise significant influence over the operating decisions and financial policies of Regulus and has therefore discontinued the equity method of accounting for Regulus. Accordingly, beginning in October 2012, the Company has accounted for its investment in Regulus as an available-for-sale marketable security. For additional details on the accounting for the Company’s investment in Regulus, see Note 10.

Comprehensive Loss

Comprehensive Loss

Comprehensive loss is comprised of net loss and certain changes in stockholders’ equity that are excluded from net loss. The Company includes foreign currency translation adjustments in other comprehensive loss for Alnylam Europe as the functional currency is not the United States dollar. The Company also includes unrealized gains and losses on certain marketable securities in other comprehensive loss.

Net Loss Per Common Share

Net Loss Per Common Share

The Company computes basic net loss per common share by dividing net loss by the weighted average number of common shares outstanding. The Company computes 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. Potential common shares consist of shares issuable upon the exercise of stock options (using the treasury stock method), and unvested restricted stock awards. Because the inclusion of potential common shares would be anti-dilutive for all periods presented, diluted net loss per common share is the same as basic net loss per common share.

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

	December 31,
	2012		2011		2010
Options to purchase common stock		8,932		9,779		8,975
Unvested restricted common stock		604		312		113
		9,536		10,091		9,088

Segment Information

Segment Information

The Company operates in a single reporting segment, the discovery, development and commercialization of RNAi therapeutics.

Subsequent Events

Subsequent Events

The Company evaluated all events or transactions that occurred after December 31, 2012 up through the date these consolidated financial statements were issued. During this period, the Company did not have any material recognized subsequent events. However, the Company did have the following nonrecognized subsequent events, which are more fully described in Notes 3, 7 and 12:

• In January 2013, the Company sold an aggregate of 9,200,000 shares of its common stock through an underwritten public offering at a price to the public of $20.13 per share. See Note 7.

• In January 2013, the Company and MedCo entered into a license and collaboration agreement (the “MedCo Agreement”), pursuant to which the Company granted to MedCo an exclusive license to develop and commercialize specified RNAi therapeutics targeting proprotein convertase subtilisin/kexin type 9 (“PCSK9”). See Note 12.

• In February 2013, Cubist notified the Company that it would not exercise its opt-in right for the Company’s ALN-RSV01 program for the treatment of respiratory syncytial virus infection in lung transplant patients. In light of this determination, the parties mutually agreed to terminate their license and collaboration agreement entered into in January 2009 (the “Cubist Agreement”). See Note 3.

• On February 19, 2013, the Company and Genzyme entered into an amendment to their license and collaboration agreement (the “Genzyme Agreement”). See Note 3.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This standard is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. The Company adopted this amendment on January 1, 2012. The adoption of this new standard did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, a company may present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, a company is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. The Company adopted this amendment on January 1, 2012. Other than a change in presentation, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. Other than a change in presentation, the Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.