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EX-32.2 - EX-32.2 - ALNYLAM PHARMACEUTICALS, INC.alny-ex322_6.htm
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EX-31.2 - EX-31.2 - ALNYLAM PHARMACEUTICALS, INC.alny-ex312_8.htm
EX-31.1 - EX-31.1 - ALNYLAM PHARMACEUTICALS, INC.alny-ex311_9.htm
EX-10.4 - EX-10.4 - ALNYLAM PHARMACEUTICALS, INC.alny-ex104_133.htm
EX-10.3 - EX-10.3 - ALNYLAM PHARMACEUTICALS, INC.alny-ex103_118.htm
EX-10.2 - EX-10.2 - ALNYLAM PHARMACEUTICALS, INC.alny-ex102_265.htm
EX-10.1 - EX-10.1 - ALNYLAM PHARMACEUTICALS, INC.alny-ex101_116.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

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

For the quarterly period ended June 30, 2017

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 001-36407

 

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)

(617) 551-8200

(Registrant’s Telephone Number, Including Area Code)

 

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     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     No  

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

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

At July 31, 2017, the registrant had 91,733,369 shares of Common Stock, $0.01 par value per share, outstanding.

 

 

 

 


INDEX

 

 

 

PAGE

NUMBER

 

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

 

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2017 AND DECEMBER 31, 2016

 

2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

 

3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016

 

4

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

5

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

16

 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

25

 

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

25

 

 

 

PART II.  OTHER INFORMATION

 

 

 

 

 

ITEM 1.  LEGAL PROCEEDINGS

 

26

 

 

 

ITEM 1A.  RISK FACTORS

 

26

 

 

 

ITEM 6. EXHIBITS

 

49

 

 

 

SIGNATURES

 

50

 

1


ALNYLAM PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30, 2017

 

 

December 31, 2016

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

408,671

 

 

$

193,617

 

Marketable securities

 

 

514,600

 

 

 

424,185

 

Investment in equity securities of Regulus Therapeutics Inc.

 

 

 

 

 

8,997

 

Billed and unbilled collaboration receivables

 

 

15,405

 

 

 

23,334

 

Prepaid expenses and other current assets

 

 

22,033

 

 

 

21,744

 

Total current assets

 

 

960,709

 

 

 

671,877

 

Marketable securities

 

 

174,570

 

 

 

324,799

 

Property, plant and equipment, net

 

 

147,533

 

 

 

114,572

 

Restricted investments

 

 

150,000

 

 

 

150,000

 

Other assets

 

 

1,471

 

 

 

1,562

 

Total assets

 

$

1,434,283

 

 

$

1,262,810

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,170

 

 

$

54,465

 

Accrued expenses

 

 

43,820

 

 

 

42,118

 

Deferred rent

 

 

1,942

 

 

 

1,576

 

Deferred revenue

 

 

39,794

 

 

 

33,540

 

Total current liabilities

 

 

108,726

 

 

 

131,699

 

Deferred rent, net of current portion

 

 

7,697

 

 

 

8,431

 

Deferred revenue, net of current portion

 

 

42,079

 

 

 

49,392

 

Long-term debt

 

 

150,000

 

 

 

150,000

 

Other liabilities

 

 

2,815

 

 

 

3,067

 

Total liabilities

 

 

311,317

 

 

 

342,589

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 5,000,000 shares authorized and no shares

   issued and outstanding at June 30, 2017 and December 31, 2016

 

 

 

 

 

Common stock, $0.01 par value per share, 125,000,000 shares authorized; 91,701,397

   shares issued and outstanding at June 30, 2017; 85,941,344 shares

   issued and outstanding at December 31, 2016

 

 

917

 

 

 

859

 

Additional paid-in capital

 

 

3,038,529

 

 

 

2,609,614

 

Accumulated other comprehensive loss

 

 

(33,959

)

 

 

(33,441

)

Accumulated deficit

 

 

(1,882,521

)

 

 

(1,656,811

)

Total stockholders’ equity

 

 

1,122,966

 

 

 

920,221

 

Total liabilities and stockholders’ equity

 

$

1,434,283

 

 

$

1,262,810

 

 

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

2


ALNYLAM PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net revenues from collaborators

 

$

15,932

 

 

$

8,709

 

 

$

34,892

 

 

$

16,054

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (1)

 

 

90,627

 

 

 

83,172

 

 

 

177,611

 

 

 

179,445

 

General and administrative (1)

 

 

45,779

 

 

 

17,987

 

 

 

84,266

 

 

 

39,087

 

Total operating expenses

 

 

136,406

 

 

 

101,159

 

 

 

261,877

 

 

 

218,532

 

Loss from operations

 

 

(120,474

)

 

 

(92,450

)

 

 

(226,985

)

 

 

(202,478

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,577

 

 

 

2,092

 

 

 

4,705

 

 

 

3,905

 

Other (expense) income

 

 

(523

)

 

 

229

 

 

 

(3,430

)

 

 

5,470

 

Total other income

 

 

2,054

 

 

 

2,321

 

 

 

1,275

 

 

 

9,375

 

Net loss

 

$

(118,420

)

 

$

(90,129

)

 

$

(225,710

)

 

$

(193,103

)

Net loss per common share - basic and diluted

 

$

(1.34

)

 

$

(1.05

)

 

$

(2.59

)

 

$

(2.26

)

Weighted-average common shares used to compute

   basic and diluted net loss per common share

 

 

88,098

 

 

 

85,545

 

 

 

87,068

 

 

 

85,411

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(118,420

)

 

$

(90,129

)

 

$

(225,710

)

 

$

(193,103

)

Unrealized loss on marketable securities, net of tax

 

 

(476

)

 

 

(18,331

)

 

 

(2,412

)

 

 

(26,555

)

Reclassification adjustment for realized loss (gain) on

   marketable securities included in net loss

 

 

345

 

 

 

(954

)

 

 

1,894

 

 

 

(6,110

)

Comprehensive loss

 

$

(118,551

)

 

$

(109,414

)

 

$

(226,228

)

 

$

(225,768

)

 

(1)

Stock-based compensation expenses included in operating expenses are as follows:

 

Research and development

 

$

13,254

 

 

$

9,277

 

 

$

21,945

 

 

$

23,633

 

General and administrative

 

 

10,776

 

 

 

6,539

 

 

 

17,802

 

 

 

15,663

 

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

3


ALNYLAM PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(225,710

)

 

$

(193,103

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,066

 

 

 

8,612

 

Stock-based compensation

 

 

39,747

 

 

 

39,296

 

Charge for 401(k) company stock match

 

 

1,074

 

 

 

781

 

Realized loss (gain) on sale of marketable equity securities

 

 

1,894

 

 

 

(6,110

)

Other

 

 

608

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Billed and unbilled collaboration receivables

 

 

7,929

 

 

 

(1,216

)

Prepaid expenses and other assets

 

 

(198

)

 

 

(5,593

)

Accounts payable

 

 

(8,326

)

 

 

(3,590

)

Accrued expenses and other

 

 

(3,404

)

 

 

1,717

 

Deferred revenue

 

 

(1,059

)

 

 

5,378

 

    Net cash used in operating activities

 

 

(181,379

)

 

 

(153,828

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(57,803

)

 

 

(24,380

)

Purchases of restricted investments

 

 

 

 

 

(150,000

)

Purchases of marketable securities

 

 

(237,184

)

 

 

(357,992

)

Sales and maturities of marketable securities

 

 

302,392

 

 

 

605,977

 

    Net cash provided by investing activities

 

 

7,405

 

 

 

73,605

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and other types of equity

 

 

12,644

 

 

 

6,266

 

Proceeds from issuance of common stock, net of offering costs

 

 

355,150

 

 

 

 

Proceeds from issuance of common stock to Sanofi Genzyme

 

 

21,381

 

 

 

14,301

 

Proceeds from issuance of long-term debt

 

 

 

 

 

150,000

 

Payments for repurchase of common stock for employee tax withholding

 

 

(147

)

 

 

(163

)

Net cash provided by financing activities

 

 

389,028

 

 

 

170,404

 

Net increase in cash and cash equivalents

 

 

215,054

 

 

 

90,181

 

Cash and cash equivalents, beginning of period

 

 

193,617

 

 

 

180,895

 

Cash and cash equivalents, end of period

 

$

408,671

 

 

$

271,076

 

 

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

4


ALNYLAM PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements of Alnylam Pharmaceuticals, Inc. are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, applicable to interim periods and, in the opinion of management, include all normal and recurring adjustments that are necessary to present fairly the results of operations for the reported periods. Our condensed consolidated financial statements have also been prepared on a basis substantially consistent with, and should be read in conjunction with, our audited consolidated financial statements for the year ended December 31, 2016, which were included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission, or SEC, on February 15, 2017. The year-end condensed consolidated balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP.  The results of our operations for any interim period are not necessarily indicative of the results of our operations for any other interim period or for a full fiscal year.

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

Use of Estimates

The preparation of financial statements in conformity with 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Liquidity

Based on our current operating plan, we believe that our cash, cash equivalents and fixed income marketable securities at June 30, 2017, together with the cash we expect to generate under our current alliances, will be sufficient to enable us to advance our Alnylam 2020 strategy for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q.

Net Loss Per Common Share

We compute basic net loss per common share by dividing net loss by the weighted-average number of common shares outstanding. We compute diluted net loss per common share by dividing net loss by the weighted-average number of common shares and dilutive potential common share equivalents then outstanding. Potential common shares consist of shares issuable upon the exercise of stock options (the proceeds of which are then assumed to have been repurchased using the treasury stock method). 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:

 

 

 

At June 30,

 

 

 

2017

 

 

2016

 

Options to purchase common stock

 

 

12,372

 

 

 

10,377

 

Unvested restricted common stock

 

 

172

 

 

 

179

 

 

 

 

12,544

 

 

 

10,556

 

 

Public Offering

 

In May 2017, we sold an aggregate of 5,000,000 shares of our common stock through an underwritten public offering at a price to the public of $71.87 per share. As a result of the offering, we received aggregate net proceeds of $355.2 million after deducting underwriting discounts and commissions and other offering expenses of $4.2 million.

Equity

Total stockholders’ equity at June 30, 2017 increased by $202.7 million compared to December 31, 2016. This increase was related primarily to increases to additional paid-in capital due to our public offering in May 2017, our issuance of common stock to

5


Sanofi Genzyme in May 2017 and stock-based compensation, partially offset during the six months ended June 30, 2017 by our net loss.

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. 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.

Investments in Marketable Securities and Cash Equivalents

We invest our excess cash balances in short-term and long-term marketable debt and equity securities. We classify our investments in marketable debt securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time we purchased the securities. At each balance sheet date presented, we classified all of our investments in debt and equity securities as available-for-sale. We report available-for-sale investments at fair value at each balance sheet date and include any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. At June 30, 2017, the balance in our accumulated other comprehensive loss was composed solely of activity related to our available-for-sale marketable securities, including our investment in equity securities of Regulus Therapeutics Inc., or Regulus. Realized gains and losses are determined using the specific identification method and are included in other income (expense). We recognized $0.3 million of realized losses and $1.0 million of realized gains from sales of our Regulus available-for-sale securities as other income (expense) in our condensed consolidated statements of comprehensive loss during the three months ended June 30, 2017 and 2016, respectively. In addition, we recognized $1.9 million of realized losses and $6.1 million of realized gains from sales of our Regulus available-for-sale securities as other income (expense) in our condensed consolidated statements of comprehensive loss during the six months ended June 30, 2017 and 2016, respectively. If any adjustment to arrive at fair value reflects a decline in the value of the investment, we consider all available evidence to evaluate the extent to which the decline is “other than temporary,” including our intention to sell and, if so, record a charge to our condensed consolidated statements of comprehensive loss. We did not record any impairment charges related to our fixed income marketable securities during the six months ended June 30, 2017 or 2016. Our 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. Our cash equivalents are composed of commercial paper, money market funds, and U.S. government-sponsored enterprise securities.

During the second quarter of 2017, we sold all our remaining holdings in Regulus. We accounted for our investment in Regulus as an available-for-sale marketable security. Intraperiod tax allocation rules require us to allocate our provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income. In periods in which we have a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as other comprehensive income, we must allocate the tax provision to the other categories of earnings. We then record a related tax benefit in continuing operations. Upon sales of our available-for-sale marketable securities, we apply the aggregate portfolio approach to recognize the related tax provision or benefit into income (loss) from continuing operations. As a result, the disproportionate tax effect remains in accumulated other comprehensive income (loss) as long as we maintain an investment portfolio.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board, or FASB, issued a new revenue recognition standard which amends revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries. The new standard provides a five step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in both interim and annual periods. In August 2015, the FASB deferred the effective date of the new revenue standard from January 1, 2017 to January 1, 2018. In March 2016, the FASB issued amendments to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued amendments to clarify the guidance on accounting for licenses of intellectual property and identifying performance obligations. In May 2016, the FASB issued amendments related to collectibility, non-cash consideration, the presentation of sales and other similar taxes collected from customers and transition. The standard allows for adoption using a full retrospective method or a modified retrospective method. We plan to adopt this standard using the modified retrospective method. During the second half of 2017, we plan to complete our review of our revenue streams to determine the impact that this standard could have on our condensed consolidated financial statements and related disclosures.

In January 2016, the FASB issued new guidance on recognition and measurement of financial assets and financial liabilities. The new guidance will impact the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. All equity investments in unconsolidated entities (other than those

6


accounted for under the equity method of accounting) will generally be measured at fair value with changes in fair value recognized through earnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive income (loss)) for equity securities with readily determinable fair values. In addition, the FASB clarified the need for a valuation allowance on deferred tax assets resulting from unrealized losses on available-for-sale debt securities. In general, the new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings. This guidance will be effective for us on January 1, 2018. We are currently evaluating the expected impact that the standard could have on our condensed consolidated financial statements and related disclosures.

In February 2016, the FASB issued a new leasing standard that requires that all lessees recognize the assets and liabilities that arise from leases on the condensed consolidated balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the expected impact that this standard could have on our condensed consolidated financial statements and related disclosures.

In October 2016, the FASB issued guidance that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs instead of deferring the income tax effects. The new standard will be effective for us on a modified retrospective basis on January 1, 2018. We are currently evaluating the expected impact that this standard could have on our condensed consolidated financial statements and related disclosures.

In November 2016, the FASB issued guidance that requires restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The new standard will be effective for us on January 1, 2018 using a retrospective transition method to each period presented. Early adoption is permitted. We are currently evaluating the timing of our adoption and the expected impact that this standard could have on our condensed consolidated financial statements and related disclosures.

In March 2017, the FASB issued guidance that amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date.  The new standard will be effective for us on January 1, 2019. Early adoption is permitted. We are currently evaluating the timing of our adoption and the expected impact that this standard could have on our condensed consolidated financial statements and related disclosures.

In May 2017, the FASB issued guidance that clarifies when changes to the terms or conditions of share-based payment awards must be accounted for as modifications. The new standard will be applied prospectively to awards modified on or after the adoption date and will be effective for us on January 1, 2018.  Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our condensed consolidated financial statements and related disclosures.

Subsequent Event

We did not have any material recognized subsequent events. However, we did have the following nonrecognized subsequent event, which is more fully described in Note 5.

 

On August 8, 2017, Dicerna Pharmaceuticals, Inc., or Dicerna, filed a new complaint in the United States District Court for the District of Massachusetts asserting a claim for attempted monopolization under the Sherman Antitrust Act.  

 

 

2. COLLABORATION AGREEMENTS

The following table summarizes our total consolidated net revenues from collaborators, for the periods indicated, in thousands:

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Description

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Sanofi Genzyme

 

$

14,375

 

 

$

5,387

 

 

$

26,652

 

 

$

9,802

 

The Medicines Company

 

 

1,522

 

 

 

3,268

 

 

 

7,886

 

 

 

5,925

 

Other

 

 

35

 

 

 

54

 

 

 

354

 

 

 

327

 

Total net revenues from collaborators

 

$

15,932

 

 

$

8,709

 

 

$

34,892

 

 

$

16,054

 

7


Product Alliances

Sanofi Genzyme Collaboration

In January 2014, we entered into a global, strategic collaboration with Sanofi Genzyme, the specialty care global business unit of Sanofi, to discover, develop and commercialize RNA interference, or RNAi, therapeutics as Genetic Medicines to treat orphan diseases. The 2014 Sanofi Genzyme collaboration superseded and replaced the previous collaboration between us and Sanofi Genzyme entered into in October 2012 to develop and commercialize RNAi therapeutics targeting transthyretin, or TTR, for the treatment of hereditary ATTR amyloidosis, including patisiran and revusiran, in Japan and the Asia-Pacific region.

2012 Sanofi Genzyme Agreement

Under the 2012 Sanofi Genzyme agreement, Sanofi Genzyme paid us an upfront cash payment of $22.5 million. We were also entitled to receive certain milestone payments under the 2012 Sanofi Genzyme agreement. In the fourth quarter of 2013, we earned a milestone of $7.0 million based upon the completion of a successful patisiran Phase 2 clinical trial and a milestone of $4.0 million based upon the initiation of the APOLLO Phase 3 clinical trial for patisiran.

We determined that the deliverables under the 2012 Sanofi Genzyme agreement included the license, a joint steering committee and any additional TTR-specific RNAi therapeutic compounds that comprised 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 did not have standalone value due to the specialized nature of the services to be provided by us. In addition, while Sanofi Genzyme had the ability to grant sublicenses, it could not sublicense all or substantially all of its rights under the 2012 Sanofi Genzyme agreement. The uniqueness of our services and the limited sublicense right were indicators that standalone value was not present in the arrangement. Therefore the deliverables were not separable and, accordingly, the license and undelivered services were treated as a single unit of accounting. We were unable to reasonably estimate the period of performance under the 2012 Sanofi Genzyme agreement, as we were unable to estimate the timeline of our deliverables related to the deliverable for any additional TTR-specific RNAi therapeutic compounds. Through December 31, 2013, we had deferred all revenue, or $33.5 million, under the 2012 Sanofi Genzyme agreement.

2014 Sanofi Genzyme Collaboration

In January 2014, we entered into the 2014 Sanofi Genzyme collaboration. As noted above, the 2014 Sanofi Genzyme collaboration superseded and replaced the 2012 Sanofi Genzyme agreement.

The 2014 Sanofi Genzyme collaboration is structured as an exclusive relationship for the worldwide development and commercialization of RNAi therapeutics in the field of Genetic Medicines, which includes our current and future Genetic Medicine programs that reach Human Proof-of-Principle Study Completion (as defined in the Sanofi Genzyme master agreement), or Human POP, by the end of 2019, subject to extension to the end of 2021 in various circumstances. We will retain product rights in the United States, Canada and Western Europe, referred to as the Alnylam Territory, while Sanofi Genzyme will obtain exclusive rights to develop and commercialize collaboration products in the rest of the world, referred to as the Sanofi Genzyme Territory, together with certain broader co-development/co-commercialize or worldwide rights for certain products. Sanofi Genzyme’s rights, described in detail below, are structured as an opt-in that is triggered upon achievement of Human POP. We maintain development control for all programs prior to Sanofi Genzyme’s opt-in and maintain development and commercialization control after Sanofi Genzyme’s opt-in for all programs in the Alnylam Territory. We will retain global rights to any RNAi therapeutic Genetic Medicine program that does not reach Human POP by the end of 2019, subject to certain limited exceptions. We retain full rights to all current and future RNAi therapeutic programs outside of the field of Genetic Medicines, including the right to form new collaborations.

Under the 2014 Sanofi Genzyme collaboration, Sanofi Genzyme’s specific license rights and the programs into which Sanofi Genzyme has opted include the following:

 

Regional license terms and programs — Upon opt-in, we will retain product rights in the Alnylam Territory, while Sanofi Genzyme will obtain exclusive rights to develop and commercialize the product in the Sanofi Genzyme Territory. Sanofi Genzyme can elect this license for any of our current and future Genetic Medicine programs that complete Human POP by the end of 2019, subject to limited extension. Development costs for products once Sanofi Genzyme exercises an option will be shared between Sanofi Genzyme and us, with Sanofi Genzyme responsible for twenty percent of the global development costs. Upon the effective date of the 2014 Sanofi Genzyme collaboration, Sanofi Genzyme expanded the scope of its regional license and collaboration for patisiran, an investigational RNAi therapeutic currently in Phase 3 clinical development, which was originally established under the 2012 Sanofi Genzyme agreement. In September 2015, Sanofi Genzyme elected to opt into our fitusiran clinical development program for the treatment of hemophilia and other rare bleeding disorders under the regional license terms. Cost-sharing for the fitusiran program began in January 2016 under the regional license terms. Sanofi Genzyme also had the right to elect to co-develop and co-commercialize fitusiran in the Alnylam Territory pursuant to the co-development/co-commercialize license terms described below. In November 2016, Sanofi Genzyme exercised this right and elected to co-develop and co-commercialize fitusiran in the Alnylam

8


 

Territory. In addition, during 2016, Sanofi Genzyme elected not to opt into the development and commercialization of givosiran or ALN-CC5 in the Sanofi Genzyme Territory. Sanofi Genzyme will be required to make payments totaling up to $50.0 million upon the achievement of certain patisiran development milestones. We could potentially earn the next patisiran milestone payment, ranging between $5.0 million and $20.0 million based on the geographic region, upon the achievement of specified events in connection with a regulatory filing or approval. In addition, Sanofi Genzyme will be required to make payments totaling up to $75.0 million per regional product other than patisiran, consisting of up to $55.0 million in development milestones and $20.0 million in commercial milestones. Sanofi Genzyme will also be required to pay tiered double-digit royalties up to twenty percent for each regional product based on annual net sales, if any, of such regional product by Sanofi Genzyme, its affiliates and sublicensees.

 

Co-development/co-commercialize license terms and programs — Upon opt-in, we will retain product rights in the Alnylam Territory, while Sanofi Genzyme will obtain exclusive rights to develop and commercialize the product in the Sanofi Genzyme Territory, and will co-commercialize the product in the Alnylam Territory. Upon the effective date of the 2014 Sanofi Genzyme collaboration, Sanofi Genzyme expanded its regional rights for revusiran, an investigational RNAi therapeutic that was previously being advanced in a Phase 3 clinical trial, which were originally granted under the 2012 Sanofi Genzyme agreement, to include a co-development/co-commercialize license and collaboration. In October 2016, upon the recommendation of the revusiran ENDEAVOUR Phase 3 study Data Monitoring Committee to suspend dosing, we decided to discontinue development of revusiran. As noted above, in November 2016, Sanofi Genzyme exercised its right to elect a co-development/co-commercialize license for fitusiran. Development costs for co-development/co-commercialize products, once Sanofi Genzyme exercises an option, will be shared between Sanofi Genzyme and us, with Sanofi Genzyme responsible for fifty percent of the global development costs. In connection with the exercise of its co-development/co-commercialize rights for fitusiran, Sanofi Genzyme paid us approximately $6.0 million in January 2017 for its incremental share of co-development costs incurred from January 2016 through September 2016. Sanofi Genzyme will be required to make payments totaling up to $75.0 million in development milestones for fitusiran, and, prior to the discontinuation of the revusiran program, was required to make certain milestone payments for revusiran. In December 2014, we earned a development milestone payment of $25.0 million based upon the initiation of the first global Phase 3 clinical trial for revusiran. We expect to earn the first fitusiran milestone payment of $25.0 million upon the dosing of the first patient in our ATLAS Phase 3 program for fitusiran. We announced the initiation of the ATLAS Phase 3 program in July 2017.  Sanofi Genzyme will also be required to pay tiered double-digit royalties up to twenty percent for each co-development/co-commercialize product based on annual net sales, if any, in the Sanofi Genzyme Territory for such co-development/co-commercialize product by Sanofi Genzyme, its affiliates and sublicensees. The parties will share profits equally and we expect to book product sales in the Alnylam Territory.

 

Global license terms and programs — Upon opt-in, Sanofi Genzyme will obtain a worldwide license to develop and commercialize the product. Sanofi Genzyme had the right to elect a global license for givosiran, but instead elected a license to co-develop and co-commercialize fitusiran, as described above. Sanofi Genzyme continues to have one right to a global license through 2019, subject to limited extension, for a future Genetic Medicine program that was not one of our defined Genetic Medicine programs as of the effective date of the 2014 Sanofi Genzyme collaboration. Sanofi Genzyme shall be responsible for one hundred percent of global development costs. Sanofi Genzyme will be required to make payments totaling up to $200.0 million for such global product, including up to $100.0 million in development milestones and $100.0 million in commercial milestones. Sanofi Genzyme will also be required to pay tiered double-digit royalties up to twenty percent for such global product based on annual net sales, if any, of such global product by Sanofi Genzyme, its affiliates and sublicensees.

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 Sanofi Genzyme under the 2014 Sanofi Genzyme collaboration.

Under the master agreement, the parties will collaborate in the development of option products, with us leading development for all programs prior to Sanofi Genzyme’s opt-in and also leading development and commercialization for all programs in the Alnylam Territory after Sanofi Genzyme’s opt-in. If Sanofi Genzyme does not exercise its option to license rights to a particular program, we will retain the exclusive right to develop and commercialize such program throughout the world, including the right to sublicense to third parties.

The 2014 Sanofi Genzyme collaboration is governed by an alliance joint steering committee that is comprised of an equal number of representatives from each party. There are additional committees to manage various aspects of each regional, co-developed/co-commercialized and global program. We and Sanofi Genzyme intend to enter into supply agreements to provide for supply of collaboration products to Sanofi Genzyme for clinical studies, and, at Sanofi Genzyme’s request, commercial sales. Sanofi Genzyme also has certain rights to manufacture collaboration products. Additionally, Sanofi Genzyme has certain limited opt-out rights, as specified in the master agreement, upon which products revert fully back to us with no further obligations to Sanofi Genzyme.

Upon the closing of the equity transaction in February 2014, we sold to Sanofi Genzyme 8,766,338 shares of our common stock and Sanofi Genzyme paid $700.0 million in aggregate cash consideration to us. As a condition to the closing of the equity transaction,

9


Sanofi Genzyme entered into an investor agreement with us containing provisions regarding Sanofi Genzyme’s holding and “standstill” obligations, additional purchase, voting and registration rights, as well as certain other rights and obligations of the parties.

We recorded the issuance of 8,766,338 shares of our common stock under the stock purchase agreement using the price of our common stock on the date the shares were issued to Sanofi Genzyme. Based on the common stock price of $85.72, the fair value of the shares issued was $751.5 million, which was $51.5 million in excess of the proceeds received from Sanofi Genzyme for the issuance of our common stock. This $51.5 million is being amortized on a straight-line basis over the performance period. In addition, due to intraperiod tax allocation rules, upon closing of the equity transaction we recorded a benefit from income taxes of $15.2 million due to the Sanofi Genzyme equity purchase being recorded in additional paid-in capital, net of tax.

In accordance with the investor agreement, as a result of our issuance of shares in connection with our acquisition of Sirna Therapeutics, Inc., or Sirna, in March 2014, Sanofi Genzyme exercised its right to purchase an additional 344,448 shares of our common stock for $23.0 million. In addition, in connection with our public offerings, Sanofi Genzyme exercised its right to purchase directly from us, in concurrent private placements, 744,566 shares of common stock in January 2015 at the public offering price resulting in $70.7 million in proceeds to us and 297,501 shares of common stock in May 2017 at the public offering price resulting in $21.4 million in proceeds to us. The sales of common stock to Sanofi Genzyme were not registered as part of these public offerings, though they were consummated simultaneously with such public offerings.

Sanofi Genzyme also has the right at the beginning of each year to purchase a number of shares of our common stock based on the number of shares we issued during the previous year for compensation-related purposes. Sanofi Genzyme exercised this right to purchase directly from us 196,251 shares of our common stock on January 22, 2015 for $18.3 million and 205,030 shares of our common stock on February 1, 2016 for $14.3 million. In January 2017, Sanofi Genzyme elected not to exercise its compensation-related right for 2016. The sales of these shares to Sanofi Genzyme were consummated as private placements.

In each instance, the purchase by Sanofi Genzyme described above allowed Sanofi Genzyme to maintain its ownership level of our common stock of approximately 12 percent.

We determined that the deliverables for the programs on which Sanofi Genzyme was collaborating with us upon initiation of the 2014 Sanofi Genzyme collaboration included the licenses to our patisiran and revusiran clinical programs, which licenses were delivered to Sanofi Genzyme upon the closing date of the transaction, and the associated development activities, joint steering committee participation and information exchange for these clinical programs. We also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and associated undelivered development activities, joint steering committee participation and information exchange activities did not have standalone value due to the specialized nature of the services to be provided by us. In addition, while Sanofi Genzyme has the ability to grant sublicenses, it cannot sublicense all or substantially all of its rights under the 2014 Sanofi Genzyme collaboration. The uniqueness of our services and the limited sublicense rights are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered 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 model on the final deliverable. Under the 2014 Sanofi Genzyme collaboration, the last deliverables for patisiran and revusiran were expected to be completed within approximately six years from the closing date of the transaction and the last deliverables for fitusiran are expected to be completed within approximately five years from the date Sanofi Genzyme elected to opt into our fitusiran clinical development program under the regional license terms. Our estimate regarding the performance period under the 2014 Sanofi Genzyme collaboration related to the license to our patisiran and revusiran clinical programs was adjusted in October 2016 due to our decision to discontinue development of revusiran. As a result, with respect to these programs, we currently expect the last deliverables to be completed within approximately five years from the closing date of the transaction.

We determined that the total cash received from Sanofi Genzyme under the now superseded 2012 Sanofi Genzyme agreement reflects consideration for certain of the performance obligations for ALN-TTR programs included in the 2014 Sanofi Genzyme collaboration. Therefore we are recognizing the $33.5 million of deferred revenue under the 2012 Sanofi Genzyme agreement on a straight-line basis over the period of performance of the ALN-TTR programs. As consideration is achieved, including any milestones or reimbursement for development activities, we recognize as revenue a portion of these payments equal to the percentage of the performance period completed when the milestone or activities have been satisfied, multiplied by the amount of the payment. We recognize the remaining portion of consideration received over the remaining performance period on a straight-line basis.

10


The following table presents information related to the 2014 Sanofi Genzyme collaboration, in thousands:

 

Excess of fair value of our common stock issued to Sanofi Genzyme in

   February 2014

 

$

(51,450

)

Deferred revenue remaining under the 2012 Sanofi Genzyme agreement

   upon execution of the 2014 Sanofi Genzyme collaboration

 

 

33,500

 

Milestone payment received:

 

 

 

 

Year-ended December 31, 2014

 

 

25,000

 

Expense reimbursement from Sanofi Genzyme:

 

 

 

 

Year-ended December 31, 2015

 

 

33,949

 

Year-ended December 31, 2016

 

 

54,337

 

Quarter-ended March 31, 2017

 

 

13,012

 

Quarter-ended June 30, 2017

 

 

15,037

 

Total consideration at June 30, 2017

 

$

123,385

 

 

 

 

 

 

Cumulative revenue recognized at June 30, 2017

 

$

70,041

 

Deferred revenue at June 30, 2017

 

$

53,344

 

 

We determined that the opt-in rights that Sanofi Genzyme has for future Genetic Medicine programs represent separate and additional deliverables that Sanofi Genzyme may receive from us in future periods. Upon each initial opt-in by Sanofi Genzyme, we have determined that each program and the related activities will represent a single unit of accounting and, consistent with our accounting policies, we will base our revenue recognition period on the final deliverable associated with each future opt-in.

3. FAIR VALUE MEASUREMENTS

The following tables present information about our assets that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016, and indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair value, in thousands:

 

Description

 

At June 30, 2017

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

3,990

 

 

$

 

 

$

3,990

 

 

$

 

U.S. government-sponsored enterprise securities

 

 

7,987

 

 

 

 

 

 

7,987

 

 

 

 

Money market funds

 

 

373,415

 

 

 

373,415

 

 

 

 

 

 

 

Marketable securities (fixed income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

12,900

 

 

 

 

 

 

12,900

 

 

 

 

Commercial paper

 

 

62,758

 

 

 

 

 

 

62,758

 

 

 

 

Corporate notes

 

 

269,009

 

 

 

 

 

 

269,009

 

 

 

 

U.S. government-sponsored enterprise securities

 

 

304,518

 

 

 

 

 

 

304,518

 

 

 

 

U.S. treasury securities

 

 

39,985

 

 

 

 

 

 

39,985

 

 

 

 

Restricted cash (money market funds)

 

 

1,471

 

 

 

1,471

 

 

 

 

 

 

 

Total

 

$

1,076,033

 

 

$

374,886

 

 

$

701,147

 

 

$

 

11


 

Description

 

At December 31, 2016

 

 

Quoted

Prices in

Active

Markets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

17,199

 

 

$

 

 

$

17,199

 

 

$

 

Money market funds

 

 

151,479

 

 

 

151,479

 

 

 

 

 

 

 

Marketable securities (fixed income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

17,999

 

 

 

 

 

 

17,999

 

 

 

 

Commercial paper

 

 

59,340

 

 

 

 

 

 

59,340

 

 

 

 

Corporate notes

 

 

333,872

 

 

 

 

 

 

333,872

 

 

 

 

U.S. government-sponsored enterprise securities

 

 

297,773

 

 

 

 

 

 

297,773

 

 

 

 

U.S. treasury securities

 

 

40,000

 

 

 

 

 

 

40,000

 

 

 

 

Marketable securities (Regulus equity holdings)

 

 

8,997

 

 

 

8,997

 

 

 

 

 

 

 

Restricted cash (money market funds)

 

 

1,471

 

 

 

1,471

 

 

 

 

 

 

 

Total

 

$

928,130

 

 

$

161,947

 

 

$

766,183

 

 

$

 

 

During the six months ended June 30, 2017, there were no transfers between Level 1 and Level 2 financial assets. The carrying amounts reflected in our condensed 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. The fair value of our long-term debt at June 30, 2017, computed pursuant to a discounted cash flow technique using a market interest rate, was $150.2 million and is considered a Level 3 fair value measurement. The effective interest rate reflects the current market rate.

4. MARKETABLE SECURITIES

The following tables summarize the fair value, accumulated other comprehensive income (loss) and intraperiod tax allocation regarding our investment in Regulus available-for-sale marketable securities at June 30, 2017 and 2016, and for the activity recorded for the three months ended June 30, 2017 and 2016, in thousands:

 

Description

 

At March 31, 2017

 

 

Sales of Regulus

Shares

During Three

Months Ended

June 30, 2017

 

 

All Other Activity

During Three

Months Ended

June 30, 2017

 

 

Balance at

June 30, 2017

 

Carrying value

 

$

2,682

 

 

$

(2,682

)

 

$

 

 

$

 

Accumulated other comprehensive income (loss),

   before tax

 

 

 

 

 

345

 

 

 

(345

)

 

 

 

Investment in equity securities of Regulus, as reported

 

$

2,682

 

 

$

(2,337

)

 

$

(345

)

 

$

 

Accumulated other comprehensive income (loss),

   before tax

 

$

 

 

$

345

 

 

$

(345

)

 

$

 

Intraperiod tax allocation recorded as a benefit from

   income taxes

 

 

(32,792

)

 

 

 

 

 

 

 

 

(32,792

)

Accumulated other comprehensive income (loss), net of

   tax

 

$

(32,792

)

 

$

345

 

 

$

(345

)

 

$

(32,792

)

12


 

Description

 

At March 31, 2016

 

 

Sales of Regulus

Shares

During Three

Months Ended

June 30, 2016

 

 

All Other Activity

During Three

Months Ended

June 30, 2016

 

 

Balance at

June 30, 2016

 

Carrying value

 

$

9,911

 

 

$

(574

)

 

$

 

 

$

9,337

 

Accumulated other comprehensive income (loss),

   before tax

 

 

24,023

 

 

 

(954

)

 

 

(19,074

)

 

 

3,995

 

Investment in equity securities of Regulus, as reported

 

$

33,934

 

 

$

(1,528

)

 

$

(19,074

)

 

$

13,332

 

Accumulated other comprehensive income (loss),

   before tax

 

$

24,023

 

 

$

(954

)

 

$

(19,074

)

 

$

3,995

 

Intraperiod tax allocation recorded as a benefit from

   income taxes

 

 

(32,792

)

 

 

 

 

 

 

 

 

(32,792

)

Accumulated other comprehensive income (loss), net of

   tax

 

$

(8,769

)

 

$

(954

)

 

$

(19,074

)

 

$

(28,797

)

The following tables summarize the fair value, accumulated other comprehensive income (loss) and intraperiod tax allocation regarding our investment in Regulus available-for-sale marketable securities at June 30, 2017 and 2016, and for the activity recorded for the six months ended June 30, 2017 and 2016, in thousands:

 

Description

 

At December 31, 2016

 

 

Sales of Regulus

Shares

During Six Months Ended June 30, 2017

 

 

All Other Activity

During Six Months Ended June 30, 2017

 

 

Balance at

June 30, 2017

 

Carrying value

 

$

8,093

 

 

$

(7,485

)

 

$

(608

)

 

$

 

Accumulated other comprehensive income (loss),

   before tax

 

 

904

 

 

 

1,894

 

 

 

(2,798

)

 

 

 

Investment in equity securities of Regulus,

   as reported

 

$

8,997

 

 

$

(5,591

)

 

$

(3,406

)

 

$

 

Accumulated other comprehensive income (loss), before

   tax

 

$

904

 

 

$

1,894

 

 

$

(2,798

)

 

$

 

Intraperiod tax allocation recorded as a benefit from

   income taxes

 

 

(32,792

)

 

 

 

 

 

 

 

 

(32,792

)

Accumulated other comprehensive income (loss), net of

   tax

 

$

(31,888

)

 

$

1,894

 

 

$

(2,798

)

 

$

(32,792

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

 

At December 31, 2015

 

 

Sales of Regulus

Shares

During Six Months Ended June 30, 2016

 

 

All Other Activity

During Six Months Ended June 30, 2016

 

 

Balance at

June 30, 2016

 

Carrying value

 

$

11,935

 

 

$

(2,598

)

 

$

 

 

$

9,337

 

Accumulated other comprehensive income (loss),

   before tax

 

 

39,484

 

 

 

(6,110

)

 

 

(29,379

)

 

 

3,995

 

Investment in equity securities of Regulus, as reported

 

$

51,419

 

 

$

(8,708

)

 

$

(29,379

)

 

$

13,332

 

Accumulated other comprehensive income (loss), before

   tax

 

$

39,484

 

 

$

(6,110

)

 

$

(29,379

)

 

$

3,995

 

Intraperiod tax allocation recorded as a benefit from

   income taxes

 

 

(32,792

)

 

 

 

 

 

 

 

 

(32,792

)

Accumulated other comprehensive income (loss), net of

   tax

 

$

6,692

 

 

$

(6,110

)

 

$

(29,379

)

 

$

(28,797

)

 

We obtain fair value measurement data for our marketable securities from independent pricing services. We perform 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, we perform our 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.

13


The following tables summarize our marketable securities, other than our holdings in Regulus noted above, at June 30, 2017 and December 31, 2016, in thousands:

 

 

 

At June 30, 2017

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

Certificates of deposit

 

$

12,900

 

 

$

 

 

$

 

 

$

12,900

 

Commercial paper

 

 

62,761

 

 

 

 

 

 

(3

)

 

 

62,758

 

Corporate notes

 

 

269,265

 

 

 

30

 

 

 

(286

)

 

 

269,009

 

U.S. government-sponsored enterprise securities

 

 

305,400

 

 

 

1

 

 

 

(883

)

 

 

304,518

 

U.S. treasury securities

 

 

40,011

 

 

 

 

 

 

(26

)

 

 

39,985

 

Total

 

$

690,337

 

 

$

31

 

 

$

(1,198

)

 

$

689,170

 

 

 

 

At December 31, 2016

 

 

 

Amortized

Cost