Alnylam Pharmaceuticals Reports Fourth Quarter and Full Year 2012 Financial Results

  Alnylam Pharmaceuticals Reports Fourth Quarter and Full Year 2012 Financial
  Results

   – Continued to Execute on “Alnylam 5x15™” Product Strategy with Positive
 Clinical Data in Multiple RNAi Therapeutic Programs Including ALN-TTR02 for
 Treatment of Transthyretin (TTR)-Mediated Amyloidosis (ATTR) and ALN-PCS for
                     Treatment of Hypercholesterolemia –

   – Advanced Proprietary Conjugate Delivery Platform Enabling Subcutaneous
  Delivery of RNAi Therapeutics Towards the Clinic, Including ALN-TTRsc for
   Treatment of ATTR, ALN-AT3 for Treatment of Hemophilia and Rare Bleeding
                       Disorders, and Other Programs –

    – Initiated New “Alnylam 5x15” Program, ALN-AS1 for Treatment of Acute
                        Intermittent Porphyria (AIP) –

 – Formed Multiple Strategic Collaborations Including Alliances with Genzyme
for ALN-TTR in Japan and other Asian-Pacific Countries and with The Medicines
                       Company for ALN-PCS Worldwide –

   – Provides Guidance on Next Steps with ALN-RSV Program for Treatment of
                        Respiratory Syncytial Virus –

– Maintained Strong Balance Sheet with $226 Million in Cash and Expects to End
                2013 with Greater Than $320 Million in Cash –

Business Wire

CAMBRIDGE, Mass. -- February 7, 2013

Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics
company, today reported its consolidated financial results for the fourth
quarter and full year 2012, and company highlights.

“2012 was a remarkable year of clinical achievement for Alnylam and for the
advancement of RNAi therapeutics. Importantly, we believe that data from our
ALN-TTR02 program showing up to a 94% knockdown of a disease-causing protein
and data from our PCSK9 program showing up to a 50% decrease in LDL
cholesterol served as unambiguous proof points that RNAi works in man.
Moreover, we have executed on a clear product strategy we call ‘Alnylam 5x15,’
where we are advancing RNAi therapeutics toward genetically defined targets
for diseases with high unmet need and where we intend to directly
commercialize certain core programs from this effort in major parts of the
world,” said John Maraganore, Ph.D., Chief Executive Officer of Alnylam.
“Specifically, in this past quarter and recent period we continued to execute
on our pipeline efforts by enrolling patients in our Phase II trial for
ALN-TTR02 and obtaining approval to initiate a Phase I study with ALN-TTRsc, a
subcutaneously administered RNAi therapeutic for the treatment of ATTR. In
addition, we presented key pre-clinical proof-of-concept data for several
other programs, including ALN-AT3 for hemophilia, ALN-TMP for
hemoglobinopathies, and ALN-AAT for liver disease associated with alpha-1
antitrypsin deficiency. We have also advanced a new program, ALN-AS1 for the
treatment of acute intermittent porphyria, an ultra-rare orphan disease. These
important accomplishments give us great confidence in the continued execution
of our ‘Alnylam 5x15’ product strategy, where we believe we can make a
difference in the lives of patients and deliver value to our shareholders.”

“In addition to the scientific and clinical progress we have made in the past
quarter, we have also made important progress in our business and corporate
development efforts. Over the past year, our new collaborations have resulted
in over $75 million in realized funding,” said Barry Greene, President and
Chief Operating Officer of Alnylam. “Recently, we formed a strategic alliance
with Genzyme to advance ALN-TTR in Japan and the broader Asian-Pacific region,
and earlier this week we announced a worldwide strategic alliance with The
Medicines Company to advance ALN-PCS for the treatment of
hypercholesterolemia. Both Genzyme and The Medicines Company are excellent
partners for Alnylam with shared commitments to develop innovative medicines.
Related to our partnered program efforts, Cubist has elected not to opt-in to
continued development of our respiratory syncytial virus program; we plan to
seek another partner to advance the program into a Phase III trial. In sum, we
believe our corporate development progress enables our continued focus and
execution on our ‘Alnylam 5x15’ product development and commercialization
strategy with retention of value in our core programs in major markets.”

Cash, Cash Equivalents and Total Marketable Securities

At December 31, 2012, Alnylam had cash, cash equivalents and total marketable
securities of $226.2 million, as compared to $260.8 million at December 31,
2011.

Net Loss

The net loss according to accounting principles generally accepted in the U.S.
(GAAP) for the fourth quarter of 2012 was $62.2 million, or $1.20 per share on
both a basic and diluted basis (including $2.7 million, or $0.05 per share of
non-cash stock-based compensation expense), as compared to a net loss of $14.3
million, or $0.33 per share on both a basic and diluted basis (including $4.1
million, or $0.10 per share of non-cash stock-based compensation expense), for
the same period in the previous year. For the year ended December 31, 2012,
the net loss was $106.0 million, or $2.11 per share (including $12.4 million,
or $0.25 per share of non-cash stock-based compensation expense), as compared
to a net loss of $57.6 million, or $1.36 per share (including $16.7 million,
or $0.39 per share of non-cash stock-based compensation expense), for the same
period in the previous year. The increase in net loss for the quarter and year
ended December 31, 2012 compared to the prior periods was due primarily to a
one-time charge of $65.0 million related to the restructuring of the company’s
licensing agreement with Tekmira Pharmaceuticals Corporation.

Revenues

Revenues were $8.5 million for the fourth quarter of 2012, as compared to
$20.5 million for the same period last year. Revenues for the fourth quarter
of 2012 included $5.5 million of revenues from the company’s alliance with
Takeda Pharmaceuticals Company Limited, $1.4 million in revenues from the
company’s alliance with Monsanto Company and $1.6 million of expense
reimbursement, amortization, and/or license fee revenues from Cubist
Pharmaceuticals, Inc., InterfeRx™, research reagent and services licensees,
and other sources. The decrease in revenues in the fourth quarter of 2012
compared to the prior period was due to the completion of the amortization
period for the company’s alliance with Roche (which assigned its rights and
obligations to Arrowhead Research Corporation during 2011), which ended in the
third quarter of 2012. Revenues were $66.7 million for the year ended December
31, 2012, as compared to $82.8 million for the prior year. Revenues for the
year ended December 31, 2012 included $37.3 million of collaboration revenues
related to the company’s alliance with Roche/Arrowhead, $22.0 million of
revenues related to the company’s collaboration with Takeda, and $7.4 million
of revenues related to the company’s collaborations with Monsanto, Novartis,
Cubist, research reagent licenses, and other sources.

Research and Development Expenses

Research and development (R&D) expenses were $21.7 million in the fourth
quarter of 2012, which included $1.7 million of non-cash stock-based
compensation, as compared to $23.4 million in the fourth quarter of 2011,
which included $2.6 million of non-cash stock-based compensation. The decrease
in R&D expense for the fourth quarter of 2012 compared to the fourth quarter
of the prior year was due to the decrease in compensation expenses due to the
company’s corporate restructuring in January of 2012. R&D expenses were $86.6
million for the year ended December 31, 2012, which included $8.0 million of
non-cash stock-based compensation, as compared to $99.3 million for the prior
year, which included $10.9 million of non-cash stock-based compensation. The
decrease in R&D expenses for the year ended December 31, 2012 as compared to
the prior year was due primarily to lower clinical trial and manufacturing
expenses related to the company’s ALN-RSV, ALN-PCS and ALN-VSP programs,
partially offset by additional expenses related to the advancement of the
company’s ALN-TTR program. Non-cash stock-based compensation expenses also
decreased due primarily to the reduction in workforce in connection with the
company’s January 2012 corporate restructuring. Partially offsetting these
decreases were license fees due to certain entities, primarily fees due to
Isis Pharmaceuticals, Inc. as a result of the Monsanto alliance.

General and Administrative Expenses

General and administrative (G&A) expenses were $10.2 million in the fourth
quarter of 2012, which included $1.0 million of non-cash stock-based
compensation, as compared to $10.7 million in the fourth quarter of 2011,
which included $1.4 million of non-cash stock-based compensation. The decrease
in G&A expense for the fourth quarter of 2012 compared to the fourth quarter
of the prior year was due to lower consulting and professional services
expenses. G&A expenses were $44.6 million for the year ended December 31,
2012, which included $4.3 million of non-cash stock-based compensation, as
compared to $38.3 million in 2011, which included $5.8 million of non-cash
stock-based compensation. The G&A expenses for the year ended December 31,
2012 as compared to the prior year increased primarily due to higher
consulting and professional services expenses related to business activities,
primarily legal activities. Looking ahead, G&A expenses are expected to
decrease significantly in 2013.

Restructuring of Tekmira License Agreement

For the quarter and year ended December 31, 2012, the company incurred a $65.0
million charge to operating expenses in connection with the restructuring of
its license agreement with Tekmira.

Regulus Therapeutics

Equity in loss of joint venture was $0.9 million and $1.0 million for the
fourth quarter of 2012 and 2011, respectively, related to the company’s share
of the net losses incurred by Regulus. The company incurred $4.5 million and
$3.5 million equity in loss of joint venture for the years ended December 31,
2012 and 2011, respectively. Based on the completion of the Regulus initial
public offering and concurrent private placement, the company’s percentage
ownership in Regulus decreased from approximately 44% to 17%. As a result of
this issuance of stock by Regulus, the company recognized a gain of $16.1
million to other income. In addition, beginning in the fourth quarter, the
company no longer uses the equity method to account for its investment in
Regulus because it no longer has significant influence over the operating and
financial policies of Regulus. The company now accounts for its investment in
Regulus at fair value by adjusting the value to reflect fluctuations in
Regulus’ stock price each reporting period.

Interest Income

Interest income was $0.2 million for the fourth quarter of 2012 and 2011.
Interest income was $1.0 million for the year ended December 31, 2012, as
compared to $1.2 million in 2011. The decrease in interest income was due
primarily to lower average interest rates as well as lower average cash, cash
equivalent and marketable securities balances.

Benefit from Income Taxes

The company had a benefit from income taxes of $10.6 million for the fourth
quarter and year ended December, 31 2012 as compared to zero for the
respective periods in 2011. The income tax benefit is associated with the
corresponding increase in value of the company’s investment in Regulus that
the company recorded in other comprehensive income, net of tax.

2013 Financial Guidance

Alnylam expects that its cash, cash equivalents and total marketable
securities balance will be greater than $320 million at December 31, 2013.

“Alnylam continues to maintain a solid balance sheet, with approximately $226
million in cash for year-end 2012,” said Michael Mason, Vice President,
Finance and Treasurer of Alnylam. “We also further strengthened our balance
sheet earlier this year with a public offering that resulted in net proceeds
of approximately $174 million. This financing results in a balance sheet and
operating plan that we believe will enable us to advance our ‘Alnylam 5x15’
product development and commercialization strategy. As for guidance this year,
we expect to end 2013 with greater than $320 million.”

Fourth Quarter 2012 and Recent Significant Corporate Highlights

Key “Alnylam 5x15” Program Highlights

  *Continued Advancement of ALN-TTR02 Toward Phase III Studies. Alnylam
    continued to enroll patients in its Phase II trial with ALN-TTR02 for the
    treatment of ATTR. This is an open-label, multi-center, multi-dose,
    dose-escalation trial designed to enroll approximately 20 ATTR patients.
    Subjects are being enrolled into cohorts of increasing doses. The primary
    objectives of the study 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. Alnylam expects to
    complete this trial and report results in mid-2013. Assuming positive
    results from the Phase II trial, Alnylam expects to start a Phase III
    trial for ALN-TTR02 in familial amyloidotic polyneuropathy (FAP) patients
    by the end of 2013.
  *Progressed ALN-TTRsc into Clinical Development. ALN-TTRsc is a
    subcutaneously administered RNAi therapeutic targeting TTR for the
    treatment of ATTR that comprises an siRNA conjugated to a triantennary
    N-acetylgalactosamine (GalNAc) ligand. In early 2013, Alnylam announced
    that it had filed a Clinical Trial Application (CTA) to initiate a Phase I
    Study for ALN-TTRsc. Alnylam announced today that it has received
    acceptance by the U.K. Medicines and Healthcare products Regulatory Agency
    (MHRA) to initiate a Phase I trial. The new 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 single and multiple doses of subcutaneously administered ALN-TTRsc.
    Secondary objectives include assessment of clinical activity of the drug
    as measured by serum TTR levels. Alnylam plans to begin enrollment in this
    clinical trial in the first half of 2013 and expects to report data
    mid-year. Upon completion of the Phase I trial, the company plans to start
    a Phase II clinical study of ALN-TTRsc in familial amyloidotic
    cardiomyopathy (FAC) patients by the end of 2013 and, assuming positive
    results, expects to start a pivotal trial for ALN-TTRsc in FAC patients in
    2014.
  *Advanced ALN-AT3, an RNAi Therapeutic Targeting Antithrombin (AT) for the
    Treatment of Hemophilia and Rare Bleeding Disorders (RBD). Alnylam
    presented new pre-clinical data with ALN-AT3 at American Society of
    Hematology (ASH) Annual Meeting. Results from the new pre-clinical study
    showed that subcutaneous administration of ALN-AT3 leads to potent,
    dose-dependent, and durable knockdown of AT in non-human primates (NHP)
    with an up to four-fold increase in thrombin generation. Alnylam expects
    to file an Investigational New Drug (IND) or equivalent application for
    ALN-AT3 in mid-2013 and start a Phase I trial in late 2013.
  *Designated ALN-AS1, an RNAi Therapeutic Targeting Aminolevulinate Synthase
    1 (ALAS-1) for the Treatment of Acute Intermittent Porphyria (AIP) as a
    New Program in the “Alnylam 5x15” Product Strategy. AIP is an ultra-rare
    genetic disease caused by loss of function mutations in porphobilinogen
    deaminase (PBGD), an enzyme in the heme biosynthesis pathway that can
    result in accumulation of toxic heme precursors. Patients with AIP suffer
    from acute and/or recurrent life-threatening attacks with severe abdominal
    pain, peripheral and autonomic neuropathy, and neuropsychiatric
    manifestations. Approximately 5,000 patients in the U.S. and Europe suffer
    AIP attacks annually, and approximately 500 of those patients are
    afflicted with recurrent debilitating attacks. ALN-AS1 is a GalNAc
    conjugated siRNA targeting ALAS-1, a liver-expressed, rate-limiting enzyme
    upstream of PBGD in the heme biosynthesis pathway. Inhibition of ALAS-1 is
    known to reduce the accumulation of heme precursors that cause the
    clinical manifestations of AIP. The company expects to present
    pre-clinical data from this program in mid-2013, and to identify a final
    development candidate by late 2013 to advance into the clinic in 2014.
  *Presented Pre-Clinical Data on Additional “Alnylam 5x15” Pipeline
    Programs. Also at ASH, Alnylam presented new pre-clinical data with
    ALN-TMP for the treatment of hemoglobinopathies. Data showed that ALN-TMP,
    an RNAi therapeutic targeting Tmprss6, leads to disease modifying effects,
    including a correction in globin gene expression, in a model of
    β-thalassemia. Alnylam plans to partner the ALN-TMP program before
    advancing to Phase I. At the Annual Meeting of the American Association
    for the Study of Liver Diseases (AASLD – “The Liver Meeting”), Alnylam
    presented new pre-clinical data with ALN-AAT, an RNAi therapeutic
    targeting alpha-1 antitrypsin (AAT) for the treatment of liver disease
    associated with AAT deficiency. The data showed robust RNAi-mediated
    silencing of AAT liver mRNA and serum protein in a transgenic mouse model
    of mutant AAT (“Z-AAT”) protein overexpression. In addition, ALN-AAT
    administration was associated with disease modifying effects, including a
    markedly reduced accumulation of toxic Z-AAT polymers and a decreased
    fibrotic response to injury. Alnylam has identified a GalNAc-siRNA
    targeting AAT that enables subcutaneous dose administration for further
    development. The company plans to partner the ALN-AAT program before
    advancing to Phase I.

Key Partnered Program Highlights

  *Provides Guidance on Next Steps for ALN-RSV01, an RNAi Therapeutic for the
    Treatment of Respiratory Syncytial Virus (RSV) Infection. Alnylam
    announced today that Cubist has elected not to opt-in to further
    development of ALN-RSV01 for the treatment of RSV and the parties have
    agreed to end their collaboration. Alnylam will seek another partner to
    continue advancement of the program. Late last year, Alnylam met with U.S.
    and European regulatory authorities to discuss results of a Phase IIb
    study performed in RSV-infected lung transplant patients. The  company has
    obtained preliminary guidance on the design of a potential Phase III study
    and will finalize plans with the regulatory authorities and a new partner,
    if and when identified.
  *Published Complete Results from Phase I Clinical Trial and Extension Study
    with ALN-VSP, an RNAi Therapeutic for the Treatment of Liver Cancer. The
    new paper, titled “First-in-Man Trial of an RNA Interference Therapeutic
    Targeting VEGF and KSP in Cancer Patients with Liver Involvement” appeared
    as an OnlineFirst publication in the journal Cancer Discovery. In this
    study – the most comprehensive study of a systemically administered RNAi
    therapeutic to date – chronic dosing of up to 26 months with ALN-VSP was
    found to be generally safe and well tolerated. Further, ALN-VSP showed
    evidence of RNAi activity in biopsy samples and anti-tumor activity,
    including a complete response in an endometrial cancer patient with
    multiple liver metastases.

Business and Organizational Highlights

  *Formed Strategic Worldwide Alliance with The Medicines Company to Advance
    ALN-PCS for the Treatment of Hypercholesterolemia. Alnylam and The
    Medicines Company formed an exclusive worldwide alliance to develop and
    commercialize RNAi therapeutics targeting PCSK9 for the treatment of
    hypercholesterolemia. The new ALN-PCS alliance includes ALN-PCS02 and
    ALN-PCSsc, which are RNAi therapeutic product candidates administered by
    intravenous infusion and subcutaneous injection, respectively. ALN-PCS02
    has completed a Phase I clinical study in human volunteers with elevated
    baseline low-density lipoprotein cholesterol (LDL-C); the study was
    performed in the absence of statin co-administration. A single dose of
    ALN-PCS02 was associated with rapid, dose-dependent, and durable knockdown
    of plasma PCSK9 by up to 84% and reduction in LDL-C of up to 50%. Alnylam
    has presented pre-clinical data for ALN-PCSsc showing potent knockdown of
    PCSK9 following subcutaneous administration. Alnylam will continue the
    program for an estimated one to two years to complete certain pre-clinical
    and Phase I clinical studies. The Medicines Company is responsible for
    leading and funding development from Phase II forward and commercializing
    the ALN-PCS program if successful. Under the terms of the agreement, The
    Medicines Company will make an upfront cash payment of $25 million to
    Alnylam. In addition, Alnylam is eligible to receive development and
    commercial milestone payments totaling up to $180 million, as well as
    double-digit royalties on ALN-PCS product sales.
  *Formed Strategic Alliance with Genzyme to Advance ALN-TTR in Japan and
    Broader Asian Market. Alnylam and Genzyme, a Sanofi company, entered into
    an exclusive alliance to develop and commercialize RNAi therapeutics for
    the treatment of ATTR in Japan and the broader Asian-Pacific region.
    Genzyme will leverage its proven regulatory and commercial capabilities in
    the Japanese and broader Asian market to advance the ALN-TTR program,
    which includes ALN-TTR02 and ALN-TTRsc. Alnylam will maintain plans to
    develop and commercialize ALN-TTR in North and South America, Europe, and
    rest of the world. Under the terms of the agreement, Genzyme made an
    upfront cash payment of $22.5 million to Alnylam. In addition, Alnylam is
    eligible to receive certain success-based development milestone payments
    totaling up to $50 million. Furthermore, Genzyme will make tiered royalty
    payments to Alnylam that are expected to yield an effective rate in the
    mid-teens to mid-twenties on sales of ALN-TTR in the Genzyme territory.
  *Completed Successful Public Offering of Common Stock. Alnylam completed a
    public offering of common stock resulting in the issuance of a total of
    9,200,000 shares and receipt of aggregate net proceeds, after deducting
    underwriting discounts and commissions and other estimated underwriting
    expenses, of approximately $174 million.
  *Continued to Strengthen Intellectual Property Estate Covering RNAi
    Therapeutics. Alnylam announced today that it has received Notices of
    Allowance from the United States Patent and Trademark Office (USPTO) for
    two new patents from the Tuschl I patent family. This represents the first
    allowances by the USPTO from the Tuschl I patent estate, which is
    co-exclusively licensed to Alnylam for RNAi therapeutics on a worldwide
    basis through an agreement with Max Planck Innovation GmbH, the licensing
    agent for the Max Planck Society. Specifically, the USPTO has allowed
    claims in patent application 12/897,744 which cover methods of mediating
    RNA interference using double stranded RNA molecules of about 21 to 23
    nucleotides in length and in 12/897,754 with claims directed to methods of
    producing knock-down cells and organisms with double stranded RNA
    molecules of about 21 to 23 nucleotides in length. The company also
    obtained two granted patents and a Notice of Allowance for a third
    application from the USPTO from the company's exclusively held Tuschl II
    patent estate. The claims cover compositions, methods, and uses of siRNA
    of about 19 to 25 nucleotides in length with 3’ overhangs of about 1 to 5
    nucleotides that are important for the development and commercialization
    of RNAi therapeutics. In addition, Alnylam achieved a successful outcome
    in an invalidation trial before the Japanese Patent Office, upholding key
    claims in the Japanese Tuschl II patent (JP4095895).
  *Restructured Relationship with Tekmira and Settled All Litigation. Alnylam
    and Tekmira Pharmaceuticals Corporation restructured their relationship
    with a new licensing agreement and resolved all litigation between the
    parties in a settlement agreement. The new license agreement consolidates
    and clarifies certain 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.
  *Expanded Scientific Advisory Board and Developed Management Team. Alnylam
    elected Daniel J. Rader, M.D. to its Scientific Advisory Board. Dr. Rader
    is a professor of Medicine and chief, Division of Translational Medicine
    and Human Genetics, at the Perelman School of Medicine at the University
    of Pennsylvania. In addition, Saraswathy (Sara) Nochur, Ph.D. has been
    promoted to Senior Vice President, Regulatory Affairs & Quality Assurance,
    from Vice President, Regulatory Affairs, and Mary Beth DeLena has been
    promoted to Vice President, Associate General Counsel, from Senior
    Director, Associate General Counsel.

Conference Call Information

Management will provide an update on the company, discuss fourth quarter and
2012 results, and discuss expectations for the future via conference call on
Thursday, February 7, 2013 at 4:30 p.m. ET. A corporate slide presentation
will also be available on the News & Investors page of the company’s website,
www.alnylam.com, to accompany the conference call. To access the call, please
dial 877-312-7507(domestic) or 631-813-4828(international) five minutes
prior to the start time and refer to conference ID 91074947. A replay of the
call will be available beginning at 7:30 p.m. ET on Thursday, February 7,
2013. To access the replay, please dial 855- 859-2056(domestic) or
404-537-3406(international) and refer to conference ID 91074947.

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 and rare bleeding disorders (RBD), ALN-AS1 for the
treatment of acute intermittent porphyria, ALN-PCS for the treatment of
hypercholesterolemia, and ALN-TMP for the treatment of hemoglobinopathies. As
part of its “Alnylam 5x15^TM” 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 and ALN-VSP for the treatment of liver cancers. 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, Genzyme, and The Medicines Company. In addition, Alnylam
holds a significant equity position in Regulus Therapeutics Inc., a company
focused on discovery, development, and commercialization of microRNA
therapeutics. 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 “Alnylam 5x15™”

The “Alnylam 5x15” strategy, launched in January 2011, establishes a path for
development and commercialization of novel RNAi therapeutics to address
genetically defined diseases with high unmet medical need. Products arising
from this initiative share several key characteristics including: a
genetically defined target and disease; the potential to have a major impact
in a high unmet need population; the ability to leverage the existing Alnylam
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 (NDA) with a
focused patient database and possible accelerated paths for commercialization.
By the end of 2015, the company expects to have five such RNAi therapeutic
programs in clinical development, including programs in advanced stages, on
its own or with a partner. The “Alnylam 5x15” programs include ALN-TTR for the
treatment of transthyretin-mediated amyloidosis (ATTR), ALN-AT3 for the
treatment of hemophilia and rare bleeding disorders (RBD), ALN-AS1 for the
treatment of acute intermittent porphyria (AIP), ALN-PCS for the treatment of
hypercholesterolemia, ALN-TMP for the treatment of hemoglobinopathies, and
other programs. Alnylam intends to focus on developing and commercializing
certain programs from this product strategy itself in North and South America,
Europe, and other parts of the world; these include ALN-TTR, ALN-AT3, and
ALN-AS1; the company will seek global development and commercial alliances for
other programs.

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, Alnylam’s expectations
regarding its “Alnylam 5x15” product strategy, Alnylam’s views with respect to
the potential for RNAi therapeutics, including ALN-TTR02 and ALN-TTRsc,
ALN-AT3, ALN-AS1, ALN-TMP, ALN-AAT, ALN-VSP, ALN-RSV01, ALN-PCS02, and
ALN-PCSsc, its expectations with respect to the timing and success of its
clinical and pre-clinical trials, the expected timing of regulatory filings,
including its plan to file IND or IND equivalent applications and initiate
clinical trials for ALN-TTRsc, ALN-AT3 and ALN-AS1, its expectations regarding
reporting data from its clinical studies, including its ALN-TTR02 and
ALN-TTRsc studies, its plans to seek a partner for its ALN-TMP and ALN-ATT
programs, and other ‘Alnylam 5x15’ programs, its expectations regarding the
receipt of upfront and potential milestone and royalty payments under its
agreements with Genzyme and The Medicines Company, its expectations regarding
the market opportunity for ALN-TTR, including in Japan, and ALN-AS1, its views
with regard to the strength, enforceability, and validity of its intellectual
property estate, its plans with respect to its ALN-RSV program, and its
expected cash position as of December 31, 2013, 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
manage operating expenses, Alnylam’s ability to discover and develop novel
drug candidates and delivery approaches, successfully demonstrate the efficacy
and safety of its drug candidates, the pre-clinical and clinical results for
its product candidates, which may not support further development of product
candidates, actions of regulatory agencies, which may affect the initiation,
timing and progress of clinical trials, obtaining, maintaining and protecting
intellectual property, Alnylam’s ability to enforce its patents against
infringers and defend its patent portfolio against challenges from third
parties, 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 obtain additional funding to support its
business activities and establish and maintain strategic business alliances
and new business initiatives, Alnylam’s dependence on third parties for
development, manufacture, marketing, sales and distribution of products, the
outcome of litigation, and unexpected expenditures, as well as those risks
more fully discussed in the “Risk Factors” filed with Alnylam’s current report
on Form 8-K filed with the Securities and Exchange Commission (SEC) on January
14, 2013 and in other filings that Alnylam makes with the SEC. 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 explicitly disclaims any obligation to update any forward-looking
statements.



Alnylam Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except per share amounts)
                                                              
                       Three Months Ended              Twelve Months Ended
                       December 31,                    December 31,
                        2012         2011           2012          2011     
                                                                       
Net revenues
from research          $ 8,495       $ 20,455        $ 66,725       $ 82,757   
collaborators
                                                                       
Operating
expenses:
Research and
development ^            21,678         23,369           86,569          99,295
(1)
General and
administrative           10,166         10,672           44,612          38,280
^(1)
Restructuring
of Tekmira              65,000       —              65,000        —        
license
agreement
Total
operating               96,844       34,041         196,181       137,575  
expenses
Loss from               (88,349  )    (13,586  )      (129,456  )    (54,818  )
operations
Other income
(expense):
Equity in loss
of joint
venture                  (881     )     (954     )       (4,522    )     (3,505   )
(Regulus
Therapeutics
Inc.)
Gain on
issuance of
stock by                 16,084         —                16,084          —
Regulus
Therapeutics
Inc.
Interest                 222            236              977             1,205
income
Other income            164          1              331           (531     )
(expense)
Total other
income                  15,589       (717     )      12,870        (2,831   )
(expense)
Loss before              (72,760  )     ($14,303 )       (116,586  )     ($57,649 )
income taxes
Benefit from            10,572       —              10,572        —        
income taxes
Net loss                ($62,188 )    ($14,303 )      ($106,014 )    ($57,649 )
                                                                       
Net loss per
common share -         $ (1.20    )   $ (0.33    )     $ (2.11     )   $ (1.36    )
basic and
diluted
                                                                       
Weighted
average common
shares used to
compute basic            51,821         42,715           50,286          42,410
and diluted
net loss per
common share
                                                                       
Comprehensive
loss
Net loss               $ (62,188  )   $ (14,303  )     $ (106,014  )   $ (57,649  )
Unrealized
gain (loss) on
marketable             $ 15,554      $ (14      )     $ 15,827       $ (879     )
securities,
net of tax
Comprehensive          $ (46,634  )   $ (14,317  )     $ (90,187   )   $ (58,528  )
loss
                                                                       
(1) Non-cash
stock-based
compensation
expenses
included in
operating
expenses are
as follows:
Research and           $ 1,684        $ 2,637          $ 8,041         $ 10,921
development
General and            $ 1,038        $ 1,445          $ 4,319         $ 5,755
administrative
                                                                                  
                                                                                  

Alnylam Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
                                                           
                                               December 31,  December 31,
                                              2012          2011
Cash, cash equivalents and total                   $   226,228    $   260,809
marketable securities
Billed and unbilled collaboration                      104            1,468
receivables
Prepaid expenses and other current assets              2,641          4,997
Property and equipment, net                            19,799         14,643
Investment in equity securities of Regulus        38,748       —
Therapeutics Inc.
Total assets                                   $   287,520   $   281,917
Accounts payable and accrued expenses              $   15,978     $   18,140
Total deferred revenue                                 132,291        140,853
Total deferred rent                                    5,198          4,211
Other liabilities                                      —              716
Total stockholders’ equity (52.5 million
and 42.7 million common shares issued and         134,053      117,997
outstanding and at December 31, 2012 and
December 31, 2011, respectively)
Total liabilities and stockholders' equity     $   287,520   $   281,917

This selected financial information should be read in conjunction with the
consolidated financial statements and notes thereto included in Alnylam’s
Annual Report on Form 10-K which includes the audited financial statements for
the year ended December 31, 2011.

Contact:

Alnylam Pharmaceuticals, Inc.
Cynthia Clayton, 617-551-8207
Vice President, Investor Relations and
Corporate Communications
or
Michael Mason, 617-551-8327
Vice President, Finance and Treasurer
 
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